Highway
Robbery INVESTIGATIONS Tehelka report
There is corruption beyond the 2G scam. India’s highways and road
construction projects are mired in multi-million financial scandals. Ashish
Khetan exposes the builder-official nexus that plagues our roads
IN THE
2G scam proceedings before the Supreme Court and the trial court, the Central
Bureau of Investigation (CBI) has been variously caricatured by both the
complainants and the accused as the Congress Bureau of Investigation, the
Confused Bureau of Investigation and Central Bureau of Imagination. It’s an
undeniable fact that when it comes to bringing to book the high and mighty, the
track record of the country’s so-called premier investigating agency has been
dismal. The Bofors scam, the Babri Masjid demolition case and the anti-Sikh
riots cases are only some of the sensitive cases that ran aground because of
the CBI’s biased and subservient approach towards ruling politicians.
“Will the case be over
in seven years? Seven months down the line we have seen paper book after paper
book being filed, rolled-up chargesheets filed, witness after witness being
called. This has been going on without a trial for months together now,” a
Bench comprising Justice GS Singhvi and Justice HL Dattu quipped on 14 October
while hearing the bail application of the 2G scam accused. The court wanted to
know from the CBI how long it planned to continue with the investigation.
Many believe — perhaps
justifiably so — that but for the sustained judicial activism of the SC Bench
comprising Justice Singhvi and Justice AK Ganguly, former telecom minister A
Raja would have still been in Sanchar Bhawan while Swan Telecom Director Vinod
Goenka, Unitech Managing Director Sanjay Chandra and DB Realty promoter Shahid
Balwa would have still been jet-setting.
But what about those
cases of graft that are not being monitored by the court? After all, telecom is
not the only ministry afflicted by the malaise of corruption. The Ministry of
Road Transport and Highways, particularly its apex agency for development of
national highways — the National Highways Authority of India (NHAI) — has been
mired in a spate of allegations of corruption and crony capitalism. Because of
rampant corruption, poor planning, inefficiency in execution, cost overruns and
inordinate project delays, the very objective behind creating NHAI, which was
to take national highways to global standards and thus work as an engine for
economic development, has been defeated. In a statement issued on 18 October,
the Associated Chambers of Commerce and Industry (ASSOCHAM) estimated the economic
loss due to bad condition of roads at over Rs 30,000 crore per year. In August
2010, the road transport ministry told the Rajya Sabha that out of 441 projects
undertaken by the NHAI since its inception, 299 (67.80 percent) had been
delayed, resulting in massive cost and time overruns.
THE ROT within the NHAI first came to the fore when,
during the NDA rule in 2002, a NHAI engineer, Satyendra Dubey (later murdered
under mysterious circumstances) wrote to then prime minister Atal Bihari
Vajpayee blowing the whistle on the rampant corruption and crony capitalism
prevailing in the ministry.
Over the past three
years, the CBI has received over 100 complaints, some anonymous and some
official, alleging a deeprooted nexus between officials in the NHAI and the
road transport ministry and various private developers. It is alleged that
crores of rupees are routinely paid as kickbacks to procure highway development
contracts, manipulate bid documents, rig the tendering process, inflate project
costs, avoid penalty for delays in execution, shoddy construction and for the
officers to look the other way while private firms collect toll much before the
highways got completed. Each complaint spoke about a specific project running
into hundreds of crores and gave details about the irregularities and graft
involved.
But out of over 100
complaints of corruption received, all of which were about the projects awarded
during Kamal Nath and his predecessor TR Baalu’s tenure, the agency in its
wisdom saw merit in just three. It registered cases of regular offence and then
carried out raids and made arrests. Two of these cases were registered in
December 2009, and one was registered in May 2010. But shockingly, in none of
these three cases has the CBI so far filed even a single chargesheet.
Ironically, in two out
of the three cases, the 2G Supreme Court Bench judge Justice Singhvi’s younger
brother SS Singhvi was named as the main accused. It was alleged that Singhvi,
while he was posted as chief general manager of NHAI’s Chennai regional office,
entered into a conspiracy with two private infrastructure companies — Indu-
Navayuga Infra Pvt Ltd and Madhucon Projects Ltd — and by abusing his official
position allowed the companies to collect massive amount of toll even though
road construction was far from complete. The CBI had alleged that Singhvi’s act
allowed the contractor to make illegal gains and put the lives of those using
the incomplete highway at risk. Irregularities in toll collection constitute a
big area of corruption in the management of national highways.
But surprisingly, over a
year after the FIRs were registered against Singhvi, the CBI in February this
year filed a wishywashy closure report in one out of the two cases, saying the
FIRwas a ‘mistake of fact’. The report, a copy of which is available with
TEHELKA, is full of baffling non sequiturs. It concludes by saying that the
agency could not find any ‘mala fide’ intention in Singhvi’s conduct but at the
same time recommended “suitable action” to be taken against him by the NHAI for
showing undue haste in granting sanctions to the contractor. The agency didn’t
spell out what it meant by ‘suitable action’. However, while closing the case,
the agency curiously chose to keep the second case open. The modus operandi of
the scam alleged in both cases was exactly the same. Till date, the CBI has not
concluded its investigation in the second case.
THE THIRD case registered by the CBI against the NHAI is
even more curious. It involved the alleged rigging of the Rs 2,500 crore tender
to build a 174 km highway connecting Nagpur in Maharashtra to Betul in Madhya
Pradesh. Sometime in the month of April 2010 while the tendering process for
the project was still on, the CBI got a specific tip-off that the bid was going
to be rigged in favour of a company named Oriental Structural Engineers Pvt Ltd
(OSEPL). The CBI conducted a preliminary inquiry and found enough merit in the
allegations. The agency, after seeking necessary approvals from the Ministry of
Home Affairs, started tapping the telephone lines of a few top company
executives and two senior NHAI officials. A few weeks of tapping yielded
incriminating evidence of the builder-official nexus. As informed by the
complainant, all other bidders except OSEPL were eliminated at different stages
of the tendering process before the tender was finally awarded to it.
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In the initial stages at
least, the agency showed firm intent and moved fast to register an FIR. On 26
May, the agency carried out simultaneous raids at the offices of NHAI and
OSEPL. Two senior NHAI officials and two top executives, including OSEPL’s managing
director, were arrested and sent to jail. According to an official press
release, the sleuths had found a whopping Rs 2.87 crore in cash at the homes of
the two NHAI officials. But more than a year-and-a-half later, the CBI has not
yet concluded its investigation nor has it filed its first chargesheet. As a
result, the accused are out on bail, going about their usual business. More
shockingly, despite the FIR in which the CBI had laid down the modus
regisoperandi in great detail, and the subsequent raids and arrests, the NHAI
went ahead and awarded the Rs 2,500 crore contract to the same company with
which it is alleged to have entered into a conspiracy. When the award was
contracted, Kamal Nath was the surface transport minister.
If you thought this wasn’t
bad enough, consider the following. A few months after the FIR was registered,
the CBI wrote several letters to then Cabinet secretary KM Chandrashekhar and
the road transport ministry seeking sanction to investigate the then member
(Projects) SI Patel, as the investigation had yielded prima facie evidence
suggesting Patel’s involvement in the alleged rigged tender. Patel was an IAS
officer of the additional secretary level and thus prior permission from the
ministry was required before the CBI could move against him. But Nath
steadfastly refused the CBI the necessary sanction, frustrating its attempts to
go to the depth of the conspiracy. A helpless CBI then wrote to the government
to at least transfer Patel from NHAI. Last November, Patel was repatriated to
his parent cadre of Gujarat.
Repeated attempts to
seek an official response from the office of NHAI Chairman AK Upadhyay and also
the authority’s official spokesperson Vishnu Darbari proved to be futile. A
senior NHAI official, speaking on condition of anonymity, justified the
decision to give the contract to OSEPL, saying that signing the concession
agreement was perfectly logical since the firm was the lowest bidder and a
letter of award had already been issued when the CBI registered the case.
According to a
contractor, at every stage of a project, one has to bribe officials. From
getting monthly bills cleared to clearances of quality control to completion
certificates, the contractor has to give a certain percentage of the money
cleared to officers in charge. At least 3-5 percent of the cost of every
project is paid in bribes, they allege. In some cases, the contractors pay
kickbacks to the NHAI engineers and overseeing consultants and inflate the
project cost many times over. The officers pass the cost overruns on some
pretext or the other.
The NHAI has often been
rapped by the CAG for irregularities in project execution and cost overruns.
Three years ago, the CAG estimated a revenue loss of Rs 384.25 crore to the
exchequer because of the irregularities in two major national highways. The
same CAG report also blamed the NHAI for faulty preparation of detailed project
reports (DPR) in many projects, resulting in cost overruns. But unlike its
report on the 2G spectrum sale, which led to a political storm, the CAG’s
adverse observations about NHAI’s poor functioning and losses estimated in
different projects have caught little attention.
Many in the industry see the past five years of UPA as one
of policy stalemate within the road transport ministry. “I’d not like to
comment on individual ministers but the fact is that there is rampant
corruption in the NHAI,” says a senior Planning Commission official on
condition of anonymity. “The system of checks and balances has clearly failed
to tackle this menace. The CBI also has proved to be completely ineffective in
nailing the culprits. Either they don’t understand the modus operandi or they
just lack the capabilities to investigate sophisticated and institutionalised
corruption like that which prevails in the NHAI.”
Or is it the case that the agency is afraid that if these
investigations are taken to their logical conclusion, many more heads in the
UPA may roll? People who are aware of the details of the investigation told
TEHELKA that like the Niira Radia tapes, the tapped phone conversations between
top NHAI officials and owners of OSEPL carry incriminating statements which, if
placed in the public domain, are bound to embarrass an already scam-ridden
government. Whatever its reasons, the fact is that with no court or special
body to monitor it in NHAI-related matters, the CBI seems to be unwilling to
carry the ball.
Reacting to the charges, CBI spokesperson Dharini Mishra
told TEHELKA, “The CBI had registered two cases against SS Singhvi on 9
November 2009. The allegations in both cases were similar, which was abuse of
official position to cause pecuniary advantage to private persons. In the case
pertaining to Madhucon, the CBI filed a closure report u/s 173 (2) (i) of CrPC
and it was accepted by the court. The second case is still under
investigation.” When contacted, Singhvi refused to comment.
CBI files closure
report in one case against Singhvi, keeps the second case open On 10 December
2009, the CBI carried out simultaneous day-long raids at Singhvi’s offices and
premises in three cities — Chennai, Delhi and Jaipur.
The CBI told the
media that it was a multi-crore scam and that they had seized several documents
and details of assets worth over Rs 1 crore from the possession of Singhvi and
his family. The CBI disclosed that the searches at Singhvi’s posh Shyam Nagar
residence had yielded documents of a 400-sq yard plot at Jagdamba Nagar on
Ajmer Road purchased for Rs 25 lakh, besides Rs 4.70 lakh in cash and gold
weighing around 500g. “A large number of bundles containing NHAI office files
were found stacked in the basement. We have also seized passbooks of 30 bank
accounts and details of two bank lockers of Singhvi in Chennai. A large
quantity of Indian and foreign liquor was also recovered,” a CBI spokesperson
had told the media.
Raids were also
carried out at the residence and office premises of private contractors at
Samayapuram, Aravakurichi and Tiruchendur in Tamil Nadu and in some places in
Andhra Pradesh. The CBI also claimed to have seized several highend mobile
phones and laptops, which they claimed were allegedly gifted to Singhvi by
private contractors. Consequently, the agency registered two cases against
Singhvi, one for the alleged favours to a private firm named Madhucon and
another with regard to Indu Navayuga Infra Pvt Ltd. On various occasions in the
past, Madhucon had been issued official warnings by the NHAI for shoddy and
delayed work. But on each occasion the company managed to evade penalties or
blacklisting.
In the case involving Singhvi registered by the CBI, the crux of
the matter is as follows: The NHAI had entered into a concession agreement
dated 20 April 2006 with Hyderabad-based Madhucon Projects Ltd for (i) design,
engineering, construction, development, finance, operation and maintenance of
the stretch from Karur Bypass to Dindigul (68 km) and (ii) improvement,
operation and maintenance of the 13 km Karur Bypass on NH-7 in Tamil Nadu on
Build, Operate and Transfer (BOT) basis. The validity of the agreement was for
a period of 20 years, which means the company was entitled to collect toll for
20 years after completing the contracted work. But Singhvi, by misusing his
position, the FIR alleged, allowed the contractor to start collecting the toll,
which was about Rs 1.5 lakh per day, at a time when work on these highways was
far from complete.
Over a year after the FIRs were registered, the CBI filed the
closure report in this case. The report was first filed before the principal
sessions judge, Chennai, on 24 February this year. In March, the judge returned
the report and asked the investigating officer (IO) P Rama Mohana Rao, a deputy
SP with the CBI, to submit the report along with statements of witnesses
recorded by the agency. On 29 March, the IO resubmitted the report along with the
witnesses’ statements. On the same day, the judge passed the order saying,
“Reasons stated therein are convincing. Hence the FIR is closed.” However, a
quick read of the report reveals glaring gaps in the CBI’s investigation. The
report, running into over 70 pages, leaves several key questions unanswered and
the suspicious circumstances surrounding the act unexplained. The judge clearly
erred by not asking the agency pertinent questions seeking explanations about
the glaring lacunae in its investigation and closed the case in unjustifiable
haste. The CBI’s final report made the following arguments justifying the
closure of the case:
THE INDEPENDENT consultant
in-charge of the project, a foreign firm named Egis Bceom International, issued
the provisional certificate of completion after which the contractor started
collecting the toll (The NHAI has independent consultants monitoring projects).
The certificate was issued after due consultation with and
approval from the NHAI. At the time of issuing the provisional certificate, the
work on the highway was not over but it was still issued in accordance with a
provision provided in the agreement by which the contractor could be given
permission to collect toll if most of the work was over and what remained was
only minor work that would not hamper the commercial use of the highway.
Singhvi only passed on the request proposal from the consultant to
issue the provisional certificate to NHAI headquarters and accordingly
permission came from officials in Delhi and not from Singhvi.
Since the FIR alleged that Singhvi had given permission to collect
toll and this could not be substantiated by the investigation, the agency
sought to close the case.However, the CBI failed to give any justification for
the following irregularities in the entire process of giving the permission of
toll collection, which even in its extremely limp report it has found to be
improper:
The deadline for the contracted work was 16 April 2009. But as
late as August 2009, the work was far from over. On 25 August, the NHAI
regional office, Chennai wrote a letter to the project director, NHAI, Karur,
and sought the reasons for delay in project completion. Subsequently, on 1 and
2 October, discussions over delay were held in the office of the project
director. This shows that at least till these dates, Singhvi was unhappy with the
progress of construction.
From 17 August 2009, the contractor was requesting the consultant
for issuance of provisional completion certificate. A consultant is required to
issue such certificate only after he is satisfied that the work on the main
highway is complete and it could be thrown open for vehicular movement. Such a
certificate is issued after due consultation with and permission from the NHAI.
But the proposal is initiated by the consultant and first vetted by the
regional CGM, who in this case was Singhvi, who in turn forwarded it to the
NHAI headquarters in Delhi. Clearly, it’s the consultant and CGM who held the
key for the issuance of any such certificate as the NHAI headquarters would go
by the advice of its CGM. In this case, the consultant was a foreign firm and
the person in charge was a foreign national, Ian Pragnell. Despite repeated
requests from the contractor, Pragnell refused to initiate any such proposal.
However, when on 1 October 2009, Pragnell went on leave and his
place was taken by his deputy Viswanatha Rao, the latter initiated the proposal
for provisional completion certificate hitherto denied by Pragnell. Rao sent
the proposal to NHAI Project Director M Thangamani. It was received by the
project director on the same day, who, for his part, did not waste another day
in forwarding it to Singhvi. Along with this proposal, a list of both work
pending on the main highway and some minor work was annexed. As per rules, such
a proposal could only be moved if the main carriageway is ready for use. But
Singhvi overlooked this fact and forwarded the proposal to NHAI, Delhi, with an
assurance that all pending work on the main carriageway would be completed by
20 October. The proposal was duly approved and permission to collect toll
granted.
In the meantime, Pragnell came back from leave and shot off a
letter dated 12 October saying that the acting team leader’s move to initiate
the proposal for provisional certificate was unjustified. He said that upon his
return, he visited the site and found many parts of work far from complete. He
also said that the assurance given by his deputy in his absence that all
pending work would be completed by 20 October was unrealistic. But the CBI in
its closure report has claimed that this letter, both the fax and posted copy,
were received by Thangamani, not by Singhvi’s office. The CBI has not bothered
to nail Singhvi on the fact that even if Pragnell’s letter did not reach him,
surely the project director would have informed Singhvi.
The contractor started collecting the toll from 5 November 2009,
but failed to finish the work on time. The consultant recommended the
imposition of a total penalty of Rs 5.95 crore for the delay. At the time the
CBI filed the closure report, the NHAI had not realised the penalty.
From the above-mentioned facts, which are part of the CBI’s own
closure report, it’s quite clear that the agency has left gaping holes in its
own investigation. Besides, the report does not even talk about the 30 bank
passbooks, the papers related to various properties owned by Singhvi, the NHAI
files recovered from his residence in Jaipur, the expensive mobile phones and
liquor bottles which the CBI claimed it recovered during the raids. It’s also
silent on the other case in which a similar modus operandi of illegally
allowing the contractor to collect the toll was alleged.
A senior NHAI official speaking on condition of anonymity told
TEHELKA that toll collection is a mega scam within the NHAI. “Every day, the
government loses at least Rs 1 crore to private contractors by way of illegal
tolling,” he says.
The agency taps into phones, carries out raids and arrests, Seizes
crores of rupees of cash but finally fails to file a chargesheet
On 26 May 2010, the CBI arrested two senior NHAI officials — a
Chief General Manager named SK Nirmal and a General Manager, Nitin Jain — and
two senior executives from OSEPL, including its Managing Director KS Bakshi.
The arrests were made after extensive raids at the homes and offices of all the
accused. All four were produced before a designated CBI court in Delhi
following which the court sent them to CBI custody for five days. The accused
were subjected to sustained interrogation and were later sent to judicial
custody. They remained in jail for over 50 days before being granted bail. In
fact, the accused managed to secure the bail because of the CBI’s inability to
file the chargesheet within the stipulated 60 days of the arrest.
TEHELKA found that as many as 17 firms had participated at the
pre-bid technical qualification stage. But only the following five firms made
to the final stage of the bid: 1) SEL-GDCL-GKC Consortium,2) Oriental
Structural Engineers Pvt Ltd - Continental Engines Ltd, 3) Shapoorji Pallonji
& Co Ltd,4) IL&FS Transportation Networks Ltd,5) Soma Enterprises Ltd
The CBI FIR, a copy of which is available with TEHELKA, says that
Nirmal and Jain rejected the offer of four companies, including Larsen &
Toubro, at the prequalifying stage on frivolous grounds. It further says that
in order to eliminate potential competitors, both got issued a new circular No.
54/2010 on 2 April 2010 specifying that only those applications would be
considered that were submitted with original documents and thereby eliminated
four bidders — Valecha Engineers, Nagarjuna Construction Company, Transstroy
and Reliance Infrastructure. “During the processing of the present tender, the
ground for disqualification was submission of scanned documents but during the
same period, the scanned documents of Transstroy were accepted at Request for
Proposal stage in a different tender by the same two officers,” the FIR
alleged. It concluded by saying that the two NHAI officers “used to part with
key confidential and vital details of the tender process and documents and
facilitated the calculation of annuity by applying financial parameters on the
upper side so that the firm can fetch maximum financial benefits and
subsequently awarded the contract to OSEPL.”
Now, a year-and-a-half later, the CBI is yet to conclude its
investigation. The CBI spokesperson failed to respond on the status of the case
at the time of going to press. On the other hand, VC Verma, Director, OSEPL,
told TEHELKA that though the project was still with them, the construction work
had not yet commenced because of lack of environmental clearance.
A mix of corruption, inefficiency and red-tapism is crippling our
roadways. There is an urgent need to give some of our collective time and
attention — that is devoted by the media, courts and constitutional bodies — to
issues other than the 2G scam.
. 13 December 2011 Tuesday
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