Financial Schemes & Excess

Bid-rigging, skimming, overbilling, tax evasion, golden parachutes, and other tactics for profit – often at public expense

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

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)

Likely conflict of interest behind coal contracts and projects in South Africa


The 355-page State of Capture report from South Africa’s Public Protector reveals details of favorable decisions by state utility Eskom to award huge coal supply contracts to Tegeta Exploration and Resources, a company co-owned by South African President Jacob Zuma’s son, Duduzane, and the Gupta family, close friends of President Zuma. The revelations add new fuel to longstanding suspicion about the role of government leaders and relatives of President Zuma with ties to the coal industry in paving the way for new coal mining and new coal-fired power plants in the face of serious water use, pollution and economic concerns. According to a Circle of Blue investigative report, “the ANC operates an investment arm, called Chancellor House, that owned an investment stake in Hitachi, which won the multi-billion dollar contracts to build the boilers for the two giant and unfinished Medupi and Kusile coal-fired power plants. Chancellor House also has a financial stake in the proposed 1,050-megawatt coal-fired Colenso power plant.”

In late May, the African National Congress’s parliamentary caucus called for the immediate removal of Eskom’s chief executive after a committee on public enterprises determined that there is total disregard for the principles of good governance in the state-run company.


– State of Capture Report\

– Quartz


– Pulitzer Center

– Circle of Blue

Eyewitness News (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

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

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