The Hindu Business Line : STCL under investigation, says Minister

Chennai, Sept. 23 La affaire STCL is under investigation and the culprits will be brought to book, the Union Minister of State for Commerce and Industry, Mr Jyotiraditya Scindia, has said.

Speaking to journalists of The Hindu group of publications today, Mr Scindia said in response to a specific question that the Ministry of Commerce is fully “seized of the matter” and is in the process of investigating the scam.

The issue relates to transactions of STC Ltd (formerly, Spices Trading Corporation Ltd), a wholly-owned subsidiary of State Trading Corporation of India, which comes under the control of the Ministry of Commerce and Industry.

In 2007, STCL changed tack in its business and began to trade in metal scrap. Last year, it contracted to import nickel and copper scrap. Eight banks paid Rs 1,300 crore for the purchase. While the consignment was paid for, the buyers in India refused to lift the products, which remained in the South Korean port of Busan, because the prices of the metals had fallen drastically in the meantime.

But even as STCL and the banks were trying to salvage any value out of the consignments, it was discovered that the containers held not nickel and copper scrap but steel scrap, which is of much lower value. In the meantime, the port authorities in Busan began selling the contents of the containers against their dues.

Several parties were involved in this transaction — banks, STCL, exporter, inspection agency (Worldwide Logistics Survey and Inspection), agents in India (Future Metals Pvt Ltd and Future Exim Pvt Ltd) and the final buyers of the product. There have been allegations and reports of collusion among these parties, which the Ministry of Commerce is investigating.

Answering a question, Mr Scindia said he would not want to comment on the current status of the investigations.

Five public sector and three private sector banks have practically lost Rs 1,300 crore. The worst hit is Vijaya Bank which lost the highest amount — Rs 290 crore. Ironically, the bank received Rs 500 crore from the Government towards capital in the first quarter of the year and in that very quarter, had to record Rs 290 crore of NPA — thanks to STCL.

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