India’s central investigating agency on Monday filed its first formal charges in a $30 billion coal mining scandal in which the government allotted the rights to develop coal blocks to private companies at negotiated prices rather than in an auction.
Kanchan Prasad, the Central Bureau of Investigation’s spokeswoman, said Monday that the former power unit of Nava Bharat Ventures, which is based in Hyderabad, and its two owners at the time, Y. Harish Chandra Prasad and P. Trivikrama Prasad, have been charged with criminal conspiracy and cheating in connection to the allocation of a coal block given to the company by the government in 2008.
The investigative agency accuses the former power unit, Navabharat Power, of misrepresenting its net worth to obtain a valuable contract for a coal field and to set up a coal power plant in the eastern state of Orissa. To be granted a contract to mine a coal block, companies were required to present a minimum net worth to demonstrate their capacity to do the job.
In its application for the coal block in 2008, Navabharat Power said it had a partnership with GDF Suez Energy International, a French company. Ms. Prasad said the Central Bureau of Investigation was investigating the legal basis of that arrangement.
For the next two years, Navabharat Power stalled on the Orissa project, and in 2011, Essar Power of Britain acquired the company and control of the Indian coal block. Ms. Prasad said the sale of the coal block resulted in a profit of 2 billion rupees, or $32 million, for Navabharat Power.
“Coal blocks are not private properties that you sell off to someone else,” said Ms. Prasad. “They didn’t have the authority to sell it.”
The investigative agency said the two former owners were still involved with Nava Bharat Ventures. Essar said in a statement in 2012 that it had no dealings with the owners of Navabharat Power before it entered into an agreement to buy the company.
Y. Harish Chandra Prasad wrote in a text message that he was surprised that he was being charged since he cooperated fully with the investigation.
“I am confident I will be exonerated of the charges,” he said.
Navabharat Power said Mr. P. Trivikrama Prasad was not available to answer questions.
Ms. Prasad of the Central Bureau of Investigation said that the agency was still investigating several other companies, including Hindalco and Jindal Steel and Power. She also said the agency was still investigating the complicity of some government officials but had yet to file charges against them.
So far, the Central Bureau of Investigation has filed 16 preliminary reports that it said would eventually lead to charges.
Accusations of the misallocation of coal blocks, which is now known as Coalgate in India, has long plagued the Congress Party-led United Progressive Alliance government. When the government came to power in 2004, it announced that it would open up some of the vast swaths of India’s coal fields mined by the state-owned Coal India to private bidders.
But instead of setting up an auction to award coal reserves, called blocks, to the highest bidder, the Coal Ministry awarded them to companies in a shadowy process.
In August 2012, an audit by a government agency found that India could have made an additional 1.86 trillion rupees, or $30 billion at current exchange rates, on the 142 coal concessions it had awarded to private companies since 2004.
The next month, India’s Supreme Court ruled that the government was not mandated by law to carry out an auction for natural resources.