(Adds details from CBI statement, BJP reaction)
By Krishna N Das
NEW DELHI, June 11 India's federal police said
it filed a case on Tuesday against Jindal Steel and Power Ltd
over coal mining rights, a new setback for the ruling
party amid a series of corruption scandals.
Shares in Jindal Steel, which is controlled by Naveen
Jindal, a member of parliament for the ruling Congress party,
dropped 15.4 percent.
The Central Bureau of Investigation raided Jindal's house on
Tuesday, media reports said. CBI spokesman R.K. Gaur and a
spokesman for Jindal Steel declined to comment on any raid,
Accusations of crony capitalism in allocating India's
resources from coal to mobile telephone bandwidth have dogged
the government of Prime Minister Manmohan Singh, which is now
nearing the end of its second term in office. A general election
is due within a year.
The CBI, India's answer to the American FBI, is
investigating whether there were irregularities in the awarding
of rights, potentially worth billions of dollars, to private
"This is an ongoing CBI investigation into coal block
allocation," said Manu Kapoor, head of external affairs at
Jindal Steel. "At this stage of the investigation, JSPL is
committed to fully cooperate with CBI."
The CBI started investigating suspected collusion between
state officials and private companies in underpriced sales of
coalfields, which the state auditor said in August last year
might have cost the exchequer as much as $33 billion in lost
"Coalgate," as the scandal is known, has overshadowed the
government's legislative agenda, with the BJP calling for Singh
to resign and holding up economic reform measures in the last
session of parliament.
Jindal Steel shares closed down 15 percent at 226.50 rupees
($3.91) after having touched 202.75 rupees, their lowest in
about four years.
"It is unfortunate news on JSPL. This kind of erosion of
wealth will not go well with foreign institutional investors,
who hold about 22 percent in the stock," said G. Chokkalingam,
executive director of financial services company Centrum Wealth
The CBI said it had also registered a case against a former
federal minister of coal in relation to "alleged irregularities
in allocation of Amarkonda Murgadangal coal block" in the
eastern Jharkhand state.
Searches were being conducted at 19 locations in Delhi and
Hyderabad, the CBI said, adding it was investigating whether two
Delhi-based steel and iron companies misrepresented facts to get
The main opposition Bharatiya Janata Party (BJP) said the
case was evidence the government had looted India.
"The BJP welcomes the CBI raids carried on against the
former Congress minister for coal and Congress MP Naveen Jindal,
but this is too little, too late," BJP spokesman Prakash
Javadekar said at a press conference.
In May, federal law minister Ashwani Kumar quit after the
Supreme Court said the government substantially changed a report
by the CBI on accusations of irregularities in the award of
($1 = 57.9100 Indian rupees)
(Additional reporting by Abhishek Vishnoi in Mumbai; Editing by
Frank Jack Daniel and Jane Baird)