The Curious Case of Kumar Mangalam Birla & HINDALCO

The FIR (First Information Report) filed by the CBI (Central Bureau of Investigation) against the major aluminium producing private sector company in India, HINDALCO, and its Chairman Kumar Mangalam Birla has been one of the biggest news stories of the week for many reasons. The CBI is investigating in to acts of omission and/or corruption, if any, in the allocation of coal blocks to private companies during the period 2004 onwards when the Man Mohan Singh led UPA-I government came to power. After the departure of the then coal minister as a consequence of a court verdict, the Prime Minister, Dr. Manmohan Singh, kept the coal ministry with him. The Birla company HINDALCO was allotted a part of a coal block on these terms : Talibara II & III be mined as a joint venture between Mahanadi Coalfields, Neyveli Lignite Corporation & HINDALCO. The Mahanadi Coalfields and the Neyveli Lignite Corporation are Public Sector undertakings while Hindalco is a private company. An earlier recommendation of a Screening Committee formed by the Ministry of Coal had recommended reserving the coal block in Talibara II & III for the public sector. Though it is not known for want of all documents in public domain, but the Screening Committee “recommendation” must have received the approval of the “Competent Authority” (which can be the Coal Minister or the Cabinet Committee on Economic Affairs). It is also not clear whether this recommendation was approved by the earlier minister or by Dr. Manmohan Singh, for if it was the earlier minister, the later minister is well within his lawful authority to review, reject, modify or retain such decision and no motives can be imputed to him unless it is proved that it was influenced by extraneous considerations attracting the provisions of the Indian Anti Corruption Laws. It needs to be emphasized for proper appreciation of the issues involved in this curious case that it is doubtful if the Screening Committee, which recommended reservation of Talibara II & III for public sector was lawfully constituted or just an administrative arrangement. The transaction of business in the government of India has to be carried out in accordance with the rules prescribed. The rules governing economic functions such as allocation of coal blocks or licences , provide for committees to make  appropriate recommendations based on due deliberation by all concerned ministries, whose views are required to be taken in to consideration by the committee before arriving at any decision. These recommendations are then placed before the minister in charge for approval. If the rules prescribe so, these recommendations can also be taken to the Cabinet or one of its Committees for approval. It may also be highlighted that for arriving at a decision, a lot of technical input is also required. These input come from government’s technical agencies, manned by qualified personnel, who are assigned the job of scrutiny and advice on all technical aspects, including the technical material provided by the applicant or his rivals. There are no clear cut guidelines or manuals to be followed in most cases as it all depends on several factors like capacity, demand, capability, funds, machinery, manpower, public health etc. That places limitations on the competencies of the scrutinizing authorities- what is good for China need not necessarily be good for India; or what is possible for America to achieve may not necessarily be possible for India to achieve, especially in high tech and high investment projects. So there is always scope for improvement as and when additional information becomes available. This is the law of the land. But it is susceptible to be vitiated by even the slightest act of omission or commission with malafide intentions. In other words, if implemented with utmost honesty, any genuine error of judgement also will not attract adverse notice calling for punitive action. It is only when the integrity is compromised by the scrutinizing, recommending or approving authorities that any government decision becomes a fit case for investigation by the anti corruption agencies. The HINDALCO case is curious from that angle only.

In May 2007, Kumar Mangalam Birla, chairman HINDALCO, wrote to the prime minister, who held the Coal portfolio at that time, that HINDALCO may be allocated coal blocks in Talibara II & III and gave all the justification. The company is reported to have also given a presentation to the PM (which also includes very high ranking officers in the PMO & the Coal Ministry). After hearing the company the PM asked the Coal Ministry to examine the case, which is normal method of working in government. If the examination put some wisdom in the heads of the bureaucrats, who decided to improve their earlier recommendations from no entry to private companies to 15% joint venture with the HINDALCO, this hardly makes it a case of corruption. It needs to be highlighted that the State Government of Odisha (Orissa earlier) had supported the case of HINDALCO in writing- the Lord of Corruption being totally illiterate never leaves any evidence in writing! The PM gave his instructions in writing. The Coal Secretary revised his earlier views as part of the Screening Committee and recommended , in writing again, the case of the Birla company HINDALCO to form a JV with the Mahanadi Coalfields & Neyveli Lignite Corporation. The case acquires curious characteristics for all these reasons, since everything was done in writing, openly and without any “illegal gratification” (bribe in common parlance). There is no bar on the competent authority to take a decision as it considers appropriate in its wisdom, even though it might result in loss to the government later, so far such a decision is honest, objective and in public interest.  Sensationalizing such a decision by lodging an FIR against a Chairman or private company and insinuating the involvement of the Prime Minister is indicative of incompetence of the investigating agency! That is one reason the case is making news and has gathered flak from every quarter. For one thing, neither Kumar Mangalam Birla nor HINDALCO need to succumb to such low level of bribing their way to get coal allocation. He belongs to a high stock of an industrialist , philanthropist and nationalist family of India, who are highly reputed and respected for supporting Mahatma Gandhi’s movement, establishing world class technical institutions like the Birla Institute of Technology at Pilani in the deserts of Rajasthan and numerous other such works. More than that, the young Chairman of HINDALCO  enjoys a very high reputation as a man of dignity and high moral values. I am not suggesting that he is infallible. Far from any such hint, I am putting in to spotlight an Indian attitude towards wealth, wealthy and wealth creators. The surnames “Birla & Tata” were used pejoratively by the Communists Party of India and its leaders before splitting in to the CPI & the CMP(M). But the reprehensible Indian attitude is reflected in the public pronouncement against all wealth as “Maayaa/Maya” or illusion, even as every such sermonizer was collecting wealth only through fair or foul means. It was this deplorable attitude to wealth and creators of wealth that led to the birth of the Industries (Development & Regulation) Act, all other restrictions on industries and ultimately the “inspector raj” adversely affecting all economic development in the country. The philosophy and mentality of the I(D&R) Act was replicated in other areas, such as in allocation of coal or other mining activities. It resulted in promotion of poverty in the country, which was justified in the name of “socialism”. Indira Gandhi was misled in to even amending the Constitution of India to insert the word “socialist” in the preamble of the Constitution of India. The Man Mohan Singh government is no more “socialist” by those standards! The genesis of the curious case of Hindalco/ KM Birla lies in the conflict of these two philosophies, two conflicting attitudes, two different mind sets for economic growth in the country. I suspect Dr. Manmohan Singh may not have any sympathizer other than Finance Minister Chidambaram in decisions like these! The attitude of all shades of political schools will not change till such time, the siblings of our politicians join the ranks of the ordinary beings of the contemporary knowledge society (shall we call them the aam aadmi of the knowledge society?). The process has started in many places, but slowly, as in Uttar Pradesh, where the father opposed to English and computerization has yielded space to the son who promotes both English and computerization as the Chief Minister. Yet the contradictions are too strong and vast that economic development has to suffer for decades. Meanwhile the common man  has no alternative but to remain contented in his silent suffering. If that results in undeserved vilification of any private company like Hindalco or member of the contemporary knowledge society like Kumar Mangalam Birla, it has to be taken as simply “incidental”. The history of economic and industrial development in India alone will be able to do justice to all the tirades against the entrepreneur class, who are the wealth & job creators.

I have published on this site my book with a view to put on record a faithful account of the “liberalization” enunciated by Rajiv Gandhi but viciously credited to Dr. Manmohan Singh or PV Narsimha Rao in 1991. The good work done by Rajiv Gandhi has been upended in the last 10 years of the misrule of the UPA-I & II. Since politicians are quick at rebutting such fair appraisals of their performance, it is not going to earn accolades for me or any other person thinking similarly, but the proof lies in the hordes of scams under this government, be it the Commonwealth Games scandal or the 2G Spectrum allocation, Adarsh Housing Society in Mumbai, S Band, allocation of coal blocks to ineligible applicants for illegal gratification or hundreds of other humongous scandals. The hit that HINDALCO or K.M.Birla are taking is because of the attempt by the extra constitutional authority to cover up their misdeeds by using the fair name of Kumar Mangalam Birla . They know it very well that any attempt to malign Kumar Mangalam Birla will evoke instant and sharp reactions from the media, industry, civil society, bureaucracy and thinkers. That will give them enough time to escape the heat of the investigation and the CBI breathing hard on their neck. They know that the next election to the parliament is approaching fast and the government is certain to change. By that time even the Director CBI would have also changed. The new government will not be able to pursue the case for at least one year, which is the minimum for any new government to stabilize. The wicked are practical thinkers, unlike the ideologues who exist only in the reverie of their dreams! I had also covered in my book all these aspects, which I had reason to believe to likely develop, on the strength of my information and reading of trends in Indian politics in the past 50 years. I had chosen to write my book in the Hindi language as I wanted to capture the flavour of the political developments in the national language; I could have done otherwise. I am now adding my addenda in English to capture the flavour of the times- the scandals being too large for a language like Hindi to cover as it has yet to “develop” to encompass all the white collar crimes of modern times, which have successfully been captured by the laws written in English.

Let us consider the views expressed by others. The Chairman, Godrej Group, Adi Godrej reacted in these words: The FIR against Kumar Mangalam Birla is deplorable; the company (Hindalco) has only 15% stake in the coal block. Just because it is reserved for a PSU does not mean some allocation cannot be made. Kishore Biyani, Founder, Future Group has said: India has to learn to respect its entrepreneurs. This is an insult to all of us and the entire business community. These comments printed in the Times of India (TOI) dated October 17, 2013 are only two from a multitude of comments from all prominent industrialists that have been carried out by every newspaper and television channel. The TOI in its editorial captioned “Do The Right Thing” had written on October 8, 2013 the following: “India’s growth has shrunk from 9.3% in 2010-11 to just 5% last year. Meanwhile, the number of regulators and regulations has multiplied beyond count. The resulting thicket of controls, multiplying series of clearances and policy confusions, don’t make it easier to do business. But that’s exactly what is needed. Our economy isn’t going to benefit from either overregulation or overdependence on political consensus. We need ministers to simply do the right thing. Keep politics aside, speak up for economics and India.” Hasn’t the Times of India editorial reduced to writing the prevailing reality? The TOI is perceived to be a pro-Congress newspaper, but even it could not stomach any longer the failure of the UPA-I & II governments, especially Dr. Manmohan Singh, who was wrongly credited with “ economic liberalization in India in 1991”. As I had written in my book, liberalization hurts the interests of the operators of corruption, who are beyond control of a meek, indecisive and ambiguous government servant turned politician like Dr. Manmohan Singh who can never take on such organized economic crime. It could have been done by a bold and decisive and precise man like Rajiv Gandhi, who launched economic reforms in India in a big way by taking more than 40% manufacturing industries out of the fold of the Industries (Development & Regulation) Act in 1985 itself, full 6 years before the arrival of Manmohan Singh as Finance Minister or Narsimha Rao as Prime Minister. Since I had implemented Rajiv Gandhi’s de-licensing policy in 1985, I have put on record the account of the development in my book. The extract from the Times of India editorial amply upholds and validates my assessment and account. Dr. Manmohan Singh has no clear vision of the reforms and hence it is expecting too much from him to put politics aside and do economics. The attitude towards creators of wealth is responsible for such tremendous failure of the man credited (albeit wrongly) with economic liberalization in India. The revival of the “inspector raj” under the government led by Dr. Manmohan Singh emanates from the plethora of regulations and the regulators, which have all been created by Dr. Singh, all in the name of reforms. A man who has no political roots, who has not been chosen as the Leader of the House, who has no political vision or mission or even following other than his job gratuitously given to him, can do nothing more than dissimulation in the form of newer regulation and regulator every time a problem crops up, but can never launch any reforms. All that he can do is to decide to promulgate a law through the Ordinance route to give protection to the convicted corrupt ministers or chief ministers or other politicians like MPs and MLAs. He and his government can only make it difficult to do business. The net result of unnecessary regulations is that the ministers and bureaucrats try to extract illegal gratification from every entrepreneur. Those achieving success in spite of the corrupt ministers and bureaucrats are thrown to investigating agencies like CBI or the income tax authorities. It is enough to frighten the whole segment of Industry, who are made to fall in line and submit to the unlawful demands of the corrupt for bribes, shares in the companies or even selling the company (as is being investigated in the case of Aircel & Maxis – illegally transferred by the minister to his own family and in which case the CBI is delaying filing of the FIR). Compare the two cases: Aircel & Maxis and HINDALCO/ minister & Kumar Mangalam Birla and draw your own conclusions. The TOI editorial condemns “overregulation” and demands “ministers to simply do the right thing”. If that were to be the aim of the government, why would it opt for a multitude of regulators and regulations to justify their creation and budget? They are created only when the practiced aim is different from the professed one; that means corruption in the name of reforms. The bitter truth is that the core strengths of the Indian economy has been very badly shaken in these 10 years of gross economic misrule, imposing great economic hardships on the common man by way for unconscionably high prices of all essential commodities and food, inflation, falling production, declining growth, current account deficit and institutionalized corruption. Unless India finds a new Leader, the scenario is grim. I had mentioned it in my book that the country will need to find a Leader to replace Dr. Manmohan Singh in 2009 elections. The people lost that golden opportunity and fell in the trap of the swindlers and simulators and got tricked in to choosing him again the leader of the government.  The result is a saddening tale of corruption and scandals of historic proportions. Will the voter repeat the mistake in 2014?

There is a bureaucrat accused in this curious case. He was the Secretary to the Government of India in the Ministry of Coal at the pertinent time and Chairman of the screening committee , which had recommended the reservation of the Talibara II & III for PSU. P.C. Parakh, who was the Secretary Coal is accused of changing the screening committee recommendation to allow a Joint Venture of the three companies, two public sector and HINDALCO of Birla in the private sector. The accusation aims at making P.C.Parakh “guilty” of changing his decision for what is called in the vigilance jargon “extraneous consideration”, which is substitute for illegal gratification or bribe. Its fallacy lies in believing that the screening committee decision was sacrosanct and hence, could never be changed either by the Secretary of the Department or the Competent Authority (the Prime Minister in this case in his capacity of Coal Minister). As has already been stated, there is no statutory sanction for the screening committee or the procedure of consideration and decision by the screening committee nor is any screening committee the Final Authority in any such case. It is erroneous to think that the government or its officers are not authorized to review their decisions for any valid reasons whatsoever. All and every government decision is liable to be changed, modified, amended or even abandoned depending on the merits of the case and best interests of the people.  As is known, the government decided to hear the case of the HINDALCO and on the basis of additional information provided by the company and explained by its Chairman, the government in its own wisdom decided to modify the earlier decision based on the recommendations of the screening committee. It is monarchs and dictators only who always stand their ground out of “raajhat or obduracy of the Ruler”; democratic governments have to demonstrate “dynamism” in all circumstances. Had it been the case of more than one applicant asking for allocation in these coal blocks and only HINDALCO having been benefited, there would have arisen the genuine doubts about the fairness of the government decision. So long as it is not proved that the decision was taken to either derive unlawful pecuniary benefit by the Secretary or Minister or others or to harm the interests of the public sector, there is no ground to hound, harass and malign the reputation of clean officers like P.C. Parakh. Doing so lends immense boost to the corrupt elements in the bureaucracy and brings a smirk on the face of the organized gangs of the corrupt. It is for this reason that the FIR against Parakh makes equally curious. The officer enjoys a reputation of highest integrity in the bureaucratic circles. So much so that the cabinet minister as also a minister of state sought to get him transferred for not joining them in minting illegal money from the black gold that coal is generally described to be, by writing against him to the Prime Minister. What a criminal joke for an incarcerated minister to seek transfer of an honest secretary? A half educated minister trying to kick out an officer from the highest civil service, entry to which is highly competitive! Accusing such an officer was bound to generate agitation and all round uproar. The serving and retired civil servants reacted sharply and stood by P.C.Parakh. This show of solidarity has jolted the Prime Minister, who has been compelled to clarify the situation after four days of mayhem, calling the decision as “appropriate”.

Why has the situation come to such a pass? It is because of the rarity of officers of high integrity, competence and character. The criminal elements of the bureaucracy have corrupted the system to an extent where any improvement seems to be impossible. First these elements indulged in corruption themselves, harmed honest officers subordinate to them and then infected the political fraternity. Some of them proved themselves so smart that they even made it to the cabinet as minister! Now they became the “competent authority”, which nobody normally can challenge as it needs very costly legal services to fault. The field was left open to them – they felt emperors of all that they surveyed. Forcing companies to be sold to their family members for a pittance or selling radio waves or purchasing military equipment or VVIP Helicopters from Augusta Westland or Tatra Trucks or medicines for government hospitals or equipment for the commonwealth games or allocation of coal blocks. The list is so vast and the acts of omission and commission of these corrupt elements that public memory does not have enough storage capacity for long.  Many of them are old experts at that if one looks in to the hundreds of reports of inquiry against them, including the Emergency Excesses Commission and the Indira Gandhi Assassination Inquiry Commission. But an honest government officer is weightier than all these corrupt elements put together. However, it is not likely to endure any long, if the cases of persecution by the state government in cases like those of Khemka (IAS officer) & Chaturvedi (IFoS), both from Haryana or Durga Shakti Nagpal (IAS) of U.P. are any indication. In U.P. two Chief Medical Officers have been murdered for coming in the way of looting the funds under the National Health Mission (NHRM) Scheme, for which a minister and Secretary were arrested some months ago. A former Minister of the Central government and a Member of the Rajya Sabha has been sentenced to 4 years of jail for getting ineligible candidates admitted to medical colleges. Another former Chief Minister has been jailed for 5 years in a case of illegal withdrawal of several crores of rupees from the government treasury from a scheme meant for fodder and veterinary care of animals. The incumbent Prime Minister wanted to save these corrupt politicians by promulgating the Ordinance, which was stalled by none other than Rahul Gandhi, who denounced it publicly as “nonsense” and “wrong” deserving to be torn and thrown away. The development saved the Indian democracy the ignominy of protecting the corrupt by over-ruling the judgement of the Supreme Court of India, who has pronounced that MPs and MLAs sentenced to 2 or more years lose their seat in the legislature from immediate effect. Can it be called economic or political reform by any stretch of lexical stratagum? By attacking Parakh, all such elements are seeking protection for themselves, in the fullest knowledge of their impending incarceration on change of government. These elements have displayed uncanny audacity of practicing open corruption and also staring menacingly at those questioning them. Simply making a Right To Information does not end corruption. On the contrary, the corrupt have killed and burnt publicly, honest officers for standing in their way. Ministers have started humiliating and bullying officers publicly. They act like Aurangzeb and Tughalak. Together the nexus of the politician-bureaucrat-evil business has been charging ferociously at honest officers. Today more space is occupied in the newspapers and the media by “drug Lords, mafia, underworld” than intellectuals, culture, economic achievements of the fair business, entrepreneurship, employment, prosperity, public satisfaction etc. What starts the day is either horrors of gory killings, rapes or corruption, inserted as inconsequential news in pages after pages of advertisements carrying standing insult to the women for displaying female anatomy in a manner worse than that displayed in cheap magazines. The voices of anger against accusing P. C. Parakh should not be allowed to provide a hiding place for the corrupt among the bureaucracy whose rightful place is the jail.

When the CBI made PC Parakh an accused it forgot that it will have to make the prime minister as an accused. P.C. Parakh has said so: says that there is no wrongdoing in the decision, but if he is made an accused, the Prime Minister should also be made an accused number 1, for he was the final authority to take the decision in his capacity as the Minister of Coal when the decision was taken. The CBI has no answer excepting saying that it can question the officers in the Prime Minister’s Office (PMO) in future. Since the Opposition has demanded the resignation of the PM, he has issued the clarification through the PMO that the decision was appropriate (President Clinton first used the word to get out of a really sticky situation). There may not be anything inappropriate in this case but it may not be so in the scores of other cases in which the Comptroller & Auditor General (C&AG) has determined a loss of more than 1,86,000 crore rupees to the exchequer and which is being investigated by the CBI under the supervision of the Supreme Court of India, because those primarily responsible to guard public property, the Government and the Central Vigilance Commission, have chosen to ignore the corruption involved in the allocation of coal blocks to ineligible parties or simply abdicated their duty. In such a situation, the corrupt minds, ably aided by the most corrupt legal brains, have found a convenient method of escaping the law by implicating the honest industrialist KM Birla and an honest bureaucrat PC Parakh. Their doctrine is simple: if the honest guilty, we too are guilty; but if they are not guilty, we too are not guilty. The CBI, called as the caged parrot by the Supreme Court, can prove the guilty as innocent and an innocent guilty, unless the judiciary keeps a watch on it. The corrupt generally succeed in clipping the wings of the honest officers and make caged parrot of them, as the attempts on Khemka, Chaturvedi or Nagpal described in the foregoing prove. Honesty has been reduced to a crime by the nexus of the corrupt in India. We are fighting elections in the name of routing corruption of the incumbent even after 61 years of electoral democracy of India. It is quite impressive to denounce corruption, but quite a different thing to install an honest government. Transparent government shall remain a distant dream for the average Indian. Attacks on Kumar Mangalam Birlas and P.C. Parakhs will further seal all openings to mount any attack on corruption. What is distressing is the impending change in the Supreme Court of India due to retirement of Judges like Justice Singhvi, who have displayed boldness and character. The situation is so bad that the Supreme Court is the only hope of the people in this country!

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