Vedanta benefited from arrested IAS officer, state lost over Rs 600 cr: Rajasthan probe

Last Friday, the ACB report returned to centrestage when BJP state president Ashok Parnami, countering mining scam allegations levelled against the Vasundhara Raje government by Congress leaders, referred to the ACB findings and accused Gehlot of overlooking the report and going soft on Singhvi.

[related-post]

Despite repeated calls, emails and text messages for comments, Pawan Kaushik, Head-Corporate Communications, HZL, did not respond.

The ACB claimed its probe found that on November 1, 2006, Singhvi first ordered revocation of a lease granted to HZL when it was a Government of India-owned company. The next day, the mines department took possession of the mine.

When HZL, which had by then been acquired by Vedanta’s Sterlite Industries, moved the High Court against the government’s order, the mining department put up a solid defence with a caveat.

But in October 2008, Singhvi prevailed on his department to withdraw the government’s case from the High Court and restored the lease to HZL “causing the state government a direct loss of over Rs 600 crore”, stated the report on the probe conducted by ACB officer Mahendra Singh Harsana.

Sniffing a rot, the Directorate of Mining recommended an appeal in High Court but Singhvi “at his own level” ordered that no appeal should be filed.

Six months after the original probe report, the recommendation for FIR was altered to a departmental enquiry, which never happened.

“It was an ACB investigation and all decisions related to it were taken within the ACB. The mining ministry does not interfere in ongoing probes. The ministry is only concerned with policy-level decisions,” Ramlal Jat, the then mining minister, told The Sunday Express.

While rock phosphate in the state can only be mined by Rajasthan State Mines and Minerals Limited (RSMML), the state government had granted one mining lease to HZL, when it was still a state-owned company, on the “condition that it would only sell to RSMML”.

On April 11, 2002, shortly after the lease was renewed for 10 years, HZL was acquired by Sterlite Opportunities & Ventures Limited, promoted by Sterlite Industries India Ltd, a subsidiary of Vedanta, under a disinvestment drive.

According to the ACB probe, HZL violated the government’s lease terms, including operating without environment clearance and inviting bids for mining and selling 1 lakh metric tonne of rock phosphate which was the sole right of RSMML.

The state government revoked HZL’s lease, leading to the company moving the High Court in 2006.

Under Section 30 of the Mines and Minerals Act, read with Rule 54 of the Mineral Concession Rules, such an order by a state government can be appealed before the Government of India and the “revision and legal remedy” of such a cancellation is vested only with the Centre.

Also, following the revocation order, the mine “had to be allotted to state-owned Rajasthan State Mines and Minerals Ltd”, since rock phosphate is a “monopoly mineral” of the state.

But, the probe report stated, that on October 23, 2008, Singhvi called government counsel Rishi Vaishnav and asked him to withdraw the government’s case from the HC for “reconsideration”.

“Vaishnav said that arguments had been concluded in the case and a decision would now come based on merit. To which Singhvi said: I am directing you to okay the matter for reconsideration, based on HZL’s submission. Vaishnav then asked Singhvi to give a written submission, following which Mining Engineer (Writ) Madhusudan Paliwal gave an additional submission in the HC, saying if the company fulfilled certain conditions, the department could reconsider its order,” the ACB report stated.

Based on this submission, the “hon’ble HC allowed the government to re-consider the revocation order,” it stated. Subsequently, the government order was withdrawn and “HZL took possession of the mine”.

“In such an important matter, Ashok Singhvi exercised powers exclusively available to the Government of India, on his own… even keeping the mining minister in the dark,” it stated.

When Arvind Saxena, the then Director of Mines, recommended that the matter be referred to the Law department for an appeal before a double bench of the HC, Singhvi gave a “no-appeal” fiat “at his own level without referring the matter to the Law department”, the probe report stated.

“In this way, Singhvi, Paliwal and Virendra Singh (then DLR, Mines) misused their office, entered into a criminal conspiracy with Hindustan Zinc Ltd and benefitted the company. This caused the state government a loss of over Rs 600 crore,” the report concluded, recommending an FIR under relevant sections of the Prevention of Corruption Act and the Indian Penal Code.