India police drop corruption case against top industrialist

The case filed last October against Birla, had sent shock waves through business community at the time

NEW DELHI: India's top police agency has dropped a corruption case against leading industrialist Kumar Mangalam Birla, who had been accused conspiring to obtain a coal block at a cut-rate price nearly a decade ago.

The case filed last October against Birla, viewed in India's sometimes murky corporate world as a by-the-book player, had sent shock waves through business community at the time.

The Central Bureau of Investigation said late Friday in a statement evidence "did not substantiate the allegations" of criminal conspiracy.

"There was no evidence of criminal conspiracy," the agency said.

The case stemmed from the 2005 awarding of a coal block to Hindalco Industries, one of Asia's biggest primary aluminium producers and part of the Aditya Birla conglomerate headed by Birla.

The police force also dropped its corruption investigation against a former top government coal ministry bureaucrat, P.C. Parakh.

Both men had denied any wrongdoing.

The coal block allocation was probed as part of a scandal in which India's federal auditor in 2012 accused the government of underpricing coal mines and giving away billions of dollars in windfall gains to companies.

While police are not pursuing charges against Birla and Parakh, the Supreme Court ruled last Monday the awarding of coal blocks from 1993 to as far as 2010 was illegal, creating new uncertainty for energy-hungry India.

New legislation to auction coal blocks instead of through a government screening committee became law in September 2010.

A Supreme Court hearing will be held on Monday to consider whether the allocations should be cancelled.

The court said in its ruling there were "legal flaws" in the procedure for awarding the nearly 220 coal blocks in India, which relies on the fuel to generate over half its power.

In 2012, when the previous Congress government was in power, the Supreme Court cancelled 122 telecommunications licences sold at below-market prices, causing upheaval in the fast-growing cellular industry.

Many coal blocks were awarded during the Congress government. It was ousted in May after a decade in power by the right-wing Bharatiya Janata Party (BJP) led by Narendra Modi, who vowed to stamp out corruption.

The scandal came to prominence under Congress although the BJP was also in power for part of the period cited by the court.

Many of the coal blocks are still lying idle, but mining is under way in others. The government has seized back around 80 blocks because they are not being mined.

India has one of the world's biggest proven reserves of coal but disarray in the sector means demand still outstrips supply, causing huge power outages and hurting industrial output.