UK-based hedge fund, The Children’s Investment fund, (TCI) on Wednesday said it would sue Coal India Limited (CIL)and its directors for damages if they did not take steps to bring coal prices on par with market levels.
The fund, in a letter to Coal India Chairman Narsing Rao, said the supply of coal at below market prices was a corrupt practice on par with allocation of coal blocks. “We regard the conduct of the Government of India in relation to the disposal of coal blocks as having very substantial parallels with its unlawful and improper interference in the affairs of Coal India, whereby it has compelled CIL to enter into fuel supply agreements for the supply of coal at prices well below markets,” Oscar Veldhuijzen, partner, TCI, said in a letter addressed to Rao.
According to TCI, in both cases assets have been disposed of “at undervalue for no good, commercial reasons, in pursuance of corrupt objectives, resulting in colossal losses of scarce public resources.”
“Unfortunately, to date you have chosen to stonewall all our valid objections and representations. In view of the above, we are constrained to state that unless we hear, no later than June 30, 2012, that the board of CIL is willing to set a clear, unambiguous and verifiable path to price all FSA coal to market levels, we would be left with no option but to bring claims against both CIL and its directors for repeated breaches of company law, violation of their fiduciary duties and obligations to shareholders,” the TCI partner said in his letter.