Bribery & Influence Peddling

Payments or other favors given to sway or reward a decision that may be illegal or unethical

Coal mining executives charged with fraud for roles in Serbian scams

After more than a decades of shady financing deals, Serbian investigators in early 2011 opened a case against state-run Electric Power of Serbia related to its operation of Kolubara coal mine in west-central Serbia. An internal audit of the company’s books revealed serious irregularities by management that resulted in unnecessary expenditures benefitting private contractors. The investigation led to the arrest in late 2011 of 17 people, including Dragan Tomic, who had been director of the Kolubara mine, deputy director at EPS and also a member of the Kolubara legislative assembly.

The suspects, which included officials from the mining company and the private businesses that resold lignite from the mine or leased machinery to Kolubara, were accused of running up fraudulent costs equivalent to around $11 million (US). According to reports, Tomic allegedly paid the companies for unnecessary mining equipment and services, and the companies overcharged for the number of hours they worked. Some of the private businesses that were accused belonged to high-level management in Kolubara. In all, 28 people were finally charged in connection with the case.

In a related case, several other executives of Kolubara Mining and EPS were also arrested for their part in fraudulently profiting from resettlement funds. An EPS board member was paid €1.2 million by the company as compensation for his house in the village of Vreoci. He claimed his house needed to be moved to make way for a new strip mine even though it was in fact located far from the mining zone and wasn’t actually his residence.


– Bankwatch here and here

Sham procurement leads to fraud charges, leaves Slovenians on the hook for millions

Fraud and conspiracy convictions, charges for companies and officials in India’s ‘coal scam’

From 1993 to 2011, the government of India gave away the nation’s coal deposits for free to government and private companies, providing a massive windfall for mining firms and depriving the country of at least Rs1.86 lakh crore in revenues. Just between 2006 and 2009, the coal blocks given away without auction accounted for some 14 percent of India’s total coal reserves. The scandal that resulted – known as ‘Coal scam’ or ‘Coalgate’ – prompted widespread media attention, corruption investigations by India’s Special Central Bureau of Investigation, and a special court to hear the coal allocation cases.

Convictions started coming down in April 2016, starting with jail terms and fines for two directors of a firm called Jharkhand Ispat Private Ltd. They were found guilty of cheating and criminal conspiracy – “fraudulently” and with “dishonest intention” deceiving the government in allocation of a coal block. In its second conviction several months later in July, the special court found Rathi Steel and Power and three of its officials similarly guilty of fraud and deception in procuring a coal block.

In early January 2017, yet another firm – Himachal EMTA Power Ltd – and three of its senior officials were charged by the special court. Over the course of the CBI investigations, allegations also surfaced that some senior officials in the agency were taking bribes from companies to fix or weaken cases.

Nearly two dozen coal allocation scandal cases are pending before the special court. In late December 2016, former Coal Secretary H C Gupta was charged along with two other government officials for cheating and criminal conspiracy in allotment of the “Mahuagarhi Coal Block’ in Jharkhand to a private firm. In June 2017, Gupta and two other senior government officials were sentenced to two years in prison by the special court for his role in the coal scam.

Also in June, executives for the firm Jindal Steel and Power were summoned by a special court which accused them, according to the CBI, of cheating and criminal conspiracy by misrepresenting equipment purchase orders in the allocation of a coal clock. The accused are scheduled to appear before a special CBI judge in September 2017.


– India Today

– Indian Express here, here, here and here


Economic Times and The Times of India (Updated June 2017)

Bribery and shady dealings behind Punta Catalina coal plants in the Dominican Republic

On Jan. 7, 2017, Dominican Republic President Danilo Medina named a civil society commission to investigate construction of the Punta Catalina coal power plant — the same day the director of the plant’s construction firm was questioned in Brazil over its admitted $92 million in bribes paid to Dominican government officials in return for contracts on 17 key government projects. Punta Catalina — two power plants and a coal receiving terminal in the Dominican Republic — has been dogged by allegations of a full range of dirty dealing, including lack of transparency, deception, favoritism, overbilling and bribery.

The Dominican government awarded the Punta Catalina coal project contract to Brazilian firm Odebrecht, with financing from Brazil’s BANDES bank, despite Odebrecht’s bid that inflated costs by $1 billion – double that of competing bids — according to the National Committee to Combat Climate Change (CNLCC). And according to news reports, documents emerging from corruption investigations of Odebrecht in Brazil reveal that the company received insider information from the Dominican government and then ran a scheme in which it billed exorbitant wages for workers on the project. Odebrecht is being investigated in Brazil for using mechanisms to overvalue construction projects and also for paying bribes and providing electoral advice in return for contracts, including in the Dominican Republic. Because of the corruption investigations in Brazil, financing from Brazil’s BANDES bank was stopped, prompting the Dominican Republic to turn to public funds, including from the state pension fund, to finance Punta Catalina.

In May 2017, a cabinet member and nearly a dozen other people including top-level officials in the Dominican Republic’s government were detained in the widening international bribery scandal. Those implicated also include three legislators, a former public works minister, a former Senate president, two former directors of a regulatory electricity group and a businessman. They are scheduled to appear in court to face charges including money laundering and illegal enrichment.


– Dominican Today herehere, here, here and here

– El Nuevo Herald

– Letter from CNLCC

– Banktrack

Washington Post (Updated June 2017)

A coal plant in Sri Lanka dogged by a half-decade of corruption allegations

After years of alleged coal procurement corruption and bid-rigging at Norochcholai Power Plant in Sri Lanka, the Anti-Corruption Front released a report this year finding that the country had lost 4.88 million US dollars, or more than 710 million rupees as a result of the scam. The ACF lodged a complaint with the Commission to Investigate Allegations of Bribery or Corruption. The Supreme Court in Sri Lanka said that the ‘conscience of the court was shocked’ by the conduct displayed by certain individuals involved in the coal tender process. According to news reports, former Power and Energy Minister Champika Ranawaka coined the term “coal mafia” to allude to lobbyists he claimed were influencing coal procurement contracts. Local residents ultimately pay the costs.


– TRLRN News Radio

– Newsfirst


– Lankaweb

– Sunday Times

Bribery scheme, whistleblower retaliation by Australia’s biggest coal company

This is the story of allegations that Australia’s largest coal mining company, Theiss, owned by Leighton (now CIMIC Group) – buried a corruption report detailing how a “fixer” for the company bribed officials in India, potentially millions of dollars, to award Theiss a $5.5 billion coal contract. In return, Theiss would give a company owned by the fixer work at the mine. An employee at Theiss who tried to blow the whistle on it several years ago was first bullied, then fired, and the fixer was eventually paid to go away.


– Sydney Morning Herald here, here and here

Bribing a mine inspector to make pollution violations go away

Keith Hall, a Kentucky surface coal mine owner and former state representative, received a seven-year prison sentence for paying $46,000 to a state mine inspector in return for favorable treatment on mining violations. The inspector, Kelly Shortridge, testified that Hall helped him establish a corporation in his wife’s name for the sole purpose of receiving bribes to ignore or delay violations, including for water pollution. “That was a lot of money I was being paid, and I believed I was being paid it to give favors any time they were asked to be given,” Shortridge testified.


– Lexington Herald-Leader

– Courier-Journal

Bribery and deception behind a coal plant push in Myanmar

A representative from Kyauktan Township on the outskirts of Yangon told the Yangon Division parliament that a company pushing construction of a new coal-fired power plant in Kyauktan has been bribing and misleading local residents since March. Local lawmaker Daw Thet Thet Mu said residents of Zweba Kone village — most of whom could not understand English — were asked to sign forms in English indicating their support for the power plant after the company donated US$3,560 for fresh water excavation and promised to share profits from the project. There has been concern among villagers over pollution from the project impacting local farmland and water. An MOU for the coal plant had been signed several years ago by the Ministry of Electricity, Diamond Palace Services Co, E-Gateway of India and Global Advisors (Singapore). The Divisional Minister of Electricity told Daw Thet Thet Mu that the Yangon government would not allow the coal plant.


– The Irrarwaddy

– The Global New Light of Myanmar

A secret scheme to export US coal is rife with wrongdoing

Deception and allegations of money laundering and influence-peddling were all behind a scheme to export coal mined in Utah to Asia through a shipping terminal in Oakland, California. To avert public opposition to shipping coal from Oakland, that aim for a new terminal was kept secret for years, while $53 million in public funds in Utah that was supposed to be for local civic projects was diverted to help pay for the shipping terminal project. An investment firm that stood to gain $1 million and a rail line in the deal wrote the script. Utah elected officials supporting the plan took money from the coal company pushing the outlet for Utah coal, Bowie Resource Partners. And the secret scheme, once revealed, forced concerned communities in Oakland to scramble quickly to try to stop it. In Utah, a bill in the legislature to get around prohibitions on $53 million in community impact funds being used for an out-of-state coal terminal was criticized as a money laundering scheme. Ultimately the Oakland City Council voted unanimously to ban coal handling and storage, but developers are considering legal challenges still.


– East Bay Express

– Los Angeles Times here, here and here

– East Bay Times

Endemic corruption in Indonesian coal, and deadly mining pits

Indonesian law requires mining companies to set aside funds for land reclamation before extraction begins, but Luthfi Fatah, a resource economist at Indonesia’s Lambung Mangkurat University explains that companies evade reclamation by leaving a small parcel of land unmined in each lease. Then, “when the government asks them to do reclamation, they say, ‘We haven’t finished yet — we still have 10 hectares to be exploited,’” Fatah explains. It’s just one glimpse into coal corruption in Indonesia, where 50-90 million tons of coal is mined and exported illegally each year, shortchanging Indonesians of hundreds of millions in royalty revenues. District-level politicians trade coal concessions for cash or political favors, according to environmental advocates, and some companies hold concessions in protected wild lands like East Kalimantan’s Bukit Soeharto State Forest. Indonesia’s Corruption Eradication Commission (Komisi Pemberantasan Korupsi, KPK) has revoked the licenses of 721 mines in 12 provinces across the country for failing to comply with basic standards, such as royalty payments, forestry permits and environmental commitments.

One result of the endemic corruption are the hundreds of unused water-filled mine pits in East Kalimantan in which 22 children have drowned since 2011. The most recent was 13-year-old Aprilia Wulandari who was found drowned “in a soccer field-sized mine pit on the outskirts of Samarinda,” according to Inside Indonesia. “Aprilia was reportedly playing with friends on her way home from school when she fell into the unmarked pit.”


– Environment360

– Sea Globe

– Jakarta Globe

– Greenpeace

– Inside Indonesia

Massive scale of graft comes to light in the historic center of China’s coal industry

The breadth of corruption in China’s Shanxi province – long the country’s leader in coal production – has become visible as the government has cracked down in recent years. In 2014, an investigation by Beijing magazine Caixin found coal bosses in one western county in Shanxi spending $150,000 a year on bribes. According to The Economist: “Since 2013, seven of the 13 members of Shanxi’s Communist Party committee (the province’s leaders, basically) have been arrested or charged with ‘infractions of party discipline,’ a term that usually means taking bribes. In all, 50 high-ranking officials have been placed under investigation for graft. For its size, the province has had more leaders arrested or jailed than anywhere else.”


– The Economist

– China Daily

Mining multinational fined $25 million for violating anti-bribery laws

Australia-headquartered global coal company BHP Billiton was fined $US25 million by the US Securities and Exchange Commission for violating anti-bribery law by paying for luxury hotels, sightseeing trips, and event tickets for government officials and their spouses at the 2008 Olympic Games. According to the SEC, BHP footed the bill for officials who were “”in a position to help the company with its business or regulatory endeavours,” including officials connected with BHP contract negotiations or regulatory dealings to obtain mining rights in Congo, Guinea, Burundi, and the Philippines.

Source: Australian Financial Review, ABC News

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