Friday, October 18, 2013

How does “overturning a decision” amount to corruption?

After three days of the FIR getting filed against ex Coal Secretary PC Parakh, noted industrialist Kumar Mangalam Birla and his company Hindalco, I still cannot understand what the grounds for this FIR are. It appears that the fact that Parakh overturned the screening committee decision on allotment of a mine to Hindalco is the basis of this FIR. This is bizarre for several reasons.

Firstly, if the Coal Secretary is legally authorized to overturn the decision of the screening committee, then why is that provision there at all, if not to be exercised at times? If the screening committee was the final authority, then no matter what Parakh or the PM wanted to do, they could not have overturned it. The reality is that the final authority is the Coal Secretary and the Coal Minister, who are deemed to be more competent than the screening committee. In that case, one may wonder, why have the screening committee at all? The answer of course, is that such overturning decisions are rare, and made usually when the authority feels the screening committee has erred, as in this case.

Secondly, if the Coal Secretary did not overturn a decision even when he was convinced it was a wrong decision, then what kind of an authority is he? He would be better called a clerk. If we had to have a government of clerks, then why even have such a celebrated cadre as the IAS in place?

Thirdly, to establish any criminal case of corruption, there must be someone charged with giving money and someone with receiving. Who are those people here? Is the CBI saying that Birla and Hindalco paid a bribe? And Parakh and the PM received it? Then surely the CBI can show us some money trail? If the money trail isn’t there, then what kind of a charge is this? Then the “Why was the decision overturned?” question would become merely a case of administrative decision making, and not corruption. Sure, the authorities would have to reply to the public about why the decision was overturned, but the CBI would have no case at all.

So why did Parakh overturn the screening committee decision? I think the mid 2000s was a period of when the government was hell bent on achieving a high growth in investments. The government was pushing all segments of the industry to invest, build capacity and increase production. This would lead to job creation, alleviation of poverty, distribution of wealth, social equity etc. It is such policies that led to the fastest growth India has seen since independence. It is such policies that brought alive the India story in the first place. Had India continued to grow at the BJP growth rate of the previous six years, it would never have attracted the kind of foreign investments it did since 2004. Likewise, the reason the number of coal mines allotted was so much higher than during the UPA period was the same – there was much more investment-spurred demand for coal.

The answer to Parakh’s action is very clear. But before I come to that, it’s worth mentioning that it was probably the same reason that made Naveen Patnaik recommend that Hindalco be given a share of the mine, after the screening committee had turned it down. It’s the same reason that made the PM ratify Parakh’s decision. None of these people needs to worry; nor run away from what was clearly a legitimate decision.

The reason for the overturning was the huge capital investment that Hindalco had planned in the steel sector. As per ET dated yesterday ( ) “A coal ministry official said Hindalco has invested as much as Rs 17,000 crore in the attached 900-mw captive power plant, a 1.5 million tonnes aluminium refinery and a 3.5 lakh tonne smelter in Odisha”. What’s wrong if a mine was provided under extant policies to Hindalco to facilitate this investment? Maybe the question one should ask is why the screening committee took the wrong decision. Why did it favor the government’s own companies, when there is no such provision under any law. PC Parakh himself said this in The Mint dated October 16th ( ) “We decided in favour of Neyveli Lignite because it was a government company; it was also my own ministry’s company, so we have considered Neyveli (over) Hindalco”. That’s hardly a fair reason to allot a mine to Neyveli.

Also, the overturning was not as if Neyveli was thrown out. All that it amounted to was allotting Hindalco a 15% share in the mine. If corruption was the reason for the decision, what stopped Parakh and the PM from allotting 100% to Hindalco? Or 75% or 50%? Why only 15%? The answer is obvious: the 15% was sufficient to take care of the requirements of the attached power/aluminium plant. It was a specific allocation for a specific project.

So we have no money trail. No grounds not to believe the overturning decision. And yet, what does the CBI do? It files an FIR alleging corruption. How do they even do this? Of course the SC will have to be convinced. And of course, the SC will ask the same questions. Chances are that if this is all that the CBI has got, then the case will be thrown out. But even though so many cases get thrown out, it takes so long that the reputation of the accused gets sullied for good. Would the CBI have anything to say then? Our media will certainly not given any weightage to the acquittal. It would help if the SC expedited its own working, and brought a closure to such silly cases quickly.

The real truth is what I have written twice in the last three days. The CBI has shot itself in the foot and in fact, justified why it should remain caged. The institutions – CBI, CAG, SC – have all failed us at different points in time. If this continues, we should be prepared to see an exodus of our biggest businessmen (ever wondered how difficult it is for Ambani/Tata/Mittal/Birla to shift base to a Singapore or HK or London or NY?). And for India to return to the Hindu rate of growth of 3% per annum…..

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