Indian Investigator’s Coal Report Stirs Up Political Protests

India’s federal investigation agency said today that government officials vetted its report on alleged graft in the allocation of coal blocks, kicking off opposition protests and demands for the resignation of Prime Minister Manmohan Singh.

The Central Bureau of Investigation, which is probing allegations of corruption in the award of mining rights, told the Supreme Court that the status of the investigation was shared with the federal law minister and two officials of the prime minister’s office and coal ministry. The CBI filed an affidavit today in compliance with an order of the top court, which is monitoring the probe.

The CBI’s disclosure is the latest in a string of embarrassments Singh is facing after a cabinet colleague resigned in 2010 to face trial for the 2008 sale of spectrum that the nation’s auditor said was “arbitrary” and may have cost the exchequer $31 billion. Singh was in charge of the coal ministry for part of the period under the probe and has been personally blamed by opposition parties for the irregularities.

The main opposition Bharatiya Janata Party “stands by its demand for the resignation of the most dishonest prime minister since independence,” as he was using the law ministry to save himself from the probe, Rajiv Pratap Rudy, a BJP leader told reporters in New Delhi today. Parliament was adjourned for a fourth day amid protests over the alleged interference.

Parliamentary Affairs Minister Kamal Nath ruled out the resignation of Singh and law minister Ashwani Kumar. The BJP has said the continuation of Kumar as the law minister has become untenable because the government has unduly influenced the agency’s report.

India’s Comptroller & Auditor General told lawmakers in August that the government’s policy of allocating coal mines without auction favored some private companies and may have cost as much as 1.86 trillion rupees ($34 billion) in potential revenue.

To contact the reporter on this story: Andrew Macaskill in New Delhi at amacaskill@bloomberg.net

To contact the editor responsible for this story: Peter Hirschberg at phirschberg@bloomberg.net

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