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#India-Mining Ministry’s Zero Loss Theory

In an elaborate cover-up, the Ministry of Mines is working behind the scene to save politicians and industrialists involved in illegal mining in
Prakhar Jain

January 10, 2013, Issue 3 Volume 10

Photo: Getty Images

HOW DO you defeat attempts to punish corruption? For the Union Ministry of Mines the answer is simple: set up a commission and then sabotage it.

TEHELKA has documents to prove that top officials in the mining ministry, which set up one such commission to investigate illegal mining, are working behind the scenes to dilute cases against politicians, industrialists and bureaucrats who are likely to be indicted in the commission’s report.

The matter pertains to the excessive mining of iron ore in Odisha, which the state government has already acknowledged as being illegal in several ways. However, the mining ministry has been trying its best to make the unlawful lawful by converting cases of illegality into irregularity.

The attempts at cover-up have speeded up as the former Supreme Court judge Justice MB Shah, tasked with probing illegal and manganese mining across the country in 2010, is expected to submit a voluminous report by the end of January.

Documents in possession of show that none other than the then mining secretary, Vishwapati Trivedi, was involved in the cover-up of the scam which, going by even the conservative estimates of Odisha government, caused a loss of 70,000 crore worth of natural resources. Calculated by market rates, the scam might rise to a staggering 3 lakh crores.

Seeds of the scam were sown in the beginning of the last decade when China started importing iron ore in huge quantities to build necessary infrastructure for the Beijing Olympics. As prices of iron ore skyrocketed, mining companies across the nation scrambled to exploit the opportunity.

According to the mining laws, no mineral can be extracted from ground without the prior permission of government. However, taking advantage of a loophole, mining companies in Odisha manipulated the law in connivance with bureaucrats and politicians, and started exporting an unprecedented quantity of iron ore. The companies include those associated with the Tata and the Birla groups.

The scam came to light after the 2009 state Assembly elections, when Rabi Das, the editor of a local Odia newspaper, started investigating into the campaign expenditure of two major political parties following the poll. The money was traced back to illegal mining. This prompted Das to file a case in the , forcing the state government to stop all major mining activities in the state.

When similar such cases were reported from Bellary and , the Union mining ministry asked Justice MB Shah to inquire into the illegal mining of iron ore and manganese across the nation. In the following months, the ministry initiated the coverup by going to the extraordinary length of amending the rules and interpreting the laws to benefit the case of the criminals.

The ministry even sabotaged the Odisha government’s attempt to recover the price of ore mined illegally. Three days after the state decided the modalities of computing the penalty last July, the ministry changed the definition of illegal mining by issuing a notification and amending a rule through which a mine is allocated.

The notification read, “…violation of any rules… within the mining lease area by a holder of mining lease shall not include illegal mining.” It also selectively interpreted what would constitute “an area held with lawful authority” and says that a mining lease area shall be considered as an area held with lawful authority while determining the extent of illegal mining.

In addition to the notification, to leave no doubt about the ministry’s intention, a letter was written two months later by Trivedi to the chief secretary of Odisha. The letter stated, “…the interpretation that a land granted under a mining lease by the state government can be held to be occupied without lawful authority on the grounds of violation of provisions of any other law of the land is not appropriate and such interpretation may not stand in the Court of law.”

The letter went on to suggest that if other laws like the Environment (Protection) Act and the Forest (Conservation) Act have been violated by the miners, penalty can be imposed under those Acts and not under the law governing mining in the country. This distinction, Trivedi wrote, may also be clarified to the State Accountant General.

Since most of the illegal excessive mining in the state happened in lease areas (mostly under the grossly misused provision of ‘deemed extension’ when the process of renewal of mining leases is pending) the notification and the letter dealt a huge blow to Odisha. Under the mining laws penalty can be recovered only when mining is done illegally and without the authority of law. The ministry, therefore, killed all chances of recovering the loss caused due to illegal excessive mining of a major mineral.

However, under huge political pressure, the state government went ahead with issuing show-cause notices to the miners in October last year for recovering almost Rs 70,000 crore for “illegal” production of iron ore “without the authority of the law”.This was despite the state government knowing that it would hardly be able to recover a single penny if the show-cause notice were challenged in a court of law.

Covering the tracks Those involved in illegal mining in the state include companies associated with the Tatas and the Birlas, Photo: AP

The companies, as expected, have challenged the notice before a revision authority working under the ministry of mines. Some industrialists have also approached the courts disputing the order, saying that the extra ore mined by them can at best be called an irregularity and not illegality.

Trivedi, however, defends the notification and his letter to the chief secretary. He says that the notification was issued in consultation with the law ministry, after the interim report of MB Shah Commission recommended that the laws against illegal mining be made stronger. “The miners in Odisha had a valid lease and therefore were not holding the area without lawful authority. Those proved to be mining beyond the lease area, which is illegal, will not be able to get mining lease in future because of the notification,” he says.

He further argues that the miners cannot be penalised under the mining laws for not having clearance under the environment and the forest laws. “And there is no limit to the ways in which a law can be interpreted. If someone disagrees with the ministry’s interpretation, then it would be best to let the courts decide,” he says.

Activists in the state blame the politicians for this cover-up. “A large number of senior politicians from the ruling Biju Janata Dal (BJD) and the Opposition, the Congress party, are deeply entrenched in the mining business. If the fine is recovered, they would get devastated,” says Rabi Das.

Biswajit Mohanty, a member of Transparency International, an international civil-society organisation, has filed a public interest litigation challenging the ministry’s notification. He describes it as “colourable exercise of rule-making power, which suffers from the vice of arbitrariness”.

Niranjan Patnaik, the state Congress president, who has indirect interest in the business through his relatives, also slams the fine and says that mine owners have only mined more ore from their leased areas and alleges that nobody is touching the illegal extraction by mafia/mafias who were working under the patronage of BJD leaders. “In comparison to what the mine owners have done, these mafias have extracted and sold 100 times more iron ore. Even the Shah Commission has not gone beyond the leased areas to investigate the real theft of minerals,” he says.

It would be interesting to see whether the Shah Commission is able to catch the real culprits behind the mining scam or gets hoodwinked by the systematic efforts of the bureaucracy to project that there is not scam at all.

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