What is the CBI seeking to establish? | Value Research Are the CBI's investigations truly indicative that the law in India is really above no person?
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What is the CBI seeking to establish?

Are the CBI's investigations truly indicative that the law in India is really above no person?

If you are inclined towards believing the Comptroller and Auditor General of India (CAG), the biggest scandal in independent India is the manner in which coal bearing areas were recently allotted to a host of private companies in an opaque and arbitrary manner, thereby resulting in notional losses to the exchequer that add up to a mind-boggling figure of Rs 1.86 lakh crore or over US$ 33 billion. But even the CAG did not question the manner in which a particular coal block in Orissa was allotted to Hindalco, which is part of the Aditya Birla group of companies.

Why then did the country's “premier” police agency, the Central Bureau of Investigation (CBI), lodge a first information report naming the iconic industrialist Kumar Mangalam Birla and former Secretary in the Ministry of Coal Prakash Chandra Parakh on October 16? Three days later, the Prime Minister's Office put out a detailed response clarifying the role of Dr Manmohan Singh (who was holding charge of the Coal Ministry) in the entire episode.

It is truly ironical that the three individuals named, Birla, Parakh and the PM, epitomise to many all that is supposed to be good about enlightened entrepreneurs, upright bureaucrats and honest politicians. There is a general perception that Parakh has a “clean” track record as a civil servant despite the fact that after he retired from the IAS, he served on the boards of directors of companies with coal block allotments that were subsequently found questionable. After the former bureaucrat asserted that if indeed there was a criminal conspiracy between him and Birla as has been alleged by the CBI, the third conspirator in the case should be Dr Singh himself because the PM as Coal Minister had finally vetted Parakh's decision to go back on his earlier recommendation to deny the allotment of a coal block to Hindalco.

There is a very important sentence in the note prepared by the PMO which reads: “The Prime Minister is satisfied that the final decision taken… was entirely appropriate and is based on the merits of the case placed before him”. Does this sentence imply that the responsibility for justifying whether the policy somersault in favour of Hindalco was done on “merits” will devolve on Parakh and not on Dr Singh?

The entire murky affair has thrown up a number of unanswered questions. Is Parakh being sought to be painted as an “accused” person by the CBI for extraneous political considerations, since he could serve as a “witness” in different criminal cases, including the ones in which vital documents are missing and the ones in which the role of the PM could possibly be scrutinised?

Are the CBI's investigations truly indicative that the law in India is really above no person? Is it that the CBI is genuinely independent, autonomous and insulated from pressure tactics from various sections, be they political leaders or corporate captains?

Did the CBI decide to make an example out of Birla because the government is seeking to either divert attention from the main culprits in the scam or allay the apprehension that its policies have resulted in the worst forms of crony capitalism? Was Birla targeted because he has invested in a media group that has been following an editorial line tilted in favour of the Bharatiya Janata Party and its prime ministerial candidate Narendra Modi?

Coalgate has created precedents. After the CAG presented its report, the PM by his own admission “departed from established procedure” to issue a statement in Parliament to explain, among other things, why his government took more than eight years to put in place a transparent system of public auctions of coal blocks after he had endorsed a suggestion to do so by Parakh. Dr Singh may still think his squeaky clean personal image has not been tarnished, but many believe that he turned a blind eye to brazen acts of corruption by those in his ministry.

The impact of Coalgate will be felt not just on Indian politics but on the country's economy for a long time to come, as imports of coal contribute to the trade deficit and shortages of electricity continue to constrain large sections.

This column first appeared in Mutual Fund Insight, December 2013.

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