Politics of a scam

The Karnataka government comes under strain as the Janata Dal (Secular), a constituent of the ruling coalition, demands a probe into charges of corruption in the acquisition of land for the Bangalore-Mysore expressway project and Congress leaders oppose any review of the project.

in Bangalore

THE spectre of a major corruption scandal haunts the coalition government in Karnataka. A slew of serious allegations, emanating primarily from within the Janata Dal (Secular), of a land scam that reportedly occurred during the tenure of the previous Congress government, would appear to be one of the major reasons for the delay in Ministry expansion by Chief Minister N. Dharam Singh. Some of those alleged to have been involved in the scam are contenders for ministerial positions, and the issue threatens to shake the uneasy balance of coalition interests.

The allegations revolve around corruption and personal aggrandisement indulged in by several senior politicians, ex-Ministers, and bureaucrats in the process of land acquisition for the proposed construction by the Nandi Infrastructure Corridor Enterprises Limited (NICEL) of the Bangalore-Mysore Infrastructure Corridor Project (BMICP), a six-lane expressway between Bangalore and Mysore. The charges are not new (Frontline, January 30) but have assumed a certain urgency with Janata Dal (S) national president and former Prime Minister H.D. Deve Gowda, a key architect of the coalition Ministry and a guarantor of its survival, turning the heat on the government by demanding that it get to the bottom of the scam.

In the last few months Deve Gowda has shot off letters to Dharam Singh and Governor T.N. Chaturvedi calling their attention to the affairs in the BMIC and asking that a probe be instituted into them. In a letter sent on April 1 to the Governor, Deve Gowda objected to the caretaker government issuing gazette notifications on the project, which "involved land worth crores of rupees". This was a violation of the code of conduct, he argued. Once the coalition government took office, he wrote to Dharam Singh yet again and raised fresh charges of corruption in the BMIC project. He also recalled that in his post-election talks with Congress president Sonia Gandhi on Ministry formation in the State, he had made a Central Bureau of Investigation probe into the BMIC a "condition" of his party's participation in the new government.

The BMIC project envisages a 111-km highway between Bangalore and Mysore, 41 km of peripheral roads and 9.8 km of link roads (connecting the highway to Bangalore city centre). Five townships will also be constructed along the highway. The 1995 memorandum of understanding (MOU) arrived at between the Karnataka government and a consortium comprising the United States-based Vanasse Hangen Brustlin Inc. and the Kalyani Group of Companies stipulates a 10-year construction period and a 30-year toll period after which it will revert to the government. Compensation norms included a fair market price for the land acquired plus a job per oustee family, alternative housing and even a land-for-land option. NICEL appeared as a signatory only in the formal agreement with the government in April 1997. The project achieved financial closure for Phase 1 only in March 2003. Nine years after the signing of the MOU, work has not even begun.

According to its critics, the project became a real estate windfall for NICEL and a source of profiteering for some of the individuals involved in its execution.

Instead of 20,193 acres of land approved by the Cabinet for the project in the 1997 agreement, the Karnataka Industrial Area Development Board (KIADB) actually notified 29,140 acres, an excess of 8,953 acres, the project's critics say. At present there appears to be no clear estimate of exactly how much land has been alienated to the company through sale and lease. The process of land notification goes through several stages, and one of the major criticisms of the project has been that key persons in government were making crores of rupees in the de-notification of land. Lands would be notified for acquisition by the KIADB, and then the same lands would be de-notified on the plea of their owners, but, allegedly, for very high considerations paid to those in charge. According to Deve Gowda, the KIADB has notified 8,088 acres in Bangalore South and North taluks (2,166 acres of government land, 1,351 acres of government grant land and 3,571 acres of private land) for the company in the first phase of the project. NICEL is, meanwhile, selling land as real estate through printed and online advertisements - land supposedly acquired by it for the project, and at prices several times lower than what the company is now selling it for.

In September 2002, NICEL was given 100 per cent waiver of stamp duty and registration costs, and exemption from levies and other cesses normally applicable. In a huge financial concession to the company, the government decided to fix the price of government land sold to the company for commercial purposes at 1999-2000 land prices. NICEL subsequently mortgaged a part of the land leased to it to ICICI Bank for Rs.150 crores, a transaction in which the government stood guarantor, say the project's critics, presenting documentation to back their case.

There appears to be no final alignment drawing of the proposed highway with any of the government agencies despite financial closure having been attained for the project's first stage. The reason why the project alignment kept changing, say the project's detractors, was that it was in the interests of powerful individuals to do so as crores of rupees were made in bribes in the process.

Bowing to pressures for a probe - the BMIC controversy was also raised in the State Legislature in detailed submissions by J.C. Madhuswamy of the Janata Dal (United) and G.V. Sreerama Reddy of the Communist Party of India (Marxist) - the Chief Minister has agreed to "review" the project. The Janata Dal(S) has been decidedly unenthusiastic about the project. H.D. Revanna, Minister for Public Works who belongs to the party, has asked for detailed road alignments of the first phase of the highway project, and has for now stopped all land acquisition by the Public Works Department. Responding to Dharam Singh's announcement of a "review" of the project, Deve Gowda told Frontline: "Ultimately it is left to the Chief Minister and the government to decide what sort of probe will be instituted. I do not want to destroy the Congress. But this is a public issue and I made my allegations with documents. The present government should not allow these things to happen again."

The allegations of corruption have not gone uncontested. Former Chief Minister S.M. Krishna has stumped his critics by calling for the scrapping of the project. He gave a point-by-point rebuttal in a letter to Dharam Singh of allegations made by Deve Gowda on the functioning of the Bangalore Development Authority (BDA) under his regime. In press statements and interviews to the media, Ashok Kheny, managing director of NICEL, has denied all allegations of wrongdoing on the part of the company. He has blamed the land mafia and "influential people" whose lands were acquired for the project for creating the controversy. Obtaining the necessary official clearances had delayed the project, he said.

"The government must come clean on the biggest corruption scandal in the State since Independence in the party's interest" said a senior Congressman. "It was an unusual team of people - including a person who joined our party just weeks before the 1999 elections - who coalesced and shared the spoils".

Dharam Singh is under pressure from two sides - from those in his party who do not, for obvious reasons, want the project to be reviewed and his coalition partners who would like to see just that.