According to a release issued by Lanco, the Australian coal miner has agreed to pay Perdaman a nominal amount of AUD7.5 million, plus legal costs to be taxed by the court, without admission of any of the allegations of Perdaman
Griffin Coal, an Australian subsidiary of Lanco Infratech, on Monday said the protracted litigation for a claim of AUD3.5 billion initiated by Perdaman Chemicals against it has been settled.
According to a release issued by Lanco, the Australian coal miner has agreed to pay Perdaman a nominal amount of AUD7.5 million, plus legal costs to be taxed by the court, without admission of any of the allegations of Perdaman.
Lanco is in a legal battle with Australia’s Perdaman Industries, which filed an AUD3.5 billion (around Rs19,600 crore as per latest exchange rate) lawsuit against Lanco in Australia in 2011, alleging non-compliance with coal supply pact for the company’s upcoming urea plant in Western Australia.
This settlement was reached pursuant to the rules of Supreme Court of Western Australia, which allows for early and cost effective resolution of such claims, the release said.
Lanco has always maintained that Perdaman's action was baseless and without any merit. If allowed to continue, this case would have taken another 12 to 14 months for the trial and judgment, resulting in significant legal costs and loss of management time, the release said.
“The purpose behind making this nominal offer was to put an end to this litigation now and move forward with our mine expansion plans,” it said.
This outcome will have a positive impact on the entire group, and especially for Griffin Coal, a 100% subsidiary of Lanco, it further said.
“In the end, Perdaman had no choice but to accept nominal offer in the settlement proposed by Lanco, which is in fact a small fraction of the original claim,” the release claimed.
The company will reinforce its focus on its business and mining operations in Western Australia, including the proposed expansion of the Collie mine and the enhancement of the export facilities at the Bunbury port, the release said.
Backed by the settlement news, shares of Lanco Infratech gained nearly 10% to Rs11.56 on the BSE in the early trade Monday.
The Senate's immigration overhaul would allocate $4.5 billion in new border spending. We take a look at the current proposal, and how border money's been spent (and wasted) in the past
Federal spending on border security is at an all-time high —and it would get even higher under the Gang of Eight’s new plan. The Senate immigration proposal, released last week, would allocate $4.5 billion in the next five years to tighten control of U.S. borders.
The U.S. spent nearly $18 billion dollars on immigration enforcement agencies last fiscal year, more than all other law enforcement agencies combined.
Where would another $4.5 billion go? Here’s a closer look at what is being proposed, and how the government has spent (and often wasted) border money in recent years.
More border agents
The proposal calls for an additional 3,500 U.S. Customs and Border Protection officers. In FY 2012, the department employed 21,790 officers, up 10 percent from 2008. The bill would also add an unspecified number of Border Patrol agents, whose ranks have skyrocketed from just over 4,000 in 1993 to more than 21,000 today.
A 2011 investigation by The Center for Investigative Reporting and the Los Angeles Times showed how hurried hiring by the border agency affected screening standards and led to an increase in corruption. From 2006 to 2011, the number of investigations of customs employees charged with fraud more than tripled. Since 2004, 147 agency employees have been charged with or convicted of corruption-related offenses.
The bill requires buying as many “unmanned aerial systems” (also known as drones) as needed to have 24/7 surveillance of the Southwest border. The U.S. has already purchased 10 border drones, which cost $18 million a piece and roughly $3,000 an hour to operate.
Many question whether the current border drones are worth the investment. According to a report from the Customs and Border Protection agency, drones led to 143 arrests and the recovery of 66,000 pounds of drugs in 2012. As news outlet Fronteras calculated, “that’s less than 3 percent of all drugs seized by border agents last year, and less than 0.04 percent of the 365,000 would-be illegal border crossers caught by agents.”
In May 2012, a report by the Department of Homeland Security’s Office of the Inspector General  found the U.S. didn’t have enough manpower or money to effectively operate the drones they already have. The department overshot its maintenance and operational budget by over $25 million. Drones had only flown for 30 percent of the time they were supposed to be in the air.
Another $1.5 billion would be allocated to expand the 651 miles of fencing along the Southwest border. "I think what we would do if the bill passes," Homeland Security Secretary Janet Napolitano said in a Senate hearing, "is go back and look at the type of fencing we have and say, ‘Do we want to make it triple what it is or taller?’ — or something of that sort."
More phones and radios
Remote areas along the Southwest border can have spotty cell coverage, posing a risk to border guards in an emergency. A two-year grant would provide more funding for satellite phones and radios for border staff to contact 911, local police and federal agencies.
The bill doesn’t say anything about training guards to use the new devices. In November, we reported how DHS had spent $430 million on radios that only one surveyed employee knew how to use.
More money for local cops
Some of the new DHS funds would go toward Operation Stonegarden, a $46.6 million FEMA program benefiting local law enforcement in border states. "The funds that we are getting from Stonegarden are a godsend," a county sheriff told the Arizona Daily Star in 2009. "I think we are able to provide a lot more security, a lot more visibility."
But critics say there’s little oversight of how the money has been spent. The Star’s review of Arizona police records showed grant money was funnelled toward expensive technology and overtime pay for cops doing unrelated tasks, like crowd control at city parades.
As Congress considers adding billions more to the border budget, lawmakers are left with a key question: is it working? Some critics on the left say the added funding may be unnecessary, as studies suggest net migration from Mexico is now below zero. Many on the right say there still aren’t enough hard metrics to judge whether Homeland Security is doing a better job of keeping undocumented immigrants out.
DHS has pointed to the drop in the number of apprehensions as a sign U.S. borders are stronger now than ever before. But critics say it’s a flawed way of judging whether the billions spent on border security are worth it. That number could mean fewer undocumented immigrants are attempting to cross the border, or that fewer are being arrested. The struggling U.S. economy also plays a big role in the overall drop in unauthorized immigration.
Under the new proposal, high-risk sections of the Southern border must reach a “90 percent effectiveness rate” within five years. That would be the “number of apprehensions and turn backs” divided by “the total number of illegal entries.”
If border states don’t reach the 90 percent target, a group of border state governors (or their appointees) and federally-appointed security experts would step in to draft a new plan to boost effectiveness—on which the DHS can spend up to $2 billion more. The new bill would also create a presidentially-appointed DHS Task Force to regularly review border enforcement policies.
Increased surveillance should help border agents get a better count of the total number of undocumented immigrants crossing the border, said Doris Meissner of nonpartisan think-tank the Migration Policy Institute. According to Meissner, this is the first time immigration legislation has included a specific metric to gauge whether money spent on border protection is resulting in fewer unauthorized crossings.
“The overall expectation that so much money has been invested, the government has to do better in really laying out how it assesses its effectiveness,” she said.
With the WB government bailing out Saradha, we have set a dangerous precedent and reached a new low in accountability
In mid-April, the Saradha group, a Ponzi scheme in Kolkata, went down, taking the savings of poor people from across the state. This will not be a surprise to readers of Moneylife. Our regular readers know that we have been badgering various authorities—from the Reserve Bank of India (RBI) to the prime minister’s office (PMO) to the ministry of corporate affairs (MCA) to do something about multi-level marketing schemes (MLMs) and Ponzis. We have pointed out that:
• Unregulated chit funds, pyramid/Ponzi or MLM companies are able to lure people to part with several thousand crore rupees each without any regulation, investigation or supervision.
• A massive group, like Sahara, with its logo emblazoned on the shirts of cricketers in a cricket-worshipping nation, operates almost entirely outside any formal regulation. It flaunts its cosy equation with politicians across the spectrum, sports stars, film stars, media stars, judges, god-men, bureaucrats and sundry fixers. Nobody questions its business arithmetic and no one can tell us which of its businesses earns it the kind of post-tax returns that allow for mega-sponsorship deals or Subrata Roy’s lavish lifestyle. Details of taxes paid by the group in the past 10 years are unknown. Yet, according to its own advertisements, it has raised and repaid a mind-boggling Rs73,000 crore as deposits in a residuary non-banking finance company supervised by RBI.
• Multinational MLMs, registered abroad such as Amway, Herbalife, Tupperware and more dubious ones such as QNet, are known to be in violation of the Prize Chits & Money Circulation Act, but the government makes no effort to act against them. They are big sponsors of television programmes with top sporting stars as their endorsers.
• Whether SpeakaAsia, Saradha, Rose Valley or MPS Greenery—the business model has a pattern—media support through advertisements or by setting up television channels and newspapers and cosy relationship with regional political parties. Moneylife’s website has many articles on these.
• In May 2011, Moneylife Foundation wrote to the prime minister about the need to act against SpeakAsia and other MLM schemes. Moneylife has repeatedly reported that over 10,000 Ponzi companies and dubious chit funds (as collective investment or chain schemes masquerading as chit funds) operate in every Indian state. The big ones raise upwards of Rs1,000 crore in a matter of months by handing out returns in excess of 100%, which are tied to luring new investors into the scheme.
• In July 2012, former union secretary, EAS Sarma, at our request, wrote to the prime minster, revenue secretary, MCA and the RBI governor about the dangerous proliferation of MLM/pyramid or money circulation schemes that “swindle the unwary public by offering them misleading inducements and depriving them of their hard-earned savings.” He called them a ‘scourge on society’ and asked that they be dealt with an iron hand. Mr Sarma also pointed to their political links. Nothing happened.
This is the India that we live in. Yet, as soon as a big collective scheme blows up, intellectuals and columnists clamber on to a high moral platform to berate people for their greed and gullibility in falling for the promise of extraordinarily high returns offered by these Ponzis. My question is the opposite. Why should an ordinary person assume that a company that owns IPL teams, or whose founder shares the stage at public events with top political leaders, be anything but law-abiding? And, if this is untrue, why shouldn’t the buck stop at the very top?
Every politician who protected and helped legitimise the dubious Saradha group, Rose Valley and MPS Greenery in West Bengal—to name just a few—should be held accountable for its collapse. Would a group like Saradha have been allowed to start a newspaper and a television channel if union ministries had questioned and scrutinised its source of funds?
It is time we, the people, began to ask these questions. Over the past two decades of a liberalised economy, we have allowed policy-makers, regulators and ministers (Union ministers and state governments are equally culpable) to obliterate the distance that used to be maintained between government and the businesses that it regulates. Now, many of the shadiest businessmen are inside parliament and involved in policy-making. Meanwhile, each new scam is buried after some perfunctory noise in parliament largely to empty benches. Even joint parliamentary committee (JPC) reports have only served to delay investigation until public anger cools down.
Independent regulators are all IAS officers who owe their jobs to being compliant or their willingness to act as hatchet persons for politicians (barring the singular exception of Vinod Rai as comptroller & auditor general, CAG). Nobody in the system is under pressure to prevent wrongdoing; hence, no regulator, bank chairman or union minister has lost his job in the past 20 years, despite the sharp increase in the size and number of scams. If this is true of massive scams and misappropriation of funds unearthed by the CAG (2G, coalgate, irrigation, aviation, mining, defence procurement, disbursement of government subsidies, etc), where is the question of holding anyone accountable for failing to go after MLMs, Ponzis and chit funds?
Even in the Saradha case, West Bengal chief minister, Mamata Banerjee is only containing the political fallout of a situation where some distraught investors committed suicide. But her hasty action sets a dangerous new precedent. Mamata Banerjee has created a Rs500-crore ‘relief fund’ to be raised through a 10% tax on tobacco and tobacco products; this will be supplemented by proceeds of the seizure and auction of Saradha group’s property. A commission will ensure that ‘most ordinary and small investors’ are taken care of. She is mum about the fact that Trinamool nominee to the Rajya Sabha, Kunal Ghosh, headed the now shuttered media business of Saradha.
It is ironic that the former FICCI general secretary, Amit Mitra, will rubber-stamp this desperate idea of his financially illiterate chief minister, which is likely to be emulated by corrupt state governments across the country in future Ponzi failures. Consider the consequences.
West Bengal came up with a tax on tobacco companies, probably because ITC Ltd is headquartered there. Other state governments may tax alcohol or automobiles, depending on their presence in the state. Some may come up with a populist tax on multinational company products—especially if a global Ponzi goes bust. Where does it stop? Can taxes be raised to pay for losses caused by the failure of Ponzi schemes?
Mamata Banerjee’s bailout for Saradha investors signals that the gullible will be protected if the Ponzi collapse is big enough to have political consequences. Those who avoid such schemes, opting for safe, taxable and bank fixed deposits with lower returns, will feel foolish and end up paying the bailout tax. Does the government really want to signal that it is stupid to be prudent and careful? Do we really want to allow politicians to start a new bailout tax or scam tax to pay for the financial scandals caused by their inaction or complicity?
We are, indeed, in a strange situation. Regulators and tax authorities will harass and hound legitimate businesses over compliances, taxes and permissions, while the most dubious businesses will be allowed to lure people and destroy their wealth with impunity. We have now moved to yet another level of lunacy, when the exchequer will foot the bill for such private scams. We need to do something to stop this madness now.
Sucheta Dalal is an award-winning journalist and the managing editor of Moneylife. She can be reached at [email protected]