How govt helped RP-Sanjiv Goenka group in coal auctions?

Narendra Modi’s government ignored concerns raised by the Comptroller and Auditor General (CAG) about business groups deploying shell companies to grab India’s coal reserves, reveals a Reporters Collective investigation published on Al Jazeera.

Govt ignored CAG’s finding

A report by the Comptroller and Audit General (CAG) indicates that of the five companies approved for the auction, three belonged to the RP-Sanjiv Goenka (RPSG) complex of companies. It is a company with a revenue of more than $4 billion in various sectors such as information technology, education, energy, media, and retail.

Documents accessed by The Collective reveal the auction of large coal reserves ignores the auditor’s warnings revealing that it is a loss to the public treasury in the auction process. The online tender was initiated by the Indian Coal Ministry for the Sarisatolli coal mine in West Bengal.

These auctions came after the high court in 2014 cancelled leases for 204 coal mines that previous governments had “arbitrarily” awarded to private companies in what was then supposed to be a $22bn coal scam.

Freshly ousted from the previous congress-led regime accused of short-selling the nation’s assets, the new BJP-led government promised a clean and fair new auction of coal mines.

Violate bid confidentiality protocol

The company accomplished this by using its shell companies to undermine competition at auctions and violate bid confidentiality protocol.

According to records, none of the RPGS affiliates has submitted a bid. Another bid was registered from the same IP address used by the parent company and the company that won the bid, Calcutta Electricity Supply Corporation (CESC). This shell company, on the other hand, bought RPGS just two days before the auction.

The lack of confidentiality of the offer was indicated by the documents provided during an auction, essential to obtain optimal value. Here, CAG protocols say that related entities that communicate with each other and also participate during the bidding process are considered “bid rigging”.

Suspected collusion

The CAG’s final report listed these 11 mines for which it suspected collusion between the bidders and the companies that participated in the auctions along with their sister companies.

In the case of the Sarisatolli mine, the CAG found evidence that the companies of the RP-SG Group were bidding from the same IP address.

However, in the final report, the name of the mine and the identities of the bidders were not disclosed, the Al Jazeera report notes. Instead, a “case study” was presented, detailing the bidders’ modus operandi as an example of collusion without revealing their identifiable information.

The West Bengal mine was part of the first batch of auctions the Modi government held to hand over domestic assets to private companies.

CAG officials red-flagged its auction and that of 10 other mines to the government in its final report submitted to Parliament in August 2016. It said the “potential level of competition” was not achieved during the auctions.

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