Rs.50,000 crores coal import scam

During the last four years, the Directorate of Revenue Intelligence, or DRI, has unearthed over-invoicing of imports of coal and electricity generation equipment against at least 40 of India’s biggest energy companies. The total scandal amount is Rs 50,000 crore (~$8bn). Of this Rs 30,000 crore is on account of the over-invoicing of coal imported mainly from Indonesia. The remaining Rs. 20,000 crore is due to over-invoicing of power machinery imported mostly from China. The higher costs were passed on to consumers, who paid more for electricity.

• NTPC and various state electricity boards are involved in the over-invoicing scam, along with private companies of Adani, Essar, Anil Ambani etc. 
• As claims of corruption and favouritism emerge involving corporate entities headed by politically influential tycoons and powerful technocrats, the finance ministry's pursuing these cases are being stymied and the prosecution process thwarted.
• The DRI investigation alleged that 40 major companies, including Knowledge Infrastructure Systems Private Limited (KISPL), had inflated the value of coal imported from Indonesia for power generation, resulting in illicit benefits of Rs 30,000 crore. This resulted in consumers having to pay more for electricity. 
• The DRI investigation further claimed that the illegal gains were then laundered through shell companies in tax havens outside India.
• The adjudicating authority of the DRI, has cleared two companies, both part of the Adani Group, of charges of over-invoicing imported power-plant equipment worth Rs 3,974 crore. The investigating agency, DRI, filed an appeal in which it argued that the order suffers from “total non-application of mind or recklessness.”   DRI further stated that the order was “erroneous, illegal and improper not only in law but also on facts.” 
• The adjudicating authority of the DRI has accepted allegations against KISPL regarding over-valuation of coal imports from Indonesia and imposed a penalty of Rs 17.50 crore on the company. It also imposed a penalty of Rs 1.25 crore on Rahul Bhandare, the managing director of the company, and another of Rs 25 lakh on Vipin Mahajan, a former employee of NTPC, who is currently a director of the company. In both cases identical modus operandi was deployed for the over-invoicing and laundering process.
• In the KISPL appeal, a series of procedural irregularities have raised doubts about the integrity of CJ Mathew, the technical member on the bench hearing the KISPL case. The agency claimed that Mathew’s conduct “has been far from fair and impartial.” 
• An adverse ruling by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) in favor of KISPL, would set a precedent that could absolve the larger companies, both government-owned and those in the private sector, of the charges of fleecing the exchequer, and ultimately, the public. 
• The coal was shipped from Indonesian ports, whereas KISPL submitted invoices issued by firms such as Knowledge International Strategy Systems Pte, Singapore and Springs Trader Ltd, Hong Kong. KISPL supplied the imported coal to thermal power stations of the  Mahagenco. The DRI investigation claimed that the Singapore company was a “wholly owned subsidiary” of KISPL
• The Singapore company had created false documents to show that it had imported higher grades of coal. The amounts generated on account of the difference in prices were routed through a shell company based in Hong Kong. 
• The willingness of the finance ministry to fight the case against KISPL and similar cases relating to the over-invoicing of imported coal and power equipment will be tested in the future. It is worth repeating that huge sums of public money worth Rs 50,000 crore are involved.

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Eventhough Modi talked very high about corruption of Congress & UPA and his intent to fight out, during the 2013 campaign and on every public platform, the truth is that he himself is a worst corrupt politician, as reflected by CAG reports during his Gujarat CM tenure. But most Indians doesn't know his Gujarat CM episodes. His lifestyle as PM of India, doesn't make anyone believe that he is simple & honest. His spectacles are estimated to cost over Rs.2 lakhs and changes dress at least 5 times in a day. During his Prime Ministership of last 4 years, hardly any big-shot worthwhile had been booked for corrupt practices, save some hardcore political opponents. In the last year of his five year rule, he is saddled with overall under-performance and very poor financial performance, much can't be expected from him in this regard. Modi is likely to allow almost all ongoing cases disposed off relieving tainted personalities in exchange for election fund favors. Needless to say that BJP's election campaign expenses, during the last 5 years, are unimaginably higher in the country.