Australia’s largest construction company, Leighton Holdings (ASX:LEI), is in hot water this week after their CEO was arrested on charges of cheating and criminal breach of trust. The arrest could cost the company a multimillion contract to develop and operate a $5.5 billion coal mine in India.
According to police sources, Raman Srikanth, chief executive of Leighton Holdings’ Theiss mining subsidiary in India, was arrested in relation to ongoing civil proceedings filed by Hyderabad-based Roshni Developers Private Limited in Singapore. Thiess Minecs India Private Limited is presently working on a coal mining project at Pakri Barwadih near Hazaribagh town in Jharkhand. The $5.5 billion coal mine is being developed for state-owned NTPC Ltd.
"Our teams went to Kolkata and arrested him. He has been remanded to judicial custody. It was a court directed case based on a complaint by Roshni Developers. We are investigating the case further," Deputy Commissioner of Police (Madhapur Zone) Kanthi Rana Tata said.
According to sources, Roshni Developers filed a private petition in a local court alleging that Thiess Minecs has resorted to criminal breach of trust and cheating by violating the agreement both the partied had entered in 2010. Representatives of Roshni Developers had alleged Thiess Minecs did not abide to their contractual obligations with regard to tapping a coal mine near Hazaribagh.
"By believing that they would get the sub-contract from Thiess, the owners of Roshni Developers had spent Rs 185 crore on the mining project. However, Roshni Developers alleged that after getting the contract from NTPC to develop the mine, Thiess Minecs cheated them by not giving sub-contract," the inspector said.
Since the arrest, the future of the Pakri Barwadih coal mine is in jeopardy as NTPC Ltd. issued a notice to terminate the contract, which was awarded to Thiess Minec in 2010.
Shares of Leighton Holdings closed at AUD 19.8, down 1.25 per cent from the previous close in the Australian Securities Exchange.