THE Rs 98,000-CRORE LAND SCAM BY PRAFUL PATEL? ON the surface, these appear innocuous, unrelated figures: Cost of land at Mumbai and Delhi airports at market value – Rs 98,000 crore; cost of construction of new airports at Mumbai and Delhi – Rs 14,300 crore. But, placed under the microscopic scrutiny of investigative reporting, these numbers bespeak a horror story of how the Ministry of Civil Aviation under Mr Praful Patel brazenly gifted India’s most expensive public real estate to private consortiums under the government’s so-called “airport modernization” programme.The beneficiaries of these sweetheart deals, which would have been denounced under accountability and anti-corruption laws in most responsible democracies, are laughing all the way to the bank with a Rs 83,000 crore booty. The beneficiaries: GVK Power & Infrastructure and GMR Industries, cleverly disguised in public-private partnerships. The benefactor: Minister Praful Patel. AAI conducted no price survey or evaluation of the land before entering into identical agreements with GVK and GMR.In January 2006, consortiums led by GVK and GMR and comprising Airport Company South Africa and Bidvest and other allied companies were awarded the work to operate, develop, design, construct, upgrade, modernize and manage Chhatrapati Shivaji International Airport (CSIA) and Indira Gandhi International Airport (IGIA) on land owned by the Airports Authority of India. The details, as pieced together by gfiles, add up to a sordid tale of nepotism and a fraud on the public treasury perpetrated bald-facedly by Mr Patel and conniving senior officials in the teeth of serious reservations voiced on the record by dissenting officials who believed that the public interest was being sacrificed at the altar of vested interests out to make a free killing.Consider the following facts:•Shockingly, the owner of this invaluable land (the per unit value of which is possibly the highest in the world) – Airports Authority of India (AAI) – conducted no price survey or evaluation of the land before entering into identical agreements with GVK and GMR. At the time, the land was being used on lease by the National Aviation Company Ltd (NACIL), formed after the merger of Air India and Indian Airlines in 2007. Even more shocking is the fact that when the new airport comes up at Navi Mumbai in 2014 and the existing CSIA becomes redundant, GVK will become the owners of this land automatically as per the Companies Act. Surprisingly, there is no mention in the agreement with Mumbai International Airport Pvt Ltd (MIAL) of whether the company will be dissolved and the land will be repatriated to AAI.•Had the land evaluation been carried out by experts and the land sold or even given on lease to GVK and GMR, the revenues generated could have easily wiped out the entire debt of the merged IA and AI, instead of burdening the national exchequer with a Rs 50 billion bailout plan. •MIAL and DIAL (Delhi International Airport Pvt Ltd) are joint-venture companies owned by the GVK- and GMR-led consortiums, respectively, each with 74% share while Airports Authority of India has 26% share. Formed in March 2006, MIAL and DIAL were to operate, manage and develop CSIA and IGIA, respectively. By this simple incorporation of MIAL and DIAL with AAI as a minority shareholder, GVK and GMR de facto became the instant owners of India’s prime landed property at Mumbai and Delhi. All that GVK and GMR had to do was shell out a trifling $1.2 billion (Rs 5,500 crore) and $2.6 billion (Rs 8,080 crore), respectively, for construction, development and management of these airports.•Under this land transfer arrangement to MIAL and DIAL, GVK and GMR earned instant assets of Rs 83,000 crore. Land value: Rs 98,000 crore. GVK and GMR investment: $1.26 billion and $2.6 billion, respectively, totalling Rs 14,300 crore. Not only were GVK and GMR able to pump in the $1.26 billion and $2.6 billion of their commitment from this asset that fell like manna, they also began amortizing its outlay through lease fees and operational costs charged to different airlines.The alacrity and rapidity with which the deals were allegedly consummated by Mr Patel probably set a record.•The alacrity and rapidity with which the deals were allegedly consummated by Mr Patel probably set a record in the annals of ministerial and bureaucratic decision-making in India where papers do not move for months. The Rs 83,000- crore bonanza scheme for GVK and GMR was rammed through in record time. Those present at the first meeting on October 4, 2007 to implement the whole idea were the Joint Secretary, KN Srivastava, Chairman, Airports Authority of India, K Ramalingam, CMD, NACIL, V Thulasidas, the Secretary, Civil Aviation, and representatives of MIAL and DIAL. The proceedings of the meeting (of which gfiles has a copy) were pre-orchestrated. With minor suggestions/objections, all discussions went as per the Minister’s wishes. The GOI’s safeguard tools (read bureaucrats) were in mute mode.GVK Group, builders of Mumbai International Airport“Acentury ago, Jamshedji Tata was like me. But, I cannot say I will become like the Tatas tomorrow. It takes time to grow. If we have ambition, the sky is the limit,” said GVK group chairman GVK Reddy. He started his career at the age of 22 as a small-time contractor building the Nagarjuna Sagar-Srisailam canal works. Today, at 76, he owns an empire of over $5.24 billion (Rs 25,000 crore). GVK reckons that the Mumbai International Airport is the most difficult airport to build as it has only 2,000 acres of land, unlike the newer airports which are much bigger in area. His company’s board of directors consists of Abid Hussain, former Indian Ambassador to the US, G Krishna Murthy, Sanjay Narayan (Joint Secretary, Ministry of Civil Aviation, when the airport planning and sanction meetings were on), KN Shenoy, P Abraham and Pradip Baijal. •Among the few conscientious objectors was the General Manager, Legal, Air India, TN Kumar (now deceased). He had initially penned adverse comments on the file. In addition, a year after the deal was inked, he emailed Executive Director R Harihar (06.06.2008) to point out that the language of the Memorandum of Understanding (MoU) was cleverly weighted against the interests of NACIL. The draft MoU stated, “Parties have agreed that a Master Plan is to be developed to accommodate all Existing NACIL facilities at Old Airport, New Engineering Complex and other locations at Chhatrapati Shivaji International Airport (CSIA), for this purpose areas of the various existing facilities shall be mutually finalized between the parties and the Architect to be appointed and paid by MIAL. Areas shall be rationalized without affecting requirements of NACIL as per Master Plan of NACIL.”•Kumar pointed out that there should have been mention of specific areas and, as decided by the CMD, future requirements for the next 10 years should have been configured. He added: “Airport development needs to be defined. This term is so vague that it could include the best facilities for our competitor airlines at favorable locations to those airlines and again to the detriment of NACIL. Airport development can be the taxi ways or essential operational requirement.” Nobody listened.•But Kumar was no quitter. He further pointed out that NACIL had never agreed to the relocation of the existing simulators, yet this had been conceded and presented as a fait accompli. Who authorized this extra-legal benefit that went against the interests of India’s national carrier?GMR Group, builders of Delhi International AirportGMR Industries was set up in 1978 and was the brainchild of its present Chairman, Grandhi Mallikarjuna Rao. GMR Industries is among the fastest growing companies in the Indian economy. Rao was ranked 198th in the “world’s richest” list of Forbes, and his wealth was valued at $2.6 billion. He is 14th on the “India’s richest” list. Rao, who started with jute mills, expanded the GMR group into the energy and infrastructure sectors. In 2007, the GMR group won a bid to privatize India’s third busiest airport, the Indira Gandhi International Airport. He spent $1 million on his bid and made a deal with Fraport AG to support his bid. The GMR group has also completed a $200-million Hyderabad Airport project. In April 2009, he was linked with a £500-million takeover of Liverpool FC. He owns the Indian Premier League cricket team, Delhi Daredevils.•Even more shocking was that land valued at Rs 3,000 crore and belonging to NACIL within the airport complex was also surrendered to the consortium. Kumar noted in dissent: “Regarding Para D (2) (C)…we have already agreed that the land belongs to NACIL and we have already got an opinion from M/s Bhasin & Company that NACIL becomes the owner of this land by way of adverse possession. In spite of this, it is surprising that you have conceded indirectly to surrender this nearly six acres of Land which as intimated would have an approx. market value of Rs 3000/- crores.”•Paragraph F of the MoU states that MIAL shall bear the cost of facilities/buildings as per details given to NACIL, including cost of air conditioning (wherever existing facilities of NACIL being relocated have similar facilities), electrical installations, data cabling, and so on. Cost of interiors, soft furnishing and furniture shall be borne by NACIL. Kumar questioned why NACIL should spend for interiors when it already had interiors. This spending would benefit only MIAL.•Paragraphs G & H, Kumar pointed out, were at total variance with what had been agreed to earlier. He wrote sharply: “I am totally disagreeing with what has been drafted by you in Para G & H. We had already agreed that the license fees/lease amounts would continue to be the same and will not be enhanced by MIAL. This is in view of the fact that the AAI had fixed some rate and NACIL should not be subject to increases as MIAL has earlier done in respect of vehicles where they have increased amounts in multiples of 20 and 25. This is minimum protection that NACIL can expect for the tremendous inconvenience that NACIL is going to suffer in future in the relocations etc. Further what has been stated by you is not in line and spirit of what has been agreed by the committee and so recorded.” The question that begs an answer from Mr Patel: How much did NACIL lose to MIAL by increase of lease rates?•Kumar summed up the systematic financial rape of the national carrier, guaranteed to deepen its fiscal ruin and place additional burdens on the national treasury. He could not have been more blunt: “As land is a crucial factor, we need to look at the issue that we as a national carrier can face in the event of the land being taken away from us by MIAL towards development of the airport and in the process offering the same to us on lease at astronomical rentals detrimental to our interests, especially in these difficult times when we are incurring heavy losses due to global recessionary trends.“While we are supportive of MIAL’s expansion plan for a modern airport, as a private player MIAL has a monopoly over airlines and therefore a right to demand a higher price to optimize its commercial deals. As a national carrier we need to fulfill the social obligations of the Government of India and also face the stiff competition from other airlines. “Being one of the important parties to whom the Airports Authority of India has been leasing their vast lands for over several decades for our use and to take it away without adequate compensation should not be a cause for criticism at a later date which needs to be examined in toto. Especially so, if land is being used for building of malls, hotels etc other than for airport development, in which case a share of the proceeds needs to be negotiated to be paid to us as our rightful share.”•MIAL has indicated that should the GOI’s stake in NACIL fall below 50 per cent in case of disinvestment, it would charge NACIL prevailing market rates for use of the airport’s facilities. Likewise, NACIL should, by right, have been given a share in revenues from MIAL’s development of malls, hotels, and other commercial ventures at the airport. But Mr Patel did not take this into consideration. PRAYER FOR JUSTICE•Praful Patel should be prosecuted and asked to publicly answer the questions posed in this petition.•Praful Patel’s personal properties and Rs 1,500-crore empire should be held in escrow by the government until the nation is satisfied with his reply so received.•If found guilty, Praful Patel should be imprisoned without bail to set an example for other Ministers not to treat the national wealth and national assets as their personal milch cows.•All the concerned officials from the Ministry, NACIL and AAI should be punished with imprisonment and all their assets should be confiscated and handed over to the nation.
Posted on: Sun, 23 Mar 2014 14:10:53 +0000
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