The Directorate of Vigilance and Anti-Corruption has booked five senior officials of Tamil Nadu Generation and Distribution Corporation (Tangedco), including N. Palaniappan, the then Chief Engineer, Mechanical/Coal, and V. Chellappan, the then Director, Coal, in an alleged ₹908-crore scam involving two private companies in coal consignment handling at the Visakhapatnam dockyard.
The alleged offence took place between the fiscal years 2011-12 and 2018-19 when the officials named as accused in the case served in their respective capacities. The DVAC said Tangedco procured 204 lakh metric tonnes of coal from the subsidiary companies of Coal India Limited and transported it through the rail-sea-rail route from IB Valley (Chhattisgarh), Taichar (Odisha) and Raniganj (West Bengal) to the load ports (Visakhapatnam, Paradip, and Haldia) and then to discharge ports (Chennai and Tuticorin for further transport to its power stations in Chennai, Mettur and Tuticorin.
For transporting thermal coal from various collieries to load ports and handling of the consignments at load ports and discharge ports, the Tangedco Board, at its 833rd meeting held on August 8, 2020, approved the floating of an open tender. The tender for handling coal at the Visakhapatnam port was awarded to M/s South India Corporation (SIC) Ltd. for 5 months, with an option to extend the duration for a month or two.
According to the conditions of the contract, the unloading charges of ₹131.40 a metric tonne at the Visakhapatnam port was split into two components — ₹24.05 a metric tonne in fixed payment to the contractor for service and ₹107.35 a metric tonne in the statutory labour charges for the Vizag Dock Labour Board (VDLB). It was agreed that the labour charges would be paid by SIC Ltd., to VDLB, and they would be reimbursed by Tangedco on submission of documents for handling coal at the port.
Levy by port
In the process, the Visakhapatnam port levied a tax on the number of permanent labourers of VDLB used by the contractor. The levy was not charged if temporary labourers were used. Tangedco made it clear in the purchase order that the statutory labour charges would be reimbursed on submission of the document defining the quantity of coal handled by the number of labourers used and the levy paid to the port.
The inquiry revealed that the SIC Ltd., had mostly used temporary contract workers of the port, who were paid much below the ceiling rates, compared with the permanent VDLB labour charges, resulting in lower wages and levy. Between 2011 and 2016, SIC Ltd. paid ₹232,44,73,148, which included wages and levy. But without submitting any documentary proof to Tangedco, the company claimed ₹1267.49 crore (wages of ₹282.80 crore and a levy of ₹984.69 crore) just by using the ceiling rates.
Audit query
The huge variation in the payment made and the reimbursement claimed was pointed out by the then Chairman, Tangedco, in his letter to the Director of Tariff of Major Ports. The undue favour to the contractor by the officials was also questioned by the Audit Branch of Tangedco and the Comptroller and Audit-General of India. It was found that the officials accused in the case had knowingly omitted the condition that the reimbursement of the statutory labour charges should be done by the contractor, SIC Ltd., by submitting documentary proof.
To continue the coal handling at the port, the company colluded with M/s. Western Agencies and filed a case against Tangedco’s new tender and “managed to get interim injunctions and prolonged the trial by repeated adjournments,” the DVAC said in its First Information Report, adding that SIC Ltd. caused a wrongful loss of ₹908,79,57,820 to Tangedco.
Besides Mr. Palaniappan and Mr. Chellappan, the investigating agency named M. Manoharan, former Deputy Financial Controller; D.K. Narasimhan, former Executive Engineer, Electrical; Srinivasa Shankar, former Assistant Executive Engineer, Electrical, Tangedco; M/s South India Corporation, Chennai; its former director S.P. Palaniappan; M/s Western Agencies (Madras), Chennai; its Managing Director K.C. Rajan; and others.
The case arises out of a complaint filed by Jayaram Venkatesan, convener, Arappor Iyakkam, an NGO fighting corruption in governance. The State government had accorded permission to register a detailed inquiry against P. Thangamani, the former Minister for Electricity, Prohibition and Excise, and others and into the allegations flagged by the complainant. Based on the findings of the probe, the corruption case was registered against the officials, private firms and others.
