Friday, November 19, 2010

Despite CAG indicting MADC boss R C Sinha for land allotment to Satyam, why Govt, Oppn are silent

Despite CAG indicting MADC boss R C Sinha for land allotment to Satyam, why Govt, Oppn are silent

-First come First Serve Basis allotment led to removal of A Raja, but Sinha, who is indicted by CAG on same ground, got an extension as MADC Vice-Chairman and MD?
-CAG report blames MADC for extending undue benefit of Rs 20.21 crore to Satyam Computer Services Limited by sale of land at lower rates
-Incidentally, R C Sinha was Chairman of Maytas Infra, a sister concern of Satyam when the land and adjoining lake was allotted to Satyam, attracting CAG rap

By Rahul Pande

WHILE the Opposition is insisting on strict action against ex-Telecom Minister A Raja in the 2G spectrum allotment scam after the Comptroller and Auditor General’s (CAG) report confirmed the massive loss, the very same opposition is conspicuously silent over another major scam unearthed in a CAG report revealing loss of Rs 20.21 crore in land allotment to Satyam Computer Services Limited by MADC MD R C Sinha. The CAG report was tabled in the budget session of Maharashtra Assembly in April 2010 which clearly blamed MADC bosses for causing massive loss to the State Government and indicted them for granting an “undue benefit” of Rs 20.21 crore to Satyam Computer Services Limited (SCSL). The “First come First serve” basis which attained notoriety in 2G spectrum scam, was also used by MADC while allotting land to Satyam and invited stringent criticism from CAG. The CAG report had also slammed MADC for land allotment to a chosen few without formulating a proper policy and without approval of its own Board.
Incidentally, Sinha was Chairman of Maytas Infra Limited (a sister concern of Satyam promoted by the now incarcerated Ramlingam Raju) and hence the matter became all the more serious for clash of interest and allotment of prime land to Satyam. In fact this clash of interest and involvement of Sinha in MADC and Maytas has made the matter far more serious. But curiously, the ruling party and the opposition, which usually leaves no chance to attack the Government, remained tight-lipped for reasons best known to them and Sinha continues to be the Managing Director of MADC and joint venture Mihan India Private Limited (MIPL), in which MADC has 51% stake, while Airports Authority of India has 49% stakes. The MADC registered MIPL as private limited company and was rightly pulled up by Union Civil Aviation Ministry for this blunder. In effect, a private limited company, accountable to none, became owner of the airport with its assets. Ironically, Sinha who retired a decade ago, was granted extension, again without permission of the High Court, which is mandatory according to the judgment of Aurangabad bench of Bombay High Court.
This scandal became murkier when farmers and social activists revealed that MADC had allotted land to Satyam in such a manner that a 130 acre lake would be automatically in possession of Satyam without paying a penny. The MADC was never able to justify the action and feebly claimed that they badly required an anchor project for MIHAN and hence concessional rate was offered to Satyam.
The CAG report made it crystal clear that Satyam was given land at a rate much lower than the existing market price for the MIHAN. And Satyam was given the concession without the approval of the board of directors of the Maharashtra Airport Development Company (MADC), nodal agency for the project.
The land in question was forcibly acquired from the farmers for a pittance and the CAG report had clearly established as to how Sinha allotted land to Satyam- while he remained head of its sister concern, again at a throwaway price, without following rule book.
While selling land to various companies to establish their facilities at the Special Economic Zone (SEZ) in Mihan, the rate finalised by the board of directors was Rs 24.28 lakh per acre.
However, SCSL was given land at the rate of Rs 18 lakh per acre. It resulted in a loss of Rs 6.28 crore for the MADC, and subsequently for the government. On the other hand, Shapoorji Pallonji and Company Limited (SPCL) had to buy land at Rs 26.3 lakh per acre — a rate higher than the quoted price.
After the first deal at a discounted rate in 2005, SCSL made a request for additional land. The company was allotted 28.06 acres of additional land at the rate of Rs 22.35 lakh per acre in March 2007. This was again done without the approval of the board of directors.
The market price during 2005-06 was Rs 72 lakh per acre, as offered by a private developer for the non-processing zones. The irregularity led to a revenue loss of Rs 13.93 crore. The total loss in the two deals was Rs 20.21 crore, the CAG report has said.
In its clarification to the CAG, the MADC management has said that the first allotment to SCSL and the SPCL deal was not made on the same day. However, the CAG refused to buy this logic.
“Advertisement for the land was given in December 2004, while the Centre approved the SEZ in August 2005. It is true that the allotments to SCSL and SPCL were not done on the same day, but both proposals were approved in the same meeting on December 5, 2005,” the report said.
Sinha continued to be non-Executive Director and Chairman of Maytas Infra Ltd till January 2009 and tendered resignation of directorship and chairmanship of the company after the Satyam scandal rocked the country and its founder Ramalingam Raju was arrested for the biggest corporate fraud.
According to some social activists, R C Sinha had admitted that he was director of Indu Developers and has been on Bengal Ambuja board for eight years. This company is a joint venture between West Bengal Housing Board and the Gujarat Ambuja Cements Limited. Indu Developers and Ambuja Realty are reported to have been allotted Mihan land at much cheaper rates, the activists claimed. This has apparently raised a serious question-mark over land deals struck by Sinha and various companies in which he was occupying high positions.

Satyam and Maytas

Ramalingam Raju, founder of Satyam Computers floated another company-Maytas Infra by reversing alphabets and Sinha was Chairman of Maytas till January 2009. Incidentally, Satyam after purchasing land surrounding lake at highly concessional price and entire lake without paying a single penny, did not proceed any further. The land is lying idle since last five years and apparently the detailed project report was not submitted. As per the Industrial land allotment policy, the company has to start operations within three years and follow its project report, but Satyam has done nothing till today.

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