Take, for example, the charge that 68 lease-holders actually surrendered their leases to others
to mine in violation of section 37 of the MCR Rules. The Supreme Court has issued a writ of mandamus, a direction that the government will have to act on this violation. What is the punishment? Cancellation of the lease. When we presented this argument before the SC, we could only provide evidence that people outside the government can provide: something less than perfect. But the Third Report now provides hard evidence that mining companies, particularly major players like Sesa Goa and Fomento, were all over the place, exploiting
mining leases that did not belong to them. In the process, they made huge monies and the public huge losses.
What other findings are significant? Another matter highlighted by Justice Shah was Sesa Goa mining on a total lease area in excess of 10 sq km in the state which is a violation of section 6 of the MMDR Act itself. The purpose of this provision is to prevent concentration of leases and profits in the hands of a few players. But this rule also was allowed to be violated with impunity. We presented detailed evidence on this in the SC, but there were so many illegalities before the apex court it simply could not take up every one of them. The Third Report
has upheld our contentions, which is compelling reason why Sesa Goa at least should be banned forever from mining in India.
This company is bad for the mining business, whether in Goa or Zambia or India. But the same thing could be said about Fomento and some Timblo outfits. Were there issues that were not addressed by the Shah Commission?
The Third Report does not exhaust
all mining scandals. For example, it
does not discuss the role of the Goa
Mineral Ore Exporters Association
(GMOEA). GMOEA was registered
only in 2013 after the Central Empowered
Committee asked them how
they were functioning without registration.
However, despite being unregistered,
GMOEA were appointed
by the Goa government to okay and
approve contracts between exporters
and overseas purchasers, for which
they charged a fee and thus illegally
collected several crores. The association
and its office bearers are all implicated
in the illegal exports. I wonder
when the investigation agencies
will reach GMOEA’s office.
The investigations do not cover the
entire mining industry or all the mining
years. Justice Shah says he did not
have the time necessary for this. So
please assume the situation is even
dirtier than he reports it.
Almost 200 pages of this 345-page
report are devoted to detail the
brazen extent of under-invoicing by
almost all the mining companies.
In some instances, the ore exported
was undervalued by 89 per cent
(Sesa), 76 per cent (Salgaocar Mining)
and 69 per cent (VM Salgaocar).
How did they manage this and
to what extent have they gained?
This part of the Third Report is a
complete surprise: the huge volume
of data on under-invoicing. Shah Report
III is in 3 volumes. Vol II and
nearly half of Vol III is simply evidence
upon evidence of under-invoicing
of mineral ore exports. The information
is taken from Customs
records.
There are a number of benefits to
under-invoicing. For instance, the export
duty of 30 per cent is ad valorem—
a lower value reduces this. If
it was being sold to an overseas entity
controlled by the same miners, then
profit is moving to offshore havens,
leading to under-recovery of income
tax. (A significant number of offshore
accounts were set up by Goan miners
after 2006.) Finally, the overseas entities
accumulate this profit, and it
can be reinvested abroad, or it can be
returned to India as FD!
You also tracked the offshore trail.
How did that work?
Exporters undervalued the value of
their exports. They sold to their own
companies in Singapore and elsewhere
and then resold to China at the
international price. All the leading
names and families in mining in Goa
(and Sesa as well) were involved in
under-invoicing. How do they live
down this shame? And look at where
the rot has spread. Even the Customs
officers were on the take, as per the
Third Report. How did the Customs
officers allow exporters to export the
same quality ore at different rates or
at rates far below international rates?
I asked a few people whether any of
the leases of these mining companies—
now nailed so effectively by the
Third Report—should be renewed in
the light of these charges of widespread
cheating. The opinion was a
unanimous No. Only the CM seems to
think otherwise.
It took almost a year for the third
report to be tabled in Parliament—
it was submitted to the government
in October last year. How seriously
do you think it will be taken by the
Modi government?
The Cabinet has accepted the report
and some action by central agencies
is already underway. When the Parrikar
government came to power I
had great faith that he would put
right the mining mess, since he was
so effective as the leader of opposition
and PAC chair. But two years
down the line, he has done nothing
credible. I am hoping the central government
agencies and the SIT on
money laundering will do the necessary
work.
For example, as a result of investigations
by the DRI and Commissioner
of Customs, Fomento has deposited
Rs 30 crore, Salgaocar group has deposited
Rs 50 crore and Magnum
Minerals Rs 11.5 crore with the central
government. But the Goa government
has got zilch. It has made no
such demands against any of the
companies. In fact, in the Action
Taken Report on the Third Report,
the Goa government has said that it
will take action but only after giving
notice and hearing the companies.
This is like calling a murderer to your
chamber and asking him politely
whether he has committed a murder!
Two years have passed. Has anyone
actually been given any notice, despite
the overwhelming evidence?
The Prime Minister has already expressed
his view that ore should not
be exported but should be kept for
the people of this country and their
needs. This is the right attitude to
take with regard to resources that belong
to the people of this country and
are extremely scarce.
Justice Shah recommends CBI enquiries
into various aspects of illegalities:
Vedanta’s acquisition of
Dempo mining interests; the Rajesh
Timblo takeover of the Naique
mine; the role of the Customs in under-
invoicing, among others.
Should the state government not
play a proactive role in ensuring
accountability in these and other
cases? The companies whose names
crop up again and again for illegalities
in this report are run by some
of Goa’s most prominent families.
Yet so far we’ve only seen the government
acting against a few flyby-
night operators.
The Goa government has taken this
so leisurely over the past two years
that nothing can be expected on this
front. Let the CBI come. At least some
politicians will go to jail. If left to Parrikar,
only small fry will go to jail. How
can Parrikar arrest anyone from
Vedanta when they gave the BJP Rs
22.50 crore in one single year?
We noted, for example, that all
blame for illegal mining was being
placed on the traders; they were accused
of creating the mining mess.
But could the traders have operated
without the miners doing illegal extraction?
The Shah Commission does
not mention the traders at all in all
its reports. Traders are like flies on
garbage heaps. If there is a garbage
heap, they come. Otherwise they disappear.
But who created the garbage
heap? In that sense, the Third Report
is significant because it focuses on
the illegal activities of the mining
companies, less on the failure of the
statutory authorities, which occupied
central stage in Reports I and II.
The first Shah Commission report
spoke of losses close to Rs 35,000
crore from illegal mining in Goa. In
this report we get a figure of Rs
5,503 crore from unpaid royalties
and illegal export of ore. Is there a
discrepancy or are we missing the
point?
These figures are provided in order
to show the gravity of the losses and
the scale of the illegalities. They are
staggering. The estimates are for different
illegalities, but they sometimes
overlap. The initial Rs. 35,000 crore
(from Shah Report I) was on account
of mining outside lease boundaries.
In report III, the figures you mention
(Rs.5,503 cr) are on account of excess
mining and under-invoicing.
Goa Foundation has also arrived at
a figure of approximately Rs.35,780
crore, on account of mining extraction
and export without valid mining licenses
from November 2007 through
March 2013.
The Chief Minister has talked of
mining resuming after this monsoon.
But the mining policy is still
to come out. What is your view?
My personal view is that if the government
really wants, it can start
mining tomorrow provided the mining
is done by mining companies or
even village cooperatives under contract
to the government. Let them
mine, but hand over the ore to the
government which can auction it and
get the best price which will go into
the Goenchi Mati Permanent Fund.
We have also proposed to the government
to evacuate the dumps, use
trucks to refill abandoned and closed
mines and finance this from reject
dumps, of which the government
claims it has now 150 million tonnes.
For none of this is a new policy required.
The Hindu reported earlier this
week that a study by the National
Institute of Public Finance and Policy
puts the country’s parallel economy
at 75 per cent of the GDP, with real
estate, mining and private education
as the primary sources of black
money. Should that surprise us?
Black money is what is ruining our
democracy and our politicians. In all
three spheres—real estate, mining
and private education—where degrees
are sold for a fat fee—there is
intentionally little or no enforcement
of needed norms. In several states,
uneducated politicians run engineering
and medical colleges. Education
should be free, but donations are compulsory,
without receipts. Real estate
still operates at 50 per cent white and
50 per cent black. As Shah Report III
has shown, in mining, black went
sometimes to 80 per cent! We are
moving to an economy in which black
money will control the white, if that
has not already happened.
