What is coal scam?

A report by the Comptroller and Auditor General of India showed inefficient and possibly illegal allocation of coal blocks between 2004 and 2009.

By: Express Web Desk | New Delhi | Updated: May 22, 2017 7:28 pm
coal scam, hc gupta, hc gupta convicted, coal scam court case, latest news, coal scam verdict Image for representational purpose.

A special court of the Central Bureau of Investigation on Friday sentenced former secretary H.C. Gupta, former joint secretary in Coal Ministry K.S. Kropha and former director of Coal Ministry K.C. Samaria two years in prison for their involvement in the Coal Scam. They were, however, granted bail on the same day and could now challenge the sentence in High Court. The three were found guilty under Prevention of Corruption Act and Indian Penal Code. Among the charges, one of the prime offences was abuse of public office, securing pecuniary advantage without public interest and criminal conspiracy. This case dealt with alleged irregular allocation of coal blocks in Madhya Pradesh to Kamal Sponge Steel & Power Ltd. (KSSPL).

Coalgate, as it was popularly known snowballed into a huge political scandal which pulled top leaders and bureaucrats from the previous UPA regime into the probe.

A report by the Comptroller and Auditor General of India showed inefficient and possibly illegal allocation of coal blocks between 2004 and 2009. It estimated loss to the exchequer to the tune of Rs 10.7 lakh crore but it later toned this amount down to Rs 1.86 lakh crore in the final report.

The central point of the CAG report that showed improper allocation was that the government had the authority to allocate the coal blocks. However, this was to be done via competitive bidding. But the government chose to take another route and avoided competitive bidding, the CAG report said. CAG observed the revenue secured from the allottees for allocation was much less than what could have been if there was competitive bidding–hence presumptive loss to the exchequer.

The presumptive loss was factored in to estimate the windfall gains to allottees first at Rs 10.673 lakh crore and later toned down to Rs 1.856 lakh crore. After the CAG submitted its final report to Parliament, then Prime Minister Manmohan Singh read a statement that rebutted the report in the alleged/presumptive loss as well as the reading of the law. He had also said that the observations of the CAG were disputed.

The initial CAG report didn’t talk about corruption, rather inefficient allocation. However, after BJP filed a complaint with the Central Vigilance Commission, the CVC directed CBI to probe the matter for corruption. At least a dozen companies were named in the FIR that resulted in a criminal investigation. Accusations ranged from malicious means for securing allocation, overstating net worth, non-disclosure of prior allocation and hoarding rather than the development of allocated resources.

Industrialists like Naveen Jindal and Kumar Mangalam Birla have also found their name in FIRs in the Coal Scam probe. A report of the parliamentary standing committee said that the allocation of blocks between 1993 and 2008 had been unauthorised. It recommended deallocation of all blocks where construction had not started and forfeiture of bank guarantees in others. Over the course of the investigation, Supreme Court constituted a special court to try all cases related to the coal scam.

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  1. S
    May 22, 2017 at 10:31 pm
    This scam took place during the period 2004 to 2009. The UPA was in power. If the secretary tells, Minister can blindly act. This was the conclusion taken by the court because the concerned Minister escaped from the action. It's wonderful escape. The minister needs to be appreciated. Even today, during NDA rule, Secretaries are taking so many decision. It's onl with the approval of the concerned Ministry. The Leader needs to be questioned before taking action against the subordinates - then Coal Minister.
    1. Mahendran Arumugam
      May 22, 2017 at 9:25 pm
      Can the CAG do only post mortem of coal allocation? Can not intervene at time of processing of allocation. What about the administrative approval given by the Finance Ministry prior to the allocation. Is there no checks and balances system for politicians? Anyhow, Former Prime Minister has escaped from this charge making officials as scapegoat.
      1. madhusudan Bangalore
        May 22, 2017 at 7:25 pm
        This is very shocking that real culprits of Coal gate are still at large. Only intermediaries are punished which is denial of justice. Why Coal minister are not indicted who got directive from Top leadership of Congress ? CBI must discharge its duty in fair manner and all culprits from top to bottom should be booked and punished. However the persons concerned found sentence should reveal full facts in public domain to catch hold of real culprits who got more than Rs 10 lacs crores as bribe while innocent people are made scapegoat for honesty and discharging their duty under pressure from politicians in power.