KOLKATA (miningweekly.com) - Indian investigative agencies have unearthed a $4.68-billion scam involving coal importing entities which over-valued inward shipments and illegally parked funds overseas.
The Department of Revenue Intelligence (DRI), the an investigating agency of the government mandated to probe illegal fund flows overseas, conducted raids across 80 entities including coal importing companies, shipping agents, trade intermediaries and coal sampling laboratories across provinces.
The investigations revealed that these entities have been over-valuing coal import contracts and parking the difference between the real value and excess into accounts overseas and between 2011 and 2014, these importers illegally syphoned off an estimated $4.68-billion, the DRI reported.
The bulk of the over-valuation had been done for imports of coal from Indonesia, which the DRI to be about 120-million tonnes between 2012 and 2014. In most cases the declared value was twice that shown in the country of origin, sources with knowledge of the investigations said.
Even some government-owned and -managed companies in the power sector, which had imported coal, had come on the DRI radar and the quantum of coal imported that had been over-valued by such government companies had been estimated at 55-million tonnes during 2012 to 2014, the sources said.
Coal sampling laboratories had also been found to have falsely certified the calorific value of the imported coal and the higher gross calorific value was used to declare a higher payment for imports.
As a consequence, the costs of falsely declared value for the imported coal were often passed on to electricity consumers by thermal power companies after factoring in the higher cost of coal into their electricity tariffs, the sources added.
The investigations revealed that coal imports were shipped directly from ports in Indonesia to India, but invoices were raised through various intermediaries in places such as Singapore, Hong Kong and Dubai. The inflated payment would be remitted to these intermediaries who, in turn, would transfer the amount to the original coal suppliers to be subsequently parked in illegal overseas accounts of importers, the sources said.
It has also been revealed that despite thermal coal imports from Indonesia attracted a nil rate of import duty in India under a bilateral free trade agreement, most importers did not avail the facility since this would require a certificate on the grade and price of coal from the original supplier of the coal.