Mumbai | Reuters — Indian authorities have opened an investigation into the heads of two leading fertilizer importing companies, alleging they secured commissions from overseas suppliers for inflating the prices of crop nutrient purchases.
The Central Bureau of Investigation (CBI), India’s top crimefighting agency, said late Wednesday it was investigating U.S. Awasthi, managing director of Indian Farmers Fertilizer Co-operative (IFFCO), and Pravinder Singh Gahlaut, the managing director of Indian Potash Ltd. (IPL).
IFFCO is co-operating with the CBI, a company spokesman said. IPL did not respond to Reuters request for comment. Awasthi and Gahlaut did not respond to Reuters requests seeking comment.
The CBI said searches were being carried out at the offices and residences of the two men in a dozen locations across India.
IFFCO, the country’s biggest fertilizer producer, and IPL, a leading importer, typically have import contracts for nutrients, such as with global potash miners, on behalf of Indian buyers.
In the CBI’s statement, it alleged that Awasthi, Gahlaut, members of their families and several others received kickbacks of tens of millions of dollars.
The CBI statement alleged that between the periods of 2007 and 2014, the accused cheated and defrauded IFFCO, IPL, their shareholders and the government by “fraudulently importing fertilizers and other materials for fertilizer production at inflated prices.”
India is one of the world’s top consumers of fertilizers and relies on imports of urea, potash and phosphate to fulfil significant amounts of local demand. The country also spends billions of dollars annually to subsidize fertilizer imports for farmers.
The prices of big purchases of fertilizers such as potash from Russia, Belarus and Canada are often considered as global benchmarks that can affect the spot price of these commodities.
“These officials of IFFCO and IPL have been importing fertilizers and raw materials… at highly inflated rates,” the CBI said in its statement.
IFFCO counts many state co-operative societies and some state marketing bodies as its shareholders. It in turn owns IPL, along with several public sector entities that are also shareholders.
— Reporting for Reuters by Rajendra Jadhav; additional reporting by Polina Devitt.Tagged CBI, crops, Fertilizer, IFFCO, imports, india, investigation, IPL, kickbacks, nutrients, phosphate, potash, prices, urea