India: POSCO's potential corruption must be investigated

Published by MAC on 2011-05-24
Source: Statement, Hindustan Times

Leading social activists call for suspension of massive project

Statement on Posco project and corruption

15 May 2011

To: The Prime Minister of India

Dear Prime Minister,

In the context of the recent national debates on corruption, we wish to draw your attention to another ongoing case in which both State and Central officials are blatantly favouring a private multinational company - Pohang Steel Corporation (POSCO) - in violation of law. There is enough information in the public domain for us to suspect criminal collusion between this company and government officials.

The proposed POSCO steel project in Orissa is incredibly lucrative - POSCO will make an estimated profit of Rs. 1,95,000 crores over the life of the project (Rs. 6,500 crore per year after all expenses) just on the basis of having captive iron ore mines. The fact that corporates are making super profits from our natural resources is today a national issue; the faith of the public in regulatory institutions is already deeply shaken. *We cannot see any difference between the recent handover of 2G spectrum and the seeming collusion in the POSCO case, where it seems that equally valuable resources - iron ore, land, water, a natural harbour - are being sought to be given to a private company "on the cheap" without complying with the law. * As such, the public has a right to know what has happened. It is vital that a transparent, public investigation is held into the actions of State and Central officials in this case. A few examples of such actions are as follows:

- A criminal complaint has been filed by villagers in the proposed steel plant area against the District Collector for repeatedly lying on record. For instance, he claimed on 01.03.2011 that the land had no forest prior to 1930 - when six months earlier an Enquiry Committee had found that the government's own maps show the villages as surrounded by forests in 1928. The Collector also claims there are no forest dwelling STs when the government's own public notice showed compensation payments to two STs in July 2010 when a small area of land was illegally taken for the project. The criminal complaint was only filed after repeated representations to all State and Central authorities failed to elicit any action. The Environment Ministry, whose own committee had proved that these statements were false, simply carried on accepting them without a murmur.

- The behaviour of the Environment Ministry itself is deeply suspect. It is notable that the first environmental clearance for this project was given in May 2007, when A. Raja was the Environment Minister. Since then, and especially after December 2009, the Ministry has adopted a "musical chairs" approach; every time a violation has been exposed, the Ministry has shifted the focus to some other issue, trying to appear "sensitive" while condoning the illegality. Committee after committee reached the same conclusion that the Forest Rights Act had been violated; their findings were simply buried and never referred to again. Every violation of environmental law that was raised was converted into a vague "condition" and left to the company to implement. Such actions show systematic bias and a deep contempt for the law.

- According to a report in the Telegraph newspaperp>on April 20th, POSCO-India claims to have spent Rs. 3,000 crores on the project so far - while employing less than 80 people, and without beginning any construction. What has this money been spent on?

- The majority report of the POSCO Enquiry Committee exposed that minutes of official meetings were being changed to favour the company and that there was pressure from the Finance Ministry during the environment clearance process. This finding too was ignored. After giving his final decision on this project the Environment Minister gave a speech on May 6th in which he declared that he is sometimes "forced to... condone environmental violations." Meanwhile, the requirement for the consent of the gram sabhas (village assemblies) for diversion of forest land - intended to make the process open and democratic, and the only opportunity for real public control - has been entirely ignored. To ignore democratic processes required by law, while engaging in backdoor manipulation, is a particularly noxious form of corruption.

As citizens of this country we have a right to know how and why our natural resources are being handed over to this company and why these decisions were taken. We therefore call upon the State and Central governments to:

- grant sanction for prosecution of the District Collector and ensure that the case is investigated by the CBI;
- initiate a public judicial inquiry into the actions of Central and State agencies and into expenditure by the POSCO company;
- prosecute those found guilty of criminal offences by the inquiry;
- Halt all steps to implement this project pending the completion of these processes.

Sincerely

Prashant Bhushan, Campaign for Judicial Accountability and Reform
Arvind Kejriwal, Parivartan India
Swami Agnivesh, President, World Council of Arya Samaj
Aruna Roy, Mazdoor Kisan Shakti Sanghatan and member, National Advisory Council
Vandana Shiva, Navdanya

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On very shaky grounds

Shankar Gopalakrishnan and Biju Mathew

Hindustan Times

24 May 2011

When the Union environment ministry cleared the Pohang Iron and Steel Company (Posco) project on May 2, the media saw this as a step forward. Recently, five prominent citizens - Prashant Bhushan, Aruna Roy, Swami Agnivesh, Vandana Shiva and Arvind Kejriwal - wrote to the prime minister seeking an inquiry into the project. They wrote: "There is enough evidence in the public domain for us to suspect criminal collusion between this company and government officials." Which version of the story is correct? Is the Posco project a step forward or a scam in the making?

The first area of concern is the project itself. Till date, all claims about the project's contribution to the "development of Orissa" are based on a 2007 National Council of Applied Economic Research (NCAER) study. However, in 2010, a US-based research group found that the study had been paid for by the firm and had ignored the vibrant local economy when calculating benefits. In fact, Posco's own figures showed that the project would produce at most 17,000 jobs, while destroying the livelihoods of more than 50,000 people. Further, the government's promise to provide captive iron ore mines to the company would result in the company receiving a 300% return and a profit of at least R1,95,000 crore after all expenses. This profit would result from the handover of natural resources at very low rates - as it has been done in the 2G spectrum scam.

Things got murkier when we examined how the government made decisions about the project. The courts have twice intervened to stop Orissa's attempts to allocate mines to Posco, finding that it had violated procedures. The environmental clearance process was described by the environment ministry's own enquiry panel as "farcical". The panel condemned the "cavalier and reckless attitude of the concerned authorities", who had ignored "potentially disastrous" impacts. The only dissenting member was Meena Gupta, the former secretary who had issued the clearance in the first place. The committee also found that Posco's own maps showed the project would violate the Coastal Regulation Zone and that the company had suppressed this fact. Yet the ministry cleared it with a handful of meaningless conditions. For instance, one condition says that Posco will build its port "without disturbing sand dunes". This would require the port to be suspended in mid air!

Further, three different committees found that the Forest Rights Act (FRA) had been violated in the area. Each time, the ministry buried the findings. Under the Act, among other things, the state has to produce resolutions from the local village assemblies agreeing to the takeover of forest land that belongs to them. To date, the government hasn't produced a majority resolution from a single village. Yet again, the ministry ignored this. Instead it tried to divert attention by questioning villagers' majority resolution against the project. What is more, the FRA remains completely unimplemented in the proposed mining region.

In sum, the government relied on a biased, paid for study to justify a project whose main beneficiary is the company, ignored the "potentially disastrous" environmental impacts that could threaten thousands, and it is trying to grab land and forests that belong to people. Its main concern has been to give the company cheap access to land, iron ore and other valuable resources. In the light of recent events, this sounds very familiar. If we don't want to face another potential 2G scam, a halt to the project and an inquiry are sorely needed.

(Shankar Gopalakrishnan is member, Campaign for Survival and Dignity, an NGO, and Biju Mathew is associate professor of business, Rider University, US)

The views expressed by the authors are personal