George Thomas

RECENTLY the Director (Commercial) of Steel Authority of India Ltd. (SAIL) was asked to go on leave pending an enquiry into alleged irregularities in spot purchase of coking coal.

The story, as can be gleaned from newspaper reports on the subject, is as follows: Apparently SAIL purchases every year, on an average, around eight million tonnes of high grade coking coal under a long-term contract with a clutch of Australian suppliers. (Coking coal is an essential ingredient in steel making.)

On the present occasion perhaps coincidentally, after the coking coal prices shot up in the global markets from about $58 per tonne to about $120, these Australian mining firms invoked the force majeure clause in the contract on the plea that their mines were flooded and the roofs had collapsed.

An Empowered Committee comprising Steel Ministry bureaucrats and SAIL and RINL (Rashtriya Ispat Nigam Ltd) officials was set up to oversee the spot purchases.

By that time, however, the spot price had gone through the roof, leaving in SAIL's budget a dent of a few million dollars.

It is said that the Empowered Committee failed to seek legal recourse to stop the invocation of force majeure clause or seek damages from the Australian firms for reneging on the contractual obligation. However, a three-member team sent to check on the conditions of the mines gave a clean chit to the mining firms.

After a hullabaloo about the spot purchase, it was learnt that legal notices were sent. Fortunately, all this happened when it was boom time for steel.

What perhaps aroused suspicion was the manner in which the Empowered Committee accepted the invocation of the force majeure clause by the Australian firms.

Even stranger was the fact that the force majeure clause was invoked by them soon after the prices started rising. Does this narration stand the test of scrutiny?

For a start, it is worth noting that the Empowered Committee was duly authorised by the Steel Ministry to go in for spot purchases and this had the approval of the SAIL board.

Why, then, did the Steel Minister, Mr Ram Vilas Paswan, single out just one member of the Empowered Committee, that is, the Director (Commercial), for investigation as this goes against the notion of collective responsibility of the members of any committee.

Perhaps, Mr Paswan is unaware that similar probes conducted in the past went nowhere. To top it all, on every coking coal purchase, the file movement seems to have been proper, the recordings in order and the approvals in place.

In all this, neither the Chief Vigilance Commissioner nor the CBI has a "view" on such transactions, acting as they often do, only when the government-in-power directs them to proceed in a matter, which suits the incumbent politically.

The truth is the earlier concept of corruption as a form of `bribe under-the-table' no longer exists. Often it can be divined onlybetween the lines of file `notings' carrying the signatures of principal players and in the fine-print of the recommendations of duly empowered committees charged with overseeing procurement.

Corruption is sophisticated and hi-tech, and manifests itself more often than not in the villas and mansions of such exotic locales as Monte Carlo, Naples, and Wales rather than as stuffed suitcases that is discovered by a raiding party of policemen.

One can expect then for matters to move on predictable lines that is true of the functioning of all committees — a sitting followed by a report and the matter being dropped. But no one is leaving anything to chance.

Perhaps to ensure that the probe gets diluted, the Steel Ministry appointed a former SAIL chairman as part of the inquiry committee.

But will a former SAIL chairman fault the very purchase system that he himself had followed during his tenure?

One need not wait for the submission of the report to know its findings.

Mr Paswan may have seen a few surprises in the just-concluded elections to the Bihar Assembly.

But his biggest surprise could well come in Udyog Bhavan housing the Steel Ministry.

Having said all this, the burden of the song is not just in accepting the force majeure clause or in the spot purchase of coking coal.

It is in the fact that public sector plants in the steel industry still do not have a foolproof mechanism in place, despite the fact that controversies have shrouded almost every coking coal purchase since the mid-1980s when a resourceful SAIL chairman introduced the system of purchase of high grade coking coal from Australia to blend with domestic coal to be fed into the blast furnaces.

Ironically enough, he could not escape his own actions coming under scrutiny with the CBI investigating coking coal purchases during his tenure along with the project for Durgapur Steel Plant modernisation.

One hopes that Mr Paswan is really interested in the larger issue of stemming the rot which has crept into the PSUs in the Ministry under his charge.

With steel prices booming and SAIL set to go in for another modernisation binge involving thousands of crores of rupees, the opportunity for the principal players towalk away with "apocryphal" percentage and leave SAIL saddled with avoidable higher capital burden is indeed very high.

(The author is a former Executive Director, Corporate Planning, of SAIL.)

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