Under a cloud

The Chairman and Managing Director of Coal India Limited is suspended for allegedly abusing his official position, but does not the rot run deeper?

ON June 4, Union Minister for Coal and Mines Karia Munda suspended N.K. Sharma, Chairman and Managing Director (CMD) of Coal India Limited (CIL), a major public sector undertaking. Sharma was alleged to have abused his official position for personal gains by violating norms and guidelines in the purchase of coal-handling and other equipment. He was alleged to have favoured a foreign company in a deal for purchasing nine shovels, without considering the bid submitted by the Ranchi-based PSU, Heavy Engineering Corporation (HEC). A departmental inquiry revealed that HEC's was the lowest bid. Sharma is also accused of receiving payments in return for manipulating prices in the sale of coal to private parties.

Karia Munda, who apprised Prime Minister Atal Behari Vajpayee about the state of affairs in CIL before issuing the suspension order, has created a stir in the industry. Although his action has earned him some appreciation, questions are bound to be raised regarding the involvement of others in the matter, both in CIL and in the Ministry. It has been pointed out that CIL's Director (Technical) is the one who is empowered to clear the selection of technologies. The Chairman has the authority to sanction only projects involving relatively small amounts of money, while the approval of a Cabinet-level sub-committee on investment is needed for major projects. Hence the complicity of senior officials in the Ministry and in CIL cannot be ruled out.

The question whether the Bharatiya Janata Party-led National Democratic Alliance government can take credit for "exposing" a scam is pertinent as there is a view that the goings-on in CIL would have been exposed sooner or later.

The politics in CIL is also seen to have played a role in Sharma's suspension. According to informed sources, B. Akla, the CMD of Central Coalfields Limited, a subsidiary of CIL, was tipped for the CIL chief's post after the Coal Ministry recommended his appointment in November 2000. But a Central Bureau of Investigation (CBI) raid on his house stopped his promotion. In February 2001, Sharma took over as Chairman. Akla was transferred to the Coal Mine Planning and Designing Institute. Although normally selections to posts such as that of CMD of CIL are made by the Public Enterprises Selection Board, the Union Cabinet too is known to recommend names.

With a workforce of about 5.5 lakhs, CIL operates nearly 400 mines across the country. A steadily shrinking workforce - over the last five years, it has been reduced by over one lakh - has resulted in a shortage of workers in some CIL-run companies. CIL has eight subsidiaries - Eastern Coalfields Limited, Bharat Coking Coal Limited, Central Coalfields Limited, Northern Coalfields Limited, South-Eastern Coalfields Limited, Mahanadi Coalfields, Western Coalfields Limited and North-Eastern Coalfields Limited. The annual production is above 300 million tonnes and the annual profits from the sale of coal alone amounts to Rs.1,700 crores. However, there is a gap between the demand and supply of coal, which, according to government projections, will widen. The gaps are filled mainly through imports and demand management. The total projected investment during the Tenth Plan period by CIL is around Rs.14,310 crores. During the Plan period, about 98 projects will be taken up by CIL, involving an investment of Rs.6,343.92 crores.

PILFERAGE of coal and illegal mining are major problems. Coal worth an estimated Rs.1,000 crores is stolen every year. M.K. Pandhe, general secretary of the Centre of Indian Trade Unions (CITU) and president of the All India Coal Workers' Federation (AICWF), said that the practice of storing coal in the open and the lack of adequate security at the pithead points (where coal is loaded onto rail wagons) facilitated pilferage in large quantities. Pandhe said: "We have been repeatedly raising the issue of theft and Sharma as Chairman never attended any meeting on this issue."

The unions had also raised the issue of illegal mining, but received no positive response from the CMD. Illegal mining is made possible when a mine is abandoned without extracting the entire quantity of coal. Coal is extracted from such mines by the coal mafia, who exploit workers by hiring them on low wages. As a result, the State government concerned loses royalty, and CIL loses on production.

Pandhe said that CIL was not a sick company, but it would become one if such practices were not curbed. He pointed out that despite the existence of a Vigilance Department in CIL, most of the cases of malpractice had been unearthed by the CBI. "The question is who in the Ministry has been shielding Sharma. The suspension of Sharma will make sense only if that angle is also investigated," Pandhe said.

There is a history of malpractices in CIL, but seldom have senior officers been pulled up. It is learnt that a few years ago, a senior officer was found to have misused the official telephone to make calls to Hong Kong, for which the bill came to Rs.1 lakh. The complaint reached the Central Vigilance Commission, which took action. It was decided that the official would repay the amount at the rate of Rs.2,000 a month. Sharma reportedly recommended the promotion of this official. The official who had brought out the practice was transferred from Kolkata to Patna.

Matters have not been helped by the frequent change of Ministers holding the portfolio. During the NDA's tenure, at least four Ministers have headed the Coal Ministry - Ram Vilas Paswan, L.K. Advani, Uma Bharati and Karia Munda.

Another aspect that has received little attention is the repeated attempts by the government to downsize and privatise the industry. CIL happens to be the only PSU in which a voluntary retirement scheme exclusively for women is in place. If a woman resigns her job, in her place a dependant male will be appointed. But if a man dies or gets injured and if his dependant is a woman, she is not entitled to a job in his place; instead she receives monetary compensation. The CITU has opposed this policy. It has pointed out that women in other countries not only work in mines but do a very efficient job of it.

One lakh women were employed in the industry at the time of its nationalisation in 1973; now the number is 20,000. The industry has continued to employ women but as low-wage contract labourers. The move, overall, has been towards contractualisation of labour.

Right now, there is a shortfall in coal production and there are moves to privatise the mines. In August 2002, after the trade unions jointly opposed the privatisation of CIL and its subsidiaries, the plan was put on hold.

The suspension of N.K. Sharma is bound to cast a shadow on the reputation of PSUs in general. Unless Karia Munda shows that he is determined to get to the bottom of the issue, the entire exercise of bringing about transparency in one of the leading PSUs will remain incomplete.