Vedanta resumes iron-ore working but founder's problems continue

Indian investigators launch new inquiry into tycoon Anil Agarwal's takeover of 26 per cent stake in Hindustan Zinc in 2002

The controversial FTSE 100 mining company Vedanta resumed its iron ore operations in India's southern Karnataka state yesterday after an industrywide corruption scandal partly abated.

However, elsewhere in India, the company and its billionaire founder, Anil Agarwal, continue to be mired in difficulties.

Vedanta is better known for the controversy over its project in the Niyamgiri Hills, in the eastern Indian state of Odisha, where its plan to mine bauxite was blocked, at least for now, by local tribes who deem the hills sacred.

But also, its Sesa Sterlite subsidiary has been fighting corruption allegations in Karnataka, a region so rife in corruption that one report by a former supreme court judge into the mining industry there claimed: "Huge bribes were paid. Mafia-type operations were the routine practice of the day."

Senior politicians and industry executives were said to be exploiting the rush to mine, with bribery, illicit permits and forged exports said to be widespread.

More than 100 companies were also named in that report, of which Sesa Sterlite was one. A spokesman said Vedanta and Sesa Sterlite strenuously deny the allegations against their operations.

But in 2011 a blanket ban was imposed on all mining work in the region until corruption was cleaned up. India's supreme court in April relaxed the blanket ban, allowing work to resume on 63 mines but cancelling the licences of a further 49 due to the serious nature of their operators' infractions.

Yesterday, Sesa Sterlite said it had been granted permission to resume its work and had done so. But for Mr Agarwal, the company's troubles in India are far from over.

While there remains the possibility that its Niyamgiri Hills project could eventually get the go-ahead, India's Central Bureau of Investigation has just launched a major probe into his 2002 takeover of the state's 26 per cent holding in another company, Hindustan Zinc.

That deal, too, was run through Sesa Sterlite and the investigators are examining how it was that the privatisation took place without parliamentary approval.

The inquiries into Vedanta and Mr Agarwal are not without their critics. Many in India say it must open up more to investment in its mining industry in order to create much-needed wealth for the country. Attacking current investors would only drive new revenues away, they say.

Such threats to invest elsewhere are already widespread. Mr Agarwal told last month of his "regret" that he had invested $8bn (£4.8bn) in an aluminium operation in the state of Odisha only to find there was not enough raw material for it to process. He said he wished he had spent the money buying a US company instead.

The Hindustan Zinc investigation is the third into a major mining deal led by a billionaire investor in six months.

One of those, Kumar Birla, has said he would now seek investments overseas, saying earlier this year: "The country risk for India just now is pretty elevated and chances are that for deployment of capital, you would look to see if there is an asset overseas." He is being investigated over his role in the handing over of a coal mine in 2005.

In the meantime, investors argue the government clampdown is putting at risk efforts to get $160bn of stalled projects moving.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Client Services Assistant

£18000 - £20000 per annum: Recruitment Genius: A Client Services Assistant is ...

Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Ashdown Group: Training Coordinator - Financial Services

£32000 - £38000 per annum + benefits: Ashdown Group: A highly successful, inte...

Recruitment Genius: Business Development Executive - Affiliates & Partnerships

£20000 - £35000 per annum: Recruitment Genius: This multi-award winning foreig...

Day In a Page

No postcode? No vote

Floating voters

How living on a houseboat meant I didn't officially 'exist'
Louis Theroux's affable Englishman routine begins to wear thin

By Reason of Insanity

Louis Theroux's affable Englishman routine begins to wear thin
Power dressing is back – but no shoulderpads!

Power dressing is back

But banish all thoughts of Eighties shoulderpads
Spanish stone-age cave paintings 'under threat' after being re-opened to the public

Spanish stone-age cave paintings in Altamira 'under threat'

Caves were re-opened to the public
'I was the bookies’ favourite to be first to leave the Cabinet'

Vince Cable interview

'I was the bookies’ favourite to be first to leave the Cabinet'
Election 2015: How many of the Government's coalition agreement promises have been kept?

Promises, promises

But how many coalition agreement pledges have been kept?
The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

The death of a Gaza fisherman

He built his own reef, and was fatally shot there by an Israeli gunboat
Saudi Arabia's airstrikes in Yemen are fuelling the Gulf's fire

Saudi airstrikes are fuelling the Gulf's fire

Arab intervention in Yemen risks entrenching Sunni-Shia divide and handing a victory to Isis, says Patrick Cockburn
Zayn Malik's departure from One Direction shows the perils of fame in the age of social media

The only direction Zayn could go

We wince at the anguish of One Direction's fans, but Malik's departure shows the perils of fame in the age of social media
Young Magician of the Year 2015: Meet the schoolgirl from Newcastle who has her heart set on being the competition's first female winner

Spells like teen spirit

A 16-year-old from Newcastle has set her heart on being the first female to win Young Magician of the Year. Jonathan Owen meets her
Jonathan Anderson: If fashion is a cycle, this young man knows just how to ride it

If fashion is a cycle, this young man knows just how to ride it

British designer Jonathan Anderson is putting his stamp on venerable house Loewe
Number plates scheme could provide a licence to offend in the land of the free

Licence to offend in the land of the free

Cash-strapped states have hit on a way of making money out of drivers that may be in collision with the First Amendment, says Rupert Cornwell
From farm to fork: Meet the Cornish fishermen, vegetable-growers and butchers causing a stir in London's top restaurants

From farm to fork in Cornwall

One man is bringing together Cornwall's most accomplished growers, fishermen and butchers with London's best chefs to put the finest, freshest produce on the plates of some of the country’s best restaurants
Robert Parker interview: The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes

Robert Parker interview

The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes
Don't believe the stereotype - or should you?

Don't believe the stereotype - or should you?

We exaggerate regional traits and turn them into jokes - and those on the receiving end are in on it too, says DJ Taylor