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Apr 05, 2012, 02.29 PM IST
In an interview to CNBC-TV18, Oscar Veldhuijzen, Partner, The Children's Investment Fund says that TCI plans to launch legal action against Coal India and have instructed its lawyers luthra & Luthra to begin legal process against CIL.
He further says that CIL is losing UDS 20 billion each year by selling coal below market price. "We are in the business of investing not litigating" said Oscar.
Below is the edited version of the interview with CNBC-TV18. Also watch the accompanying video.
Q: Are you aware of the government move of invoking Presidential directive on Coal India and Coal India about to sign those FSAs with power producers. What would be your next step?
A: This will strengthen our legal case under the bilateral investment treaty between the UK and India. It is clear that the government is intervening in a diplomat way and not supporting minority shareholders in a fair way.
However, itís up to the board of Coal India to determine the penalties related to this. We will launch our legal action against Coal India and its board members very shortly. It is the responsibility of the board members to keep penalties close to zero; otherwise the minority shareholders will be hurt.
Wages have gone up dramatically and FSA coal prices havenít been raised since late 2009. In the meantime, coal price have risen by 80%. We are expecting and have forced the board of Coal India to come out with a substantial price hike in order to capture those two aspects.
Q: Considering that the board is going to work out the penalty clause now, are you going to go ahead with possible international arbitration, could you even consider moving an Indian court?
A: We are taking two routes; one is the international route under BIT, which is against the Government of India. Presidential directive is actually strengthening our legal case automatically.
Secondly, we are going after the board members of Coal India for breach of fiduciary duty and the company. We believe that government interference is not in the public interest and is hurting the people of India as Coal India is being forced to sell natural resources which belong to the people of India at a sharp 70% discount to market prices. Itís like the 2G Telecom scandal, where scarce assets were sold far below market prices.
We expect the losses to be around USD 20 billion per year. Of course, the people of India would be the greatest beneficiaries because the government owns 90% of this. Most of the benefit will go to industrial companies in India.
Q: Are you in dialogue with the government. Are you considering exiting the stake if things donít work out at all?
A: No, not at all. Now we have a strong legal stance. We expect a constructive dialogue between the government and us and more importantly between the board of Coal India and TCI going forward.
We are encouraging the people of India to support us in this case because itís about corporate governance and the future of India. We have launched a website called www.coal4india.com and we encourage people to post their comments because we canít do this without the support of the people of India.
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