Set to double sales in 4 years: Shoppers Stop
Markets' euro-euphoria may already be wearing out

Corporate Sep 28, 2011

Mother of all mining scams in Odisha: Rs 30,00,00,00,00,000

By Firstbiz Staff

This could be the mother of all mining scams, and this time it's in Odisha, a State which accounts for over 30 percent of India's iron ore deposits.

A CNN-IBN investigation has exposed a mining scam estimated at Rs 3 lakh crore, a scale that dwarfs the Bellary mining scam in Karnataka and the Goa mining scam exposed by Firstpost recently.

The investigation by Jajati Karan has established that illegal mining flourishes in Odisha's Keonhjar distric. Five companies have been charge-sheeted for illegal mining by the Odisha government's vigilance department. Illegal mining operations in three companies - Serajuddin Mines, Rungta Mines and Indrani Patnaik Mines - were caught on camera by the CNN-IBN team. (Watch the video here)

The Odisha mining scam is estimated at Rs 3 lakh crore. Raman Kirpal/ Firstpost

These were among the 243 mines where work had been suspended after an uproar in the Odisha Assembly in 2009.

Yet, today, the illegal mining continues.

At Balda, at the Serajuddin mines, truckloads of iron ore could be seen emerging from the main gates, all of it mined illegally. Even at night, the CNN-IBN team found trucks leaving loaded with the illegally mined iron ore.

At Unchabali, the CNN-IBN team trekked past pillars marking the Indrani Patnaik Mines to the top of a hill where it caught images of illegal mining at a grand scale.

At Jajang, at the Rungta Mines, the team sneaked a camera in for a few minutes to uncover even more illegal mining.

According to the State Vigilance chargesheet, the illegal iron ore mining at these three mines alone has caused the loss of a staggering Rs 2,352 crore to the state exchequer.

Anup Patnaik, Director, Vigilance, says: "Show cause notices have been served on the owners of all the mines that we are investigating. We have also seized their materials, and told them that mining cannot continue till our case is over."

Independent estimates have valued the illegally mined iron ore at Rs 3 lakh crore. Each tonne of iron ore fetches the mining company nearly Rs 8,000, while the State government gets a measly royalty of Rs 78 per tonne.

The Mines Department of the Odisha government, however, defends the charge-sheeted mine owners.

Says Manoj Ahuja, Secretary, Steel and mines: "The royalty has been paid for, so it's not illegal in that sense. There are no accounts that somebody has done illegal mining." At worst, it is a violation of a technical norm, he adds.

Last year, the Indian Bureau of Mines issued a show-cause notice to these mines, but took no further action. Till date, 13 minor officials have been arrested, but none of the senior functionaries have been touched.

In April this year, the Odisha High Court finished its hearing over the demand for a CBI inquiry into the mining scam, but reserved its orders. Activists believe that only an independent and impartial inquiry can reveal the extent of the alleged nexus between mine owners, politicians and bureaucrats

RTI activist Biswajit Mohanty, who has filed a PIL calling for a CBI inquiry into the illegal mining in Odisha, points out that the mining scam was exposed accidentally in 2009, when a ruling BJD MLA asked an innocuous question to the Assembly. The reply exposed the mining scam. (Watch Mohanty's interview to CNN-IBN here.)

The government was then forced to order an inquiry, and the vigilance department conducted an enquiry. But Mohanty argues that the theVigilance Department is ill-equipped and incompetent to investigate a scam of this magnitude.

"It doesn't have jurisdiction, it cannot investigate beyond the State's border", which he says is critical because even the Central Ministry is involved."They have to be investigated, and it cannot be done by the Vigilance Department." In addition, he points out, the case has international ramifications because the ore has been exported to other countries, principally China.

"All of us have challenged this enquiry order on the simple ground that it lacks jurisdiction, it lacks competence, it lacks adequate manpower and infrastructure," Mohanty adds. "We believe it is a cover-up by the State government to protect the miners and allow illegal mining to continue."

The scam also highlights the issue of "intergenerational equity" which the Supreme Court has highlighted in an earlier vedict, Mohanty noted.

"The State and the Centre have to decide how much of mining can be permitted within, say, 25 years or 50 years or 100 years... At the rate at which leases have been given, we don't expect resources to last beyond 25 years. This kind of a policy cannot be permitted," reasons Mohanty.

Watch video: A debate on what it is about mining scams that cuts across all States and parties.

by Firstbiz Staff

Related Stories.