SAIL PROJECT SCAM: Dark, Dirty and Dubious reality of a Corrupt System

On its website, SAIL claims itself as the largest steel producer among PSUs. The recent SAIL PROJECT SCAM has shown that SAIL also has a dubious distinction of one of the biggest dens of corruption. In this article we shall cover the following:

1. How a General Manager named Rajeev Bhatia, posted at SAIL CMO Kolkata unearthed the whole SAIL PROJECT SCAM?

2. How he forced SAIL to stop sales of TMT BARS to FAKE PROJECTS?

3. How much did he add to SAIL’s top and bottom line?

4. What the Whistle Blower Rajeev Bhatia got in return and why?

SAIL’s sales & production basket contains a wide range of products which include Hot Rolled Coils, Cold Rolled Coils, Galvanised Coils, Plates, Pipes, CRNO Coils, Rails, Forged Wheels for Railways, Structurals, Wire Rods and TMT Bars. SAIL officials are allowed to sell TMT Bars only to Projects, Construction & Infrastructure companies and Distributors appointed by SAIL through competitive bidding. Out of the entire basket, TMT Bars is one such product which as per the SAIL’s stated policy is not available for OPEN TRADE/RESALE. Only SAIL Distributors are allowed to sell TMT Bars that too with in frame work provided to them by SAIL. The Distributor Channel is called Retail Channel in SAIL.

For the Retail Channel SAIL policy mandates that they would be given TMT Bars on the fixed prices which are announced regularly through a document called Marketing Tool. There is no scope of price negotiation. On the contrary, for Projects, Construction & Infrastructure companies, Regional Managers and ED (Sales & ITD) has been given the authority/power/DoP to negotiate and reduce the prices and go below the Marketing Tool prices. Apart from reduction, policy also allows to keep the prices fixed or constant for a period of three months.

The power to keep the prices fixed or constant for a period of three months is the most lethal weapon in the hands of SAIL officials and has been gathered that the same has been blatantly used by them to kill the top and bottom line of SAIL. At times when the steel market showcase signs of buoyancy and upward price trends, SAIL officials use the constant price power to approve the prices to particular FAKE PROJECT just before the formal announcement of price increase thus preparing a perfect ground for the FAKE Project to earn huge margins vis-à-vis the Distributors. It is noteworthy that in such scenario, Distributors pays the increased prices while the FAKE Project keep on getting the steel on pre-approved/pre-increased prices, although both have to sell the steel in the same market.

Modus Operandi of SAIL PROJECT SCAM

Although the guidelines mandate rigorous checks for ascertaining whether a firm is doing any project or construction work, SAIL officials purposely by-passed them to use the price reduction power for Traders/FAKE Projects. SAIL officials camouflaged Traders as Projects, Construction & Infrastructure companies and sold TMT Bars to them at heavy illegal discounts. The most disturbing aspect of the entire SCAM is that it was not out of lack of knowledge, mis-information or negligence but it was a planned act as the traders which were being camouflaged were largely known to SAIL through their other firms. These FAKE Projects procured the TMT Bars (at times other steel products also) from SAIL at heavy discounts and sold them in the open market for windfall gains. Another noticeable thing is that both distributors and FAKE Projects were operating in the same market but FAKE PROJECTS always had the edge in terms of prices. On one hand SAIL Distributors were competing with the SAIL rivals in the market and on the other hand FAKE PROJECTS of SAIL were posing a serious threat to them.

Whistle Blower Rajeev Bhatia broke the SCAM in Nov 2022 when he sent the complaint of Venkatesh Infra Projects P Ltd to Soma Mondal and V S Chakravarty, the then Chairman and Director (Commercial) of SAIL respectively. An illegal discount of Rs 55 Crores was given to the firm on supply of about 1,10,000 Tonne of TMT Bars resulting in extra benefit of Rs 5,000 PMT over the prices applicable for the SAIL Distributors.

In return Bhatia was immediately suspended and his complaint was buried. The same complaint when sent to LOKPAL by Bhatia, culminated into FIR by CBI. It has been gathered that after the case of Venkatesh Infra Projects P Ltd, Bhatia went on to uncovered large number of firms where the same game has been played by SAIL officials inflicting huge losses to SAIL exchequer and providing windfall gains to their favourite traders, probably for mutual gains. As per estimates, quantity sold to Traders in the name FAKE Projects could be as high as 15 Lakh Tonne during 2019 to 2024.

Sustained efforts of the Whistle Blower Rajeev Bhatia forced SAIL to retract, although reluctantly, from the path of sales to FAKE PROJECTS. In the process more volume of TMT Bars was now available for the RETAIL CHANNEL where on an average realisation were more by about Rs 3,500 PMT over the FAKE PROJECTS. It is noteworthy here that had the intentions of the SAIL management been honest, these additional volumes could be made available to the RETAIL CHANNEL earlier also but the Channel was deliberately kept thirsty due to ulterior motives.

SAIL still in denial mode whereas their own figures speak exactly the opposite

To corroborate above, Bureaugram.com places below the figures of RETAIL CHANNEL as taken from the investor’s presentations of SAIL available on its website.

# Additional Earnings would have been in line with 2025-26, had the sales to FAKE PROJECTS been stopped immediately after Bhatia broke the SCAM on 17.11.2022 before the then Chairman and Director (Commercial) of SAIL

What the Whistle Blower Rajeev Bhatia got in return and why?

The Whistle Blower who broke the SAIL PROJECT SCAM and added crores to the top and bottom line of SAIL was first kept under suspension for 10 months and subsequently given premature retirement by deliberately issuing a “STIGMATIC” order which says that he is being prematurely retired on account of inefficiency, doubtful integrity, and conduct unbecoming of an employee of SAIL and obstructs efficiency. Such an order is not only bad but perverse in law. It has been gathered that in one such case, for another officer, SAIL has recently withdrawn his premature retirement order before the Honourable Central Administrative Tribunal, Delhi.

On the contrary, SAIL management does not attach adjectives like inefficiency, doubtful integrity, conduct unbecoming of an employee of SAIL and obstructing efficiency to those officers who orchestrated the entire SCAM. It is noteworthy that 29 officers were suspended after the LOKPAL order in Jan 2024 and within six months all were brought back, with CBI investigations still on. Not only were they been brought back but given promotions and outstanding ratings in their Annual Appraisals.

It is nothing more than a child’s play to gauge that the treatment meted to the Whistle Blower Rajeev Bhatia is to take revenge on him as his pro-SAIL efforts are against the personal interest of SAIL management. It completely dried up the major source of corruption.