Indian tycoon accused in coal mining scandal

NEW DELHI (AFP) - Police have named one of India's leading industrialists as a suspect in a high-profile corruption inquiry into the alleged illegal allocation of coal blocks.

Kumar Mangalam Birla, chairman of conglomerate Aditya Birla Group, was accused of criminal conspiracy along with the government's former coal secretary P.C. Parekh, a federal police agency said.

India's national auditor last year alleged that the coal ministry had given away billions of dollars in windfall gains to 100 private and some state-run firms - sparking a police probe into whether kickbacks were paid in exchange.

The Central Bureau of Investigation (CBI) filed a first information report (FIR) on Tuesday claiming that Hindalco, a subsidiary of Aditya Birla Group, took coal allotments meant only for public sector companies, officials said.

An FIR is the first step in a police investigation towards possible formal charges.

The scandal has rocked Prime Minister Manmohan Singh's Congress-led government, with the CBI investigating how the coal ministry, which was headed by Mr Singh from 2004-2009, allocated mining licences.

The decision by police to file a case against Birla, 46, viewed in the corporate world as a conservative businessman who plays by the rules, made headlines in Indian dailies on Wednesday.

He joins a string of prominent figures named in the investigation including Naveen Jindal, chairman of Jindal Steel Power Ltd, a heavyweight Indian steel company. Police have lodged some 14 FIRs in the case.

In a statement, Hindalco called the police allegations "preposterous", while Birla told Economic Times newspaper separately that the company followed "all procedures in the coal mine allocation".

The latest development in what India's media has dubbed "Coalgate" came after the coal ministry said it had lost key files and was unable to turn them over to the corruption inquiry. Some of the files have since surfaced.

The opposition has repeatedly called for Mr Singh to resign over the scandal.

Mr Singh's coalition government, dominated by the left-leaning Congress party, has been beset by a string of corruption cases in recent years.

The allegations of mismanagement have piled pressure on him ahead of elections due to be held by next May.