New Delhi: After targeting Russia’s VTB Group-backed Numetal, ArcelorMittal has now targeted Vedanta Ltd — the third bidder in the race to acquire debt-laden Essar Steel — alleging environmental law and human rights violations by the Anil Agarwal firm.
ArcelorMittal, which is competing against Numetal Ltd and Vedanta for the takeover of Essar Steel, on September 15 wrote a six-page letter to the Resolution Professional overseeing the auction of debt-laden steel producer, according to the letter reviewed by PTI.
Stating that the cornerstone of the Insolvency and Bankruptcy Code, under which Essar Steel is being auctioned to recover over Rs 49,000 crore of unpaid loans, is full and complete disclosure of all material facts, ArcelorMittal in the letter said it is inviting attention to certain facts in respect of Vedanta.
Stopping short of seeking disqualification of Vedanta, the company said the "facts" were in relation to alleged “environmental law violations committed in India and Zambia, illegal mining, disregard for safety standards and human rights violations”.
While ArcelorMittal spokesperson declined to comment, a Vedanta spokesperson said it was "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 Ltd as well and the same were dealt with by NCLT and NCLAT appropriately by dismissing the challenges of competing resolution applicants. NCLAT in its order dated August 10, 2018, declared Vedanta Limited as an eligible applicant under Section 29A of the IBC,” the spokesperson said.
The National Company Law Appellate Tribunal (NCLAT) had on September 7 held Numetal's Rs 37,000 crore second-round bid for Essar Steel was valid, but rival bidder ArcelorMittal would have to clear Rs 7,000 crore overdue loans of its previously associated firms to qualify for the acquisition.
ArcelorMittal subsequently revised its bid to Rs 42,000 crore and challenged before the Supreme Court the NCLAT order asking it to clear the dues of Uttam Galva and KSS Petron. The court is likely to further hear the appeal on Tuesday.
In the letter, ArcelorMittal highlighted alleged environmental law violations at Vedanta's Tuticorin copper smelter plant and conviction of Konkola Copper Mines (KCM) in Zambia for a similar offence.
The ministry of environment had declined Vedanta a nod for its Lanjigarh refinery expansion in Odisha for not adhering to provisions, ArcelorMittal said in the letter adding international investors had withdrawn from the Vedanta Plc due to environmental practices.
It alleged that Sea Goa, a subsidiary of Vendata, was doing illegal mining in Goa, Bharat Aluminium Co (BALCO) disregarded safety standards and Amnesty International in three reports has alleged "numerous violations of environmental laws and regulations as well as abuses of the human rights of the indigenous inhabitants."
Numetal too has moved the Supreme Court challenging NCLAT order that gave ArcelorMittal three days to clear the dues. It says there is no such provision under the IBC which allows three days to clear dues by defaulting bidders to become a qualified bidder.
In its September 7 verdict, NCLAT had said that ArcelorMittal was ineligible, under Section 29A of the IBC code, to bid for Essar Steel on account of defaults by Uttam Galva and KSS Petron where ArcelorMittal (AM) and Lakshmi Mittal were the promoters.
Numetal argues that the IBC regulation very clearly provides that ArcelorMittal should have paid the NPA overdue before submitting a bid for Essar Steel.