ArcelorMittal “inadvertently” shared a “draft letter” raising questions about Vedanta’s eligibility to bid for Essar Steel, only to retract it later with a disclaimer that it reserved its right in the matter.
A letter was sent to the resolution professional (RP) of Essar on September 15, drawing his attention to Vedanta and its connected persons’ alleged environment law violations in India (specifically, Tuticorin and Lanjigarh), Zambia as well as other jurisdictions.
It also drew attention on the alleged illegal mining, disregard for safety standards and human rights violation. The “draft” letter was for the benefit of the committee of creditors (CoC) to assess the eligibility of the resolution applicants as well as the feasibility and viability of any resolution plan submitted by such applicants.
Vedanta reacted strongly on news of such a letter being sent to the RP. “We are highly disappointed that such baseless and irrelevant issues are being raised and unfounded allegations are being made with the objective to malign competitors. Similar attempts were made at the time of our bid for Electrosteel Steels Limited as well and the same were dealt with by the National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT) appropriately by dismissing the challenges of the competing resolution applicants.
The NCLAT, in its order dated August 10, 2018, declared Vedanta as an eligible applicant under Section 29A of the Insolvency and Bankruptcy Code (IBC),” the firm’s statement read. However, it emerged later in the day that Arcelor sent a second letter to the RP dated September 16, saying that an internal draft of a letter in relation to Vedanta was inadvertently shared.
The letter reviewed by Business Standard, however, read, “Note that we hereby reserve all our rights in relation to the matters referenced therein.”Vedanta is understood to have put in a bid of Rs 340 billion for Essar in the second round. Arcelor raised its offer Rs 420 billion and committed to pay Rs 70 billion according to the NCLAT order. It, however, has also moved Supreme Court against the NCLAT order.
Past allegations against Vedanta raised by another bidder, Renaissance Steel India, at the time of Electrosteel acquisition, were with regard to the Konkola Copper Mines (KCM) in Zambia.
In 2010, KCM, a subsidiary of Vedanta plc, was convicted and fined for environmental violations in Zambia. Renaissance had moved the Kolkata Bench of the NCLT, which ultimately approved Vedanta’s resolution plan. The Bench also noted that KCM was a “connected person” of Vedanta but not a habitual offender.
Renaissance had appealed in the NCLAT as well which too found Vedanta to be eligible on grounds that no “natural personal” or director of Vedanta plc was convicted for the offence, which is punishable with imprisonment of two years or more.