Cover story in December’s Open Magazine (a major Indian glossy) reveals Vedanta’s influence over the Indian government.   

…See the full story below……

Mihir Srivastava           22nd December 2012

» Ratan Tata, weeks before relinquishing control of the Tata Group, has warned India of crony capitalism. In a recent interview with PTI, asked if the problem was getting worse, he replied, “Yes. It’s just an observation, I have no facts or figures to prove it.” Asked about a statement he made on the erosion of values and ethics in India, especially within the business community, he said, “I hold that view.”

» Indian Parliament has come to a standstill again as reports surface that the US-based retailer Walmart has spent Rs 125 crore since 2008 on ‘lobbying’ in India for market access among other things.

LANJIGARH, ODISHA ~ Since late 2010, when transcripts of the Radia Tapes were published in Open, questions of corporate governance and the influence of business houses over government policy have dominated public discussions in India. But as Ratan Tata’s statement reveals, the problem only seems to be getting worse.

In this report, we focus on the case of Vedanta, and specifically, on its Lanjigarh refinery in Odisha, where despite reports of problems on the ground and consistent local opposition, the government is going out of its way to ensure that the bauxite refinery’s closure is only a temporary setback to the company.

Vedanta Resources, a conglomerate owned by the Patna-born and London-based billionaire Anil Agarwal, has always been controversial. Currently, it is engaged in two cases at the Supreme Court. One is a case involving its purchase of Cairn Energy’s stake in Cairn India, which shares oilwells in Rajasthan with the Government-owned Oil and Natural Gas Corp Ltd. On this, The Herald of Scotland has reported: ‘Westminster secretly lobbied the Indian government to give the go-ahead to a controversial multi-billion pound deal with a leading Scottish oil company, internal emails passed to the Sunday Herald reveal… UK government officials, briefed ‘over dinner’ by Edinburgh-based Cairn Energy, offered to ‘polish’ and send a letter drafted by the company. At a lunch, they also urged a key Indian government minister to back the deal. The Indian government subsequently gave permission for Cairn’s £5.5 billion agreement to sell off the bulk of its Indian oil business to Vedanta…’

The other is a case filed by the state-owned Odisha Mining Corporation (OMC) challenging a decision of the Union Ministry of Environment and Forest (MoEF) to withdraw its clearance for bauxite mining in Niyamgiri, a tribal belt in Kalahandi district of Odisha. From the very beginning, mining operations here—by OMC to supply Vedanta—have been controversial, with opposition parties in Odisha and at the national level demanding a CBI probe of all mining agreements, alleging that they violate forest laws and the state’s mineral policy—a sellout of the state’s interests.

The MoEF had cancelled its Niyamgiri forest clearance to the OMC-Vedanta project in 2011, after protests by tribals that got wide media coverage. The Ministry had also admonished Vedanta for its violation of ecological norms and expanding its refinery—a facility to turn bauxite into alumina, used as raw material to yield aluminium via electrolysis—without a mandatory environmental clearance. But no explanation has yet been offered for the ease with which the MoEF let the project go ahead in the first place.

When Vedanta shut its refinery in Lanjigarh on 5 December, it was a move widely seen as aimed at exerting pressure on the state government. Deepak Kumar Mohanty, director of mines in the Odisha government, says that ensuring production at the refinery is a priority for the government as per a 2004 agreement signed by the state with Vedanta, by which it was to supply the refinery with bauxite. “The Karlapat deposit has already been reserved for OMC,” he says, “We are trying to identify new sources of bauxite. It will take three to four months for resumption of supplies.” He refuses to comment on the wisdom of signing the 2004 agreement, claiming that the matter is in court. Mohanty is not the only state government official who appears to have made Vedanta’s concerns his own. At least he is bound by an agreement. But other state officials act under no such constraints. From the state police to the environmental authorities, Odisha’s administration seems keener on acting in the interests of the UK-based conglomerate than that of its citizens. Days before the refinery shut down, Open visited Lanjigarh to assess the scenaro.

Vedanta has gone to great lengths to describe the ‘consultative process’ that is undertaken with locals ‘to provide comprehensive details about the potential environmental and social ramifications of the proposed project’. The company claims to have sought the ‘opinion, views and suggestions’ of Dongria Konds—the group of tribals affected—on the project. The company also claims to have got an overwhelming response to its overtures to them: ‘Nearly 3,000 people have voluntarily supported the project and have approved its operations by inscribing their signature/thumb impressions.’

The latest of these series of consultations was that of the Gram Sabha of Rengopalli, which took place on 15 March this year. This came some weeks after a serious scuffle on 21 January, in which parts of people’s land had forcefully been taken away by Vedanta with the help of the police and local administration. There had been a protest against the acquisition, but it was squashed by a heavy police force that broke up a human chain formed by tribal men, women and children who were trying to block the way of landmovers on the site. The scene was captured on video by local journalist Mohammad Aslam. Tehsildar Sushant Petel is seen in the video telling the protestors in Oriya, “This land belongs to the company and there is Section 144 in force [which prohibits gatherings of people]”. Force was used to disperse the crowd, and as many as 47 people were arrested and put in jail under Section 307 of the IPC on such charges as attempted murder. They were released after 20 days.

What happened at the 15 March ‘public hearing’ has been captured on video by Aslam as well. Operating on a shoestring from a backhouse in his family home in Bhawanipatna, he makes it a point to document such interactions between the state and its people. His video of the ‘public hearing’ reveals exactly how local consent is manufactured in this tribal zone. It has to be seen to be believed. A large tent is set up and snacks are served to officials. Among those who are present are the local Block Development Officer (BDO), Tehsildar and village Sarpanch, and Vedanta’s law officer. There is also a big gathering of villagers. The proceedings start with residents of the village asked to put their thumb impressions on blank sheets of paper in a register. This is even before they are told anything, as if this is some sort of roll call for attendance being taken. The BDO then prompts the Sarpanch to say something. He does not have much to say beyond “You will get jobs”. Vedanta’s law officer, Nabal Kishore Sharma, has more to say. He speaks of the proposed rehabilitation of those willing to part with their land, and then in Oriya, offers to have all pending criminal cases against the 47 arrested withdrawn if they go along with the company.

District Magistrate Gobind Chandra Sethi, contacted by Open to discuss complaints of locals about police atrocities, non-payment of land compensation and unkept promises of jobs in Vedanta, refuses to comment on any of it. “I am too busy with an assignment from Bhubaneswar,” is his brusque response, “[I have] no time to talk on these issues.”

Aslam is worried about the fallout of his video. “They may declare me a ‘Maoist sympathiser’ one day and put me behind bars. I have no influence or support.” It is a valid fear, given what has been happening here.

Many tribals opposed to the project have been booked under various sections of the Indian Penal Code, on such charges as theft of scrap iron from construction sites, and put behind bars for months. In villages like Belamba, Turigurha, Boringpada, Chattarpur and Kendiguda, there is hardly anyone left who has not gone to jail on some unproven charge or the other.

Chattarpur village lies about a kilometre from the Lanjigarh refinery. As we walk into the village, we are soon surrounded by a small crowd of youngsters keen to tell us of their suffering. All of them have been to jail and are now out on bail. Apart from theft, some have been slapped with charges as serious as dacoity, which can have them sent to prison on life sentences. Their real crime, they say, is that some of them have been fighting for their due compensation, while others have refused to part with their land for the project. At the time of our visit, four residents of Chattarpur—Senapati Naik, Karuna Naik, Barik Takari and Nilamber Harijan—were still in jail.

Others, such as Nain Majhi, 35, who lost part of his land to the project, have been waiting for compensation since 2003. Majhi was instead sent to jail on another false charge two years ago. Nelkantha Bisal, 40, who has spent 45 days in jail, has no illusions about the state. “The police is with the company,” he says, “They will sell us to the company.”

Two brothers from the village Bandiguda, Deka and Prapula Majhi, both in their late thirties, have become symbols of local resistance against the company’s move to usurp their land. They have refused to part with their plots, which lie along the route of a conveyor belt being built to transport bauxite from Niyamgiri hills to the refinery. The yawning gap in the conveyor belt is a source of local pride, upset as they are with Vedanta’s apparent failure to deliver on its promises of job creation and prosperity in the area.

“The collector and the commissioner and other high officials visited me,” says Deka, “They offered money and then when we refused, threatened us.” His brother shows us a copy of the police complaint they have made on these threats, a complaint that has not been registered so far. “They will send us to jail and then forcefully take the land,” says a fearful Deka, explaining the standard operating procedure used for errant tribals like him.

Despite thousands of complaints filed by locals—of various kinds, though broadly about the pressure being mounted on them by Vedanta—not a single first information report (FIR) has been registered against the company or any of its functionaries.

By Vedanta’s count, 121 families have been relocated, of which 76 have a family member employed by it, while the rest have opted for cash instead. Of the 1,846 project affected people—who lost part of their agriculture land but not homestead—1,372 were provided one-off monetary compensation, 110 of them opted for employment training schemes, and 87 got jobs. The report makes no mention of the other 364.

The case of Manjo Mahapatra is interesting. He is a resident of the village Bandiguda right next to the refinery. From the village’s only educated family, he saw merit in the company’s campaign that promised jobs and a better life, and became a vocal supporter of the project. He was not employed by the company, but made money on some contracts it gave him during the project’s construction phase. He soon moved to the nearest city Bhawanipatna. But after three years, he found himself at a loose end with no source of income. “No locals who lost their land to the company have got jobs, with the exception of six,” he says.

Mahapatra does not direct his ire at the company; he blames the government for misinforming people of Vedanta’s real intentions. He mentions the former District Magistrate of Kalahandi, Sharswat Mishra. “He promised us jobs and other benefits on behalf of the company. I want to ask the district magistrate, have they ever tried to verify how many locals actually got jobs? If so, where is the data, why not make it public?” He accuses Mishra of working as an agent of the company, something that won him the dubious title of ‘Sterlite Mishra’ (Sterlite being a Vedanta group company). As widely reported, Mishra had told locals in Oriya that they had no claim to anything more than a foot deeper than the surface of their land. “What’s below that belongs to the state,” he had told them.

Mishra, coincidentally, is managing director of OMC, which holds a mining lease for Niyamgiri hills and has an exclusive sale agreement by which it must supply Vedanta bauxite at a preset price. “This issue has been extensively reported by the media all over the world…,” he says, “Since the matter is in the apex court, I am not interested in a story at this point of time.” He refuses to comment on any specific charges.

The land acquired at Rengopalli—the village featured in Aslam’s ‘public hearing’ video—was used by Vedanta to construct an extension of the refinery’s red mud pond. This pond is used to store about 92 billion litres of toxic residue from the bauxite refining process that reportedly includes some heavy metals and even radioactive traces.

It was subsequently reported that the red mud pond developed a crack on its western side, resulting in the dangerous residue leaking into nearby water bodies—a serious health hazard to the people of Lanjigarh. The matter was investigated by various government agencies of Odisha, including the State Pollution Control Board, whose team was led by member secretary Siddharth Das.

The video footage recorded by Aslam of Das’ interaction with the engineers representing Vedanta is revealing. Das reprimands Vedanta’s representatives for raising the height of the embankments of the red mud pond without the required permission. An unidentified man believed to be a representative of Vedanta informs Das that the company hardly ever takes permission. Work is usually done first and permission taken later, he says, making it sound like a mere formality. He then says that this particular move to raise the height of the embankment was taken on the advice of the Indian Institute of Science (IISc). To this, Das retorts, “Are they the statutory authority to do that?” There is silence. Das then tells them that the company will have to stop work until further orders. They look at him with bewilderment.

But the official record is different. The work never stopped. Das confirms over the telephone that he had inspected the site, and says that he did not find any violation of norms, and that no crack appeared and no leakage occurred. On the question of the embankment’s height being raised without permission, Das says, “It was done on the basis of a scientific study by the IISc to seal the pool inwards—so there is no issue.”

For Dongria Kond tribals, Vedanta is just ‘the company’. They claim the company’s writ runs everywhere in the region.

I am accompanied to the Vedanta refinery site by a local journalist called Kailash who works for a local daily. While visiting the villages of Lanjigarh block, I had noticed he was in regular touch with the public relations officer of Vedanta, Sandeep Sethi. Kailash had informed Sethi that someone from Delhi would be talking to people and taking pictures. Kailash, I found, was instructed to get details on the purpose of my visit and to get me to meet him. I declined to do so at Kailash’s behest, but called Sethi the same evening and asked for a meeting.

“I exactly know the set of people you met and what they told you,” says Sethi when I meet him. It turns out to be untrue. The people of Chattarpur village, he surmises, had complained to me of widespread skin diseases and held the company responsible for their ailments. They had not; they had actually discussed the false cases against them. Sethi then expresses regret that Kailash was not discreet enough in following his brief, and then justifies the surveillance of outsiders by saying that the media in Delhi and the foreign press are biased against the company, and that its version of events is never reflected in their reports.

For the company’s viewpoint, I also track down Dr Mukesh Kumar, president and chief operating officer of Lanjigarh Alumina Refineries . The meeting takes place in the lobby of Bhubaneswar’s Hotel Mayfair Lagoon at 11:30 at night.

Kumar launches into a diatribe against what he sees as a campaign against the company designed to “create panic” . He displays little interest in what I have seen or answering my questions. “We have nothing to hide,” he says. “Vedanta meets the highest global environment safety parameters. The Vedanta alumina plant is a zero-discharge plant. Not one drop of treated or untreated effluent mixes with outside water. Not only that, good water management practices have ensured that water consumption of the plant has gone down by 40 per cent.” He says that the red mud pond is a place where dry red ash is collected carefully so that it does not mix with the surroundings. “Where is the question of pollution?”

“Why are we in the firing line?” wonders Kumar, “OMC is the project owner and the mining lease owner. We have just entered a sole purchase agreement with OMC at a predetermined price.”

In the meantime, Vedanta has come out with a 150-page report titled The Lanjigarh Development Story: Vedanta’s Perspective that attempts to present a comprehensive counterview. According to this report, ‘The Lanjigarh project is regarded by the local population as a significant opportunity of progress and growth’ in a region that has seen ‘virtually no major development interventions since independence.’

The reality, it appears, is rather different.