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Cairn-Vedanta deal comes under a cloud

The successfully concluded $8.48-billion Cairn-Vedanta deal has come “under cloud” following instances of serious human rights violations, default of payment, environmental damage in its mining and metal projects in India, as pointed by the Internal Security section of the Home Ministry against Vedanta and its group of companies.

Following the serious issues raised by the Home Ministry, officials in the Petroleum and Natural Gas Ministry said the deal is likely to be put up before the Cabinet Committee on Economic Affairs (CCEA) for a review in light of these facts brought out in the official note.

In a communication to the Petroleum and Natural Gas Ministry through an office memorandum on November 25, 2011, the Home Ministry conveys its security no-objection certificate (NOC) to the Cairn-Vedanta deal. However, the note states: “Independent of the above security clearances, this company/group has come to notice of involvement in some cases of default of payment, human rights violations, environmental damage in its mining and metal projects in India and abroad. Following summary of adverse comments/facts with respect to the Vedanta (which as assessed does not have a direct bearing on the security NOC) are also brought to the notice of Ministry of Petroleum and Natural Gas.”

Referring to instances of such wrongdoings, the Home Ministry note points out that Directorate of Revenue Intelligence (DRI) had booked a case against Hindustan Zinc Ltd (100 per cent EOU) Chittorgarh (indirect subsidiary of Vedanta Resources Plc). The said EOU defrauded the government exchequer to the tune of Rs.2 crore by exporting the goods manufactured in 100 per cent EOU under DEPB/drawback scheme and suppressed this very fact at the time of filling the shipping bills by mentioning the name of DTA unit as exporter. Investigations in the case are still in progress.

In another instance, it said in February 2010, the Church of England decided to disinvest from the company on ethical grounds alleging human rights violations. There are also a number of court cases filed against the group and its companies in Indian courts. Apart from this, the note states that in 2007, Norway's Government Pension Fund – globally known as “Oil Fund” — had divested/sold Vedanta Resources from its $350 billion Sovereign Wealth Fund for ethical reasons, blaming it for environmental damage and human rights violations in India.

In March 2009, the note states, thousands of tribals protested against Vedanta Resources Alumina refinery being set up in the Lanjigarh area of Orissa and vowed to stop the $874 million project on account of environmental concerns.

Further more, it states Vedanta has been criticised by human rights and activist groups, including Survival International and Amnesty International, due to their operations in Niyamgiri Hills in Orissa which reportedly threaten the lives of the Dongria Kondhs populating the region. In January 2009, thousands of locals formed a human chain around the hill in protest against plans to start bauxite mining in the area.

It also points out that Sesa Goa Ltd. (link of Vedanta Resources Plc with other firms) had come to the adverse notice of DRI. A show cause notice was issued by DRI, Zonal unit, Bangalore demanding customs duty worth Rs. 95,48,171 being evaded by the said firm in their exports of “iron ore” through Mangalore Port.

All efforts to get a response from the Vedanta group to the alleged charges did not evoke any response.