Deception & Fraud

Lying, faking, covering-up, cheating, or lack of transparency to gain an advantage or hide wrongdoing

NSW EPA looks into manipulation of pollution data from coal-fired power plants

The Environmental Protection Agency of New South Wales is investigating claims that one of the Australian state’s largest power stations manipulated monitoring of its coal-fired power units to make them seem lower than actual emissions levels. Only one of the four coal-burning units at the Bayswater power station was only required to report pollution data, and according to reports, plant staff were instructed to supply it with lower sulphur coal while dirtier coal was burned in the other three units.

The company that operates the plant, AGL, did not deny that the previous owner had deliberately blended coal to mask the true emissions of nitrous oxides, sulphur dioxide and other pollutants. A former engineer at Bayswater told journalists that the practice of burning variable quality coal to curb pollution readings had been going on since at least 2000. As a result, the EPA  has broadened its inquiry and contacted all currently operating and licensed power stations in New South Wales to find out whether Bayswater and other plants have under-reported emissions in the past or continue to do so. By using cheaper, dirtier coal, it’s possible that the coal plant operator was able to avoid paying the pollution fees and carbon taxes.


The Sydney Morning Herald (Updated June 2017)

Charges, prison as NSW Corruption Commission finds widespread malfeasance in coal deals

Two former members of Parliament and political power brokers in the New South Wales have been implicated in separate corruption schemes related to developing coal in the southeastern Australia state. Both cases resulted from inquiries by the Independent Commission Against Corruption into the activities of the former NSW Labor government.

In May, former NSW Mining Minister Ian Macdonald was sentenced to a maximum of 10 years for awarding a multimillion-dollar coal exploration license in 2008 to a company chaired by a union boss and political associate without a competitive public bidding process. In previous licenses granted for coal exploration in New South Wales, companies had paid tens of millions of dollars to the government as compensation, but the license to Doyles Creek Mining, run by a political associate, was offered for almost nothing in return to the state. The judge at Macdonald’s hearing noted the deviousness of the deal, saying it was cloaked in misconduct as the principals tried to hide their scheme by couching it in the context of developing a training mine to promote mining safety. The former head of the Construction, Forestry, Mining and Energy Union made $6 million from the deal selling shares in a company that acquired Doyles Creek Mining after the license was granted and was found guilty as an accessory.

In July 2016, another former member of Parliament, Eddie Obeid, was charged for his role in netting a $30 million profit from a rigged permitting process for developing coal on Obeid family property while he was still in office. Macdonald was also charged with conspiracy to commit misconduct in that scheme.

– The Sydney Morning Herald: hereherehere, here and here (updated June 2017)


Five arrested in suspected embezzlement at proposed Bangladeshi coal plant and port

A Bangladeshi court sent the former deputy commissioner of the port town of Cox’s Bazar to jail as part of an investigation into embezzling funds from the proposed Matarbari coal-burning power plant. The chief judge in the case rejected a request for bail filed by the accused commissioner.

According to case files, a syndicate of 36 people embezzled more than $US 55 million (Tk 46,24,03,320) by disguising payouts as compensation for the purchase of 25 shrimp enclosures at the project area, which includes a proposed port for importing the coal to be burned at the plant. The scheme was discovered in In 2014 by the project’s Land Acquisition Officer, who noticed irregularities while processing five checks to disburse the compensation money. The case was then taken over by Bangladesh’s Anti-Corruption Commission, which ultimately filed the charges. In all, five people have been arrested, including another former deputy commissioner of Cox’s Bazar. The previous four suspects were all released on bail.

The initial price tag to build the 1,200-megawatt project and dredged coal port came in at $US 4.5 billion, an amount the Bangladeshi newspaper The Daily Star called “staggering.”



– The Dhaka Tribune


Scheme to secretly expand Pacific Northwest export terminal part of plan’s undoing

Allegations of deception by the developer of a proposed coal export terminal in Longview, Washington date back to 2011, when Millennium Bulk Logistics was caught concealing the true scope of its plans from local residents and elected officials. The company had publicly stated that it intended to ship a modest 5.7 million tons per year from the Pacific Northwest port facility it wanted to build. But court records obtained by the New York Times showed the company secretly was planning to a massive expansion from its initial plan in a second phase that would ship allow the port to ship up to 80 million tons annually, 14 times more than the company originally stated in its application. 

Longview is the last of six coal export terminals proposed in the Pacific Northwest that still has any life life, although in early 2017, the Washington State Commissioner of Public Lands denied a key permit need for the project, citing “a chronic pattern of failure by the company to provide essential and accurate information” as a key reason. The company is challenging the permit denial and continues to pursue a plan to export up to 44 million tons of coal per year. That amount of coal would mean eight full coal trains per day moving through dozens of cities and towns along a 500-mile rail shipping route from the Powder River Basin in Wyoming and Montana. Concerns about toxic coal dust, noise, public safety and snarled traffic have drawn stiff opposition from residents, community leaders and elected officials in communities all along the rail line.


– Portland Business Journal

– The (Longview, Washington) Daily News

– The New York Times




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

A broad scheme of falsifying water samples to avoid coal pollution limits in West Virginia

A second employee at Appalachian Laboratories, Inc. is headed to jail for taking part in a broad scheme to cover up coal company water pollution by submitting fake water samples for required testing for compliance with permit limits. Former lab manager John Brewer has been sentenced to a two-year jail term. Another former employee, John Shelton, is already in prison. Shelton admitted diluting water samples and substituting water he knew to be clean for actual mining discharges. He said he would take water from what he called a “honeyhole” known to have water that would pass testing. Brewer admitted that he and other employees would falsify the dates on water samples to avoid having to submit samples they knew would violate pollution limits. U.S. District Judge Irene Berger said the crime put communities at risk and enabled companies to pollute without fear of getting caught or facing any consequences.


– Charleston Gazette-Mail: 18 January 2017, 15 July 201610 May 2016

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)

Corruption probe hits Indian conglomerate driving big coal export expansion in Australia

The Indian conglomerate planning one of the world’s biggest new coal mines – the Carmichael mine in Australia – is now under investigation by India’s Directorate of Revenue Intelligence for fraud and money laundering. The probes of the Adani Group companies focus on fraudulent invoicing of coal imports and false invoicing for capital equipment imports – schemes whose objectives appear to include both diversion of money into offshore tax havens as well as profit at the expense of the Indian people through higher electricity prices that are based on inflated coal costs.

In addition the Carmichael mine, Adani wants to build a new 400km rail line linking it to the Abbot Point shipping terminal and greatly expand capacity at the port to handle more coal. The Australian government is considering a $1 billion subsidy to support the railway. All the planned developments are based on a web of Adani corporate structures that involve tax havens in the Caribbean and other locations. The Carmichael mine would be 40km long and 10km wide, with six open-cut pits and five underground, threatening the land and existence of the Wangan and Jagalingou people. Expansion of the Abbot Point terminal and shipping threatens the Great Barrier Reef.


– ABC here and here

– AsiaBizNews

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)

Alpha execs sued for fraud, deceiving court to exit bankruptcy and avoid mine cleanup

Six former executives at major U.S. coal company Alpha Natural Resources have been sued for fraud by the state of West Virginia, charged with knowingly making false and misleading financial projections in order to finalize Alpha’s plan to get out of bankruptcy. West Virginia’s environment department said the Alpha execs failed to disclose $100 million in obligations to restore land at Alpha mining sites in order to make Alpha’s cash flow look better. The $100 million in debts and obligations came to light just three months after Alpha got approval to exit bankruptcy and create a new stripped down company called Contura where the Alpha executives quickly took management positions.

According to West Virginia’s environment department, “…the debtors’ senior mangement knew about but did not disclose those impending “unaccounted-for” expenditures“ and “…the debtors’ senior management sat on both sides of these very issues and stood to benefit uniquely from consummation of the plan….” The $100 million shortfall could threaten Alpha’s viability and could saddle taxpayers with the costs of cleaning up Alpha’s mining sites. Alpha’s executives also wrote into the bankruptcy agreement that they could not be held liable if Alpha goes belly up. Without a bankruptcy agreement that was facilitated by alleged fraud by Alpha execs, the company could have been deemed too financially shaky and instead sold off to pay its reclamation obligations.


– Vox

– Mother Jones

– Reuters

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

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