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Did mining firm Vedanta make 'illegal' political donations?

By Vicky Nanjappa
Last updated on: August 28, 2012 17:46 IST
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Vedanta Resources, which was pulled up for its role in the mining scam in India, is under the scanner yet again. This time for making a contribution of Rs 28 crore made to political parties in the last five years. Vicky Nanjappa reports   

The recent disclosure by mining group Vedanta Resources that it paid Rs 28 crore to political parties in India over the past five years has once again put under the scanner corporate donations of such nature.

According to the annual report of Vedanta Resources, it paid $ 2.01 million to parties in 2011-12 and $3.66 million in 2009-10 amounting to about Rs 28 crore at the then prevailing exchange rates.  

Vedanta Resources was listed on the London Stock Exchange in 2003-04 and since then started making donations to political parties in India. The company believes that such contributions are made to strengthen the democratic process in India

Here's the hitch. Since the company is not listed in India it is not allowed to make political donations of any sort.  Political donations from Indian companies are permitted under the Companies Act of 1956. But multinationals cannot make these donations. Under Section 3(1)(e) of the Foreign Contributions (Regulation) Act, 1976, "no foreign contribution shall be accepted by any political party or office bearer thereof". 

Interestingly, the Vedanta group has made a declaration of the amount donated, but the name of the political parties has been kept a secret. It does not state clearly if the donation was made through one of its subsidiaries -- Sesa Goa, Sterlite Indusries, Cairn India or Hindustan Zinc.

Anil Bariwal, convenor of the National Election Watch, said that Vedanta is listed in the UK and that it does have Indian subsidiaries.

"The more important issue is that political parties cannot accept a funding from a foreign firm. The annual report does not say anything about parties that received the donations and the name of the donor. The annual report suggests that such political donations were made through a trust. We are trying to find out the name of the trust," said the NEW official.  

The Companies Act of 1956 makes it very clear that any company, which donates any money to a political party, should seek the approval of the board and its shareholders and also declare the same clearly. If this is not done they are liable to a fine and also a jail term.

"Why has Vendanta not declared the name of political parties it has made contributions to?  It is necessary to get into the crux of this matter since if political donations are coming in from foreign funds and these firms could control the country," said Bariwal.

Even when one goes through the list of corporate donors in India, the names of Vedanta and its subsidiaries does not figure. Political parties are rule bound to declare the names of the donors and in the list before the Election Commission of India, these are the names that crop up.

Political donations in 2007-08:

Congress: Rs 10 crore by Bharti Electoral Trust, Rs 2.5 crore by Torrent Power Ltd, Rs 1.5 crore by Crompton Greaves Ltd

BJP: Rs 5 crore by General Electoral Trust, Rs 2.5 crore by Videocon Industries, Rs 1 crore by Punj Lloyd

CPI-M: Rs 5 lakh by Gayatri Projects Ltd, Rs 5 lakh by Sew Constructions, Rs 5 lakh by Saimagdha Real

Political donations in 2008-09:

Congress: Rs 10 crore by Bharti Electoral Trust, Rs 2.5 crore by Torrent Power Ltd, Rs 1.5 crore by Crompton Greaves Ltd

BJP: Rs 3 crore by Bharti Electoral Trust, Rs 2.5 crore by M/s Torrent Power Ltd, Rs 2 crore by Bharti Electoral Trust

CPI-M: Rs 25 lakh by Sew Infrastructure Ltd, Rs 25 lakh by SEW,  Rs 3 lakh by GKC Projects

Political donations in 2009-2010:

Congress: Rs 13.95 crore by General Electoral Trust, Rs 5.64 crore by Electoral Trust, Rs 5.50 crore by Infrastructure Development & Consultant

BJP: Rs 16.60 crore by General Electoral Trust, Rs 10 crore by Asianet Holding, Rs 5.50 crore by Torrent Power Limited

CPI-M: Rs 10 lakh by Nuziveedu Seeds Ltd, Rs 6 lakh by Hetero Drugs, Rs 2 lakh by AMR Construction Ltd

Vedanta, a big player in mining scam 

The Vedanta group has been under the scanner in the illegal mining scam in Goa. Five mines operated by Vedanta subsidiaries -- VS Dempo and Company and Sesa Goa Ltd -- were been pulled up by the Goa government for illegalities in mining operations in 2011. 

In the 464-page report on illegal mining, Karnataka's former Lokayukta N Santosh Hegde, has mentioned that Sesa Goa was among the companies that exported iron ore from Krishnapatnam port after the state government had a ban on its transportation. This claim was however denied by Sesa Goa and it said no illegal transaction was done with regard to export of iron ore as the shipments had reached the Krishnapatnam port before the ban on its transportation took effect.

Further, the name of Sesa Goa had also cropped up in the Shah Commission of Inquiry, which probed the illegal mining scam in Goa. It had said in its report that Sesa Goa in its mines, TC No 6/55 had not obtained environment clearance as well yet extracted 745,562 tonnes in 2008-09, 665,976 tonnes 2009-10 and 512,378 tons 2010-2011 (up to January). The cost of this is estimated at Rs 769 crore. In its mine in TC No 28/51, the company extracted 26,732 tonnes above the environmental clearance quantity capping which amounts to over Rs 10 crore.

Further, there were also allegations that the firm had paid every political party in Goa to further its business, a claim that has been rejected outright by the company.

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