What the people defending former coal secretary HC Gupta are not telling you

Instead of challenging the captive coal block scam, he seems to have played along in the process.

Last week, former Coal Secretary HC Gupta surprised everyone in the Central Bureau of Investigation Court. He intended to “face trial from inside the jail” and withdraw the personal bond he had submitted in order to obtain bail, he told Special Judge Bharat Parashar.

Gupta is an accused in several coal block allocation cases relating to corruption. On being asked why, Gupta said he was in financial difficulties, struggling to even engage a lawyer.

The news triggered a minor furore – especially amongst the bureaucracy. The IAS Association announced it would meet Prime Minister Narendra Modi and Law Minister Ravi Shankar Prasad to communicate, as the Indian Express said, the duress officers will be “under if “honest decisions” are construed as mala fide.”

“There can be errors of judgement in the course of work," said secretary of the Association, Sanjay Bhoosreddy. "But that does not mean there is any criminal intent or quid pro quo.”

Subsequently, news reports and op-eds – like this and this and this – also warned that the court’s decision to charge Gupta might paralyse the bureaucracy.

On the whole, it seems that both the IAS Association and the people defending Gupta need refresher courses in both accountability and the captive coal block allocation scam.

The defence...

Gupta was coal secretary between 2006 and 2009, a period when the largest number of captive coal blocks were allocated. As Secretary, Gupta chaired the Screening Committee which chose companies that would get captive coal blocks. These recommendations would then flow to the coal minister, a post occupied for the most part by then-prime minister Manmohan Singh, for his approval.

How well did this screening committee do its work? Last week, while asking the court to cancel his bail, Harish Khare writing in the Tribune quoted him as saying:

“Whatever I did as Chairperson of the Screening Committee or as Secretary Coal was done with a clear conscience…I also believe that the coal block allocation was no scam. The Screening Committee did its job sincerely and in good faith.”

...And how it holds up

It’s interesting to contrast what Gupta says with the Screening Committee's track record.

As we know, it gave some companies much more coal than they needed. Unknown companies like Pushp Steel, a company running out of a single room office in Old Delhi, were chosen over established companies like Torrent Power and Lafarge Cement which had asked for the same block.

As many as 50 private companies – of the 105-odd private enterprises chosen by the Screening Committee – sold these blocks instead of developing them, according to CBI officials investigating the coal block scam.

Some of those transactions were reconstructed by this writer, then working with the Economic Times, and his colleagues. See this and this.

Why did the screening committee chose companies like Pushp Steel? An article published on August 25, 2016, quoted a senior official who had worked with Gupta.

“As chairman of a screening committee, one cannot be expected to verify or doubt facts that are presented to him, unless there is some evident mala fide”.

The official's response raises the question: Why then did we need a screening committee?

Think about it. The country was giving away coal blocks for free – in a period when global prices of coal almost trebled, rising from $63.8 per tonne to $171.16 per tonne between June 2004 and June 2008. In response, several applicants padded up applications in the hope of landing a block.

“Many companies showed plants on paper – something they were planning to set up – and received a coal block," the Bharatiya Janata Party MP Hansraj Ahir told the Economic Times at that time. "My estimate is that 80% of the winners had no plants that needed coal. But there was no verification.”

That wasn’t the only way applications were dressed up.

Not to mention the fact that, during this period, the number of applications for each coal block rose steeply. Take Brahmpuri, the block landed by Pushp Steel. As many as 44 companies applied for this block.

Given all this, the Screening Committee had to choose carefully. However, as members of the Screening Committee told the Economic Times at that time, it wasn’t impartial and objective. Vishwas Dhumal, a former principal secretary of Maharashtra, who represented the state in some of the screening committee meetings, summed it up well. The coal ministry, he said, had to “assess how large was the need for (the applicant’s) project. And how much coal would it need". But it did not always do so, he told the Economic Times in 2012 .

Some of this came out when a draft of the Comptroller & Auditor General report on the captive coal block allocation was leaked in 2012, which said:

“The process of allocation suffered from an element of subjectivity, opaqueness and lack of transparency."

In 2014, a CBI official threw more light on the CAG’s statement. Companies applying for a coal block had to argue their case. The coal ministry received feedback on their applications, as this article in the Economic Times described, from the user ministries (power, steel) and the relevant state government where the block was located, which went into a spreadsheet of sorts for comparison. The screening committee did not give the comparison sheet the attention it deserved, said the official.

Called an 'inter se', this comparison sheet compared applications across 10 parameters, including financial strength, progress of end-use projects, technical expertise and recommendations from user ministries and state governments. According to this CBI official, the coal ministry never wanted to follow the inter se. "If they had, only meritorious companies would have obtained blocks... Many companies got blocks even though they were not recommended by the inter se."

This was not all. Later, several screening committee minutes pertaining to these allocations went missing.

As we know now, the actual decisions on who should get the blocks were not made by the Screening Committee. While reporting on the coal scam, several officials in the coal and power ministries who had been a part of the allocation process, state government representatives, as well as executives who applied for blocks on behalf of their companies, told this reporter that politicians, especially from the ruling Congress Party, had influenced allocations.

Some of that surfaced, for instance, in the money trail that connects Naveen Jindal, the largest beneficiary of coal block allocations and Minister of State (Coal) Dasari Narayana Rao, during the United Progressive Alliance government.

Essentially, Gupta is free to say that there was no corruption in coal. But the data says something else. Let us now turn to the reasons advanced by those who say he should not be prosecuted.

A question of ‘public interest’

In this article, Rajan Katoch says bureaucrats should be prosecuted only when a quid pro quo or malafide intent can be established.

“Public servants working at senior levels, particularly in economic ministries, dealing with policies and programmes affecting the private sector, have to make recommendations or take decisions on various matters from time to time in the public interest as part of their official duties”. 

According to him, it is tricky to allege that a civil servant acted against public interest. Our understanding of public interest, he says, can be subjective or change over time.

Let us see. For starters, why did the coal scam damage India? It is not the losses to the exchequer when the UPA did not auction coal blocks or that undeserving companies got coal blocks or that politicians slipped blocks to their children or brothers. Its damage runs deeper.

The coal scam concentrated ownership over the country’s coal reserves with a few companies. In the process, it hurt India in two ways. First, it skewed competitive advantage in the power and steel sector in favour of politically powerful companies that could bag coal blocks. The result? In states like Chhattisgarh, companies aborted work on their power plants realising they could never compete against rivals who had captive coal blocks. Second, the scam pushed the country closer to an oligarchic future where a handful of business families control most of India’s mineral resources.

One would think that a process which involves giving close to half of India's coal reserves to a handful of companies would indeed result in such an outcome. It is surprising that an economist like Manmohan Singh went along. And it is even more surprising that Gupta, “the most honest officer” of his generation, went along. Tribune, Khare, who also worked as media adviser to former Prime Minister Manmohan Singh, offers a different defence:

Any person with sensitive nostrils can smell the stench of a Bleak House banality at work in the so-called investigation and trial in the so-called coal scam. While all the powerful businessmen and politicians have escaped the CBI dragnet, a man like HC Gupta has to go through the ordeal of a trial. By refusing to submit to this dehumanising charade and refusing to feel diminished, Gupta has shamed us all and made us feel small in our vindictive pursuit of partisan agendas.

Khare, in his zeal to defend the previous dispensation, also invokes the ghost of Bofors:

Make no mistake: the HC Gupta episode is bound to have a deleterious impact on all those men and women who strive to serve the Indian State. As a matter of fact, it was 30 years ago that we injected into our polity and our bureaucratic system a virus named “Bofors”. Though we felt virtuous and vindicated about the whole affair, the bottom line is that our defence purchase processes have remained dangerously skewed. We may have settled a few scores against this or that political leader or party, but we have ended up inflicting debilitating damage on our defence forces. No one wants to take a decision; procrastination has become the first line of defence.

Khare is out to wipe the slate clean. But his defence, instead of explaining the contradictions we see in the Screening Committee's decisions, degenerates into rhetoric. Gupta's track record at the Screening Committee shows that, instead of challenging the captive coal block scam, he seems to have played along in a process which damaged the country. This shows in the charges against him. Take the Vikash Metals and Power case. He has been charged for "criminal breach of trust by public servants", and "criminal misconduct by public servants" of the Prevention of Corruption Act.

Also, for this reason, Katoch's harping about the lack of a quid pro quo is besides the point.

The larger question here is about fixing accountability for a scam that went unchallenged for far, far too long. Gupta's limited tragedy is that he – along with Minister of State Rao – is caught in a scam that went a whole lot higher up into the political and corporate establishment.

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