Birla FIR: Industry says biz leaders can't be made scapegoats

Rankled by CBI action against top industrialist K M Birla in relation to coal scam, corporate leaders today said businessmen cannot be made scapegoats on the basis of mere suspicion and such incidents would further widen the government-industry trust deficit.

"Such developments dent the national psyche and dampen investor confidence, both domestic and foreign. With repeated episodes of a trust deficit between industry and government, the business sentiment and the investment environment would be vitiated," leading industry chamber Ficci's President and senior banker Naina Lal Kidwai said.

"Capable and highly regarded business leaders cannot be made scapegoats of mere suspicion and misconstrued actions," she added.

Another senior industry leader Adi Godrej said the Birla issue has further created a negative perception in the country, which was already vitiated by cases like Vodafone, and the country risks edging towards a scenario where it would lose investors' confidence with such incidents.

Kanoria Chemicals CMD R V Kanoria also said that the government needs to recognise the role played by businesses in the economy.

"If we can just implement the policy framework and create a positive environment our country has an immense potential," he added.

The action against USD 40-billion Aditya Birla group Chairman Kumar Mangalam Birla has also come for criticism by some union ministers, including Corporate Affairs Minister Sachin Pilot and Trade and Industry Minister Anand Sharma.

Other industry leaders who have criticised the action include Deepak Parekh and Ajay Piramal, as also industry chambers like Assocham and PHD Chamber of Commerce.

The CBI earlier this week filed a case against Birla as a representative of Aditya Birla Group and his group company, aluminium maker Hindalco, for alleged corruption in the allocation of Talabira two coal blocks in Odisha which was allotted to it on November 10, 2005.

The agency also named former Coal Secretary P C Parakh in the FIR on charges of criminal conspiracy and corruption in connection with alleged irregularities in allocation of coal blocks eight years back.

Earlier today, the Income Tax department seized Rs 25 crore that was recovered by the CBI yesterday during searches at the office of Hindalco Industries, which has been booked by the agency for alleged corruption in coal block allocations.

Reacting to the development, Hindalco later said in a statement it has ordered an internal probe into this cash discovery.

"The company is taken aback by the discovery of cash at one of its offices by the investigating agency. It has taken a very serious view of the matter and has instituted an internal team of senior managers to make a thorough investigation and report its findings at the earliest.

"In the meantime, the company has reiterated to the government agencies of their continued cooperation," it added.

A number of industry leaders have been voicing their concern on the entire issue ever since an FIR was filed against Birla earlier this week. Similar concerns were last raised by the industry leaders en masse a few years ago on the Vodafone tax dispute, as also over the so-called 'policy paralysis' allegations.

Godrej group Chairman Adi Godrej said: "I think, Vodafone case was the beginning of the negative perception among the investor community in the country, especially internationally.

"I think, when the Supreme Court gave its verdict, the government should have never intervened into that. I think it has created a terrible perception about India. I think, this case, the K M Birla case, is further creating these sorts of negative perceptions."

"We need to get more investments in the country. I think this move is definitely avoidable," Godrej added.

PHD Chamber of Commerce and Industry President Suman Jyoti Khaitan said that Birla is a very reputed industrialist and the industry stands by him. "This is not a very good thing for the confidence of the industry," he said.

Videocon Telecommunications CEO Arvind Bali said suc a move is demoralising for Indian companies.

Assocham Secretary General D S Rawat said the development would certainly raise a question in the minds of the industry people.

"Highly regarded and well equipped bureaucrats end up taking not the right decisions because those decisions come back to haunt them 8-10 years later, bureaucrats and ministers don't want to meet industry because just the mere meeting is read as-well, you lobbied to change something," Naina Lal Kidwai said.