The arrest of I-PAC co-founder Vinesh Chandel by the Enforcement Directorate (ED) has added a fresh layer of controversy to an already politically sensitive investigation in West Bengal. Arrested in Delhi
under the Prevention of Money Laundering Act (PMLA), Chandel’s arrest follows a series of searches conducted across multiple cities targeting individuals linked to the political consultancy firm.
The ED’s action comes just days before crucial elections in West Bengal, amplifying its political significance. While the arrest centres on alleged financial irregularities involving I-PAC, the roots of the case lie in a much older investigation, an alleged coal smuggling racket operating out of eastern India’s mining belt.
What Is The West Bengal Coal Smuggling Case?
The case originates from a November 2020 FIR filed by the Central Bureau of Investigation (CBI), which flagged a large-scale coal pilferage racket in mines operated by Eastern Coalfields Limited (ECL) in areas like Kunustoria and Kajora near Asansol.
Coal was allegedly being illegally extracted or stolen from operational mines, and was then being sold in the black market. The operation reportedly generated huge amounts of unaccounted cash. Over time, this evolved into what investigators describe as a well-organised smuggling network, involving multiple intermediaries, transporters, and financiers.
How Did The Illegal Coal Trade Operate?
According to probe agencies, the racket functioned through a mix of theft and informal distribution channels.
The ED explained how coal was pilfered from mining sites, often with insider support, and was then transported without proper documentation. Buyers included industries willing to purchase cheaper, off-the-books coal. This created a parallel supply chain, bypassing regulations and generating massive illicit profits.
The ED’s case primarily focuses on what happened to the money generated from this illegal trade.
Investigators say the proceeds were collected largely in cash, moved through hawala channels and were routed into legitimate-looking transactions via shell entities.
The agency has specifically alleged that a hawala operator linked to the coal network “helped move tens of crores of rupees” into entities connected with I-PAC.
This layering of funds is central to the money laundering case.
Why Has I-PAC Co-Founder Been Arrested?
The ED alleges that I-PAC was one of the entities where these funds were routed.
According to investigators, funds linked to the coal racket were channelled into I-PAC. Some transactions were structured to appear legitimate. The ED says around Rs 50 crore is under scrutiny as suspected proceeds of crime.
In its remand note, the ED claimed, “Substantial amounts were credited without any genuine business purpose,” suggesting that the firm may have acted as a conduit for routing illicit funds. The ED has laid out a detailed “modus operandi” describing how funds were allegedly handled. The agency claims payments were divided between formal banking channels and unaccounted cash. “Only part of the payments were recorded, the remaining portion was received in cash.”
Investigators allege that fake invoices were raised to justify incoming funds, “Transactions were deliberately structured to provide a colour of legitimacy to otherwise illicit funds.”
The ED has also questioned unsecured loans shown in company books. “The so-called loan was merely a facade to introduce unaccounted funds.” The probe points to the use of informal networks. “Proceeds of crime were systematically layered, including hawala transactions.”
The ED alleges that as a key decision-maker, Chandel had control over financial operations and was involved in handling and routing funds.
The ED’s case against Vinesh Chandel hinges not the theft of coal itself, but the alleged laundering of its proceeds through structured financial channels
As the investigation unfolds, the key question will be whether the agency can establish a clear, provable link between the coal syndicate’s money trail and the financial operations of entities like I-PAC.
