MEGA SCAM

Print edition : September 10, 2010

The Jawaharlal Nehru Stadium, the venue of the 2010 Commonwealth Games, in New Delhi.-ADNAN ABIDI/REUTERS

The Central Vigilance Commission and the CAG find high-level corruption in the organisation of the Commonwealth Games.

THE Commonwealth Games (CWG), the mega event scheduled to be held in Delhi from October 3 to 14, is mired in a controversy over high-level corruption in its organisation. The Central Vigilance Commission (CVC), which examined several projects relating to the Games, found discrepancies in the award of contracts, poor quality of construction, and possible misappropriation of funds. The inspection undertaken by the Comptroller and Auditor General of India (CAG) found several instances of financial irregularities and loss of revenue.

All the agencies in charge of getting the city ready for the event, be it the Games Organising Committee, the Congress government of Delhi, the Municipal Corporation of Delhi (MCD), the New Delhi Municipal Council (NDMC), the Delhi Development Authority (DDA), the Ministry of Youth Affairs and Sports, or the Central Public Works Department (CPWD), have come under the vigilance scanner. The CVC slapped charges of money-laundering, irregular tendering of contracts, financial bungling in infrastructure building projects, and disguised or benami financial stakes on these bodies.

In the national imagination, the CWG scandal has surpassed the Indian Premier League (IPL) controversy by many crores of rupees.

GAMES ORGANISING COMMITTEE chairman Suresh Kalmadi signs an agreement in New Delhi in November 2009 as joint director general T.S. Darbari watches. Darbari has been suspended on corruption charges-PTI

However, the United Progressive Alliance government at the Centre has decided to focus on hosting the Games successfully as it is seen as a question of national pride. Making a late intervention, Prime Minister Manmohan Singh formed a Group of Ministers (GoM) to ensure the timely completion of all the delayed projects and to investigate the corruption charges. He has promised severe and exemplary punishment for all those found guilty.

At the heart of the controversy lies one man Suresh Kalmadi, the chairman of the organising committee. He had projected himself as solely accountable for all the projects (the buck stops at my office, he had boasted). But the unfolding of the corruption scandal saw him pass the buck. Kalmadi, who was the darling of the media a few years ago for bringing the CWG to India, has suddenly become their most visible villain.

The scandal was waiting to explode. With the Games drawing near, the shoddy pace of construction work has become quite apparent. Delhi is just not ready for the event. Heaps of debris from renovation and infrastructure projects can be seen everywhere, and the sports complexes were incomplete even two months before the Games.

Meanwhile, there were reports that the swimming pool, the hockey stadium and the Jawaharlal Nehru stadium (the main venue for the athletics events) were not up to international standards. In mid-July, two rainstorms damaged the plaster on the walls of the swimming pool complex and washed away an embankment at the full-bore shooting range in Gurgaon. The Talkatora Indoor stadium was flooded and a false ceiling collapsed at the Yamuna Sports Complex.

The official cost of holding the Games, according to CWG director general V.K. Verma, is about Rs.10,000 crore. Organisations such as Housing and Land Rights Network (HLRN) have pegged the cost at Rs.60,000 crore, making the CWG the most expensive event in the history of all Games.

There were also reports that 49 labourers had died while doing the construction work. A fact-finding committee report of the People's Union of Democratic Rights (PUDR) said the Games village in the trans-Yamuna region was not ready and the contractors were found flouting labour laws and minimum wage rules.

CONSTRUCTION WORK GOING on at Shivaji Stadium on August 4, when the Games was two months away.-SUSHIL KUMAR VERMA

In the run-up to the Games, there has been large-scale eviction of slums and forcible displacement of homeless people and removal of beggars, ostensibly under the guise of beautification and urban renewal measures to create a world-class city. According to the Delhi Shramik Sangathan, in the five years between 2003 and 2008, close to 350 slum clusters housing nearly three lakh people were demolished and only about one-third of these families have been resettled. Street vendors, too, have had to bear the brunt of clearance and beautification drives. An estimated three lakh street vendors were displaced without notice, an HLRN report said. There was a legal explanation for the displacement of these vendors, which they had never heard of.

Deep Mathur, the Press and Information Director of the MCD, said, The illegal dhabas are liable to be removed without notice as they are considered encroachments. The MCD can only issue licences to eating houses that have a covered roof. We have been told to remove all encroachments before the CWG. Students from Delhi's universities have been asked to vacate their hostel rooms during the CWG. As a result, the rents for residential buildings have risen threefold for the month of October.

With so many people affected by the holding of the event, a scandal was only imminent. What was needed was a proper inquiry to nail it down, which finally happened because of a sustained media trial.

The first news of high-level financial wrongdoing came with a story that a little known firm, AM Films, was reportedly given over 4.50 lakh by the organising committee without following any proper tendering procedure and paper work. The committee is said to have remitted AM Films for providing services. According to Kalmadi, the company was recommended by the Indian High Commission.

Kalmadi cited an e-mail from a clerk-level official of the mission in support of his claim. This company was hired to provide taxi services during the Queen's Baton Relay (a relay similar to the Olympics torch relay, held before the start of the Commonwealth Games) in London. It was reported that CWG officials had directed the firm to inflate taxi bills. A national daily reported that the firm was hired when it did not even have a director and employees.

The High Commission, however, denied recommending any company to the organising committee and maintained that the official, Raju Sebastian, who Kalmadi claims had recommended AM Films, was not authorised to do so as he was too junior to hold such a responsibility. Later it turned out that the e-mail that Kalmadi presented had been was doctored. Soon a controversy broke out and the organising committee suspended three people, seen as Kalmadi's aides, on August 6. Anil Khanna, treasurer of the committee, was forced to resign.

The committee also suspended the joint director general, T.S. Darbari, whose name figured in the case involving forged e-mails and inflated payoffs to AM Films. Another joint director, M. Jeychandren, a key aide of Kalmadi, was also suspended. He was the treasurer of the controversial Queen's Baton Relay programme. Darbari later told the media that he was being made a scapegoat to hide larger truths.

Much muck came out thereafter. The CVC and the CAG indicted the organising committee on several counts. Two kinds of corruption stand out in the CWG scandal favouritism and benami stakes, and frequent exchange of illegal commissions at every level of operation. The CAG probe revealed that the committee awarded consultancy work for the Queen's Baton Relay to the highest bidder, a company called Maxxam International, for Rs.8.01 crore, against all norms. The major companies that were bypassed in the tender process were PricewaterhouseCoopers and Brilliant Entertainment Networks.

IN THE NAME of beautification at Connaught Place in New Delhi.-SUSHIL KUMAR VERMA

The CAG reported that while PricewaterhouseCoopers had quoted Rs.1.91 crore, the lowest bidder, Brilliant Entertainment Networks, had bid Rs.1.85 crore. The committee cited prestige and honour of the country among other reasons for backing Maxxam International. This is, however, not the first consultancy firm to bag an award despite being the highest bidder. The committee made a similar favour by awarding the broadcast rights to the London-based Fast Track Sales Ltd in preference to another bidder, Sports Marketing and Management (SMAM), although the former quoted a higher commission rate of 15 per cent compared with SMAM's 12.5 per cent. The CAG observed that the selection was irregular and in violation of norms.

The CVC, too, found irregularities in several Games-related works being carried out by the civic and construction agencies. The anti-graft watchdog, through its Chief Technical Examiner's Wing, made an assessment of such works and found irregularities in 15 construction projects. The agencies under the CVC scanner are the Public Works Department, the MCD, the DDA, the NDMC and the CPWD. The projects include stadiums and facilities upgradation and infrastructure beautification, and the suspected revenue misappropriation amounts to over Rs.2,500 crore.

The CVC report said substandard materials had been used, bids had been rigged, projects that were not required had been sanctioned, and ineligible agencies had been awarded work. It said test records had been fabricated to show high strength for poor quality works.

FUNDS DIVERTED

In yet another case of irregularity, the National Campaign for Dalit Human Rights (NCDHR) gathered evidence through right to information (RTI) applications that a sum of Rs.744.354 crore was diverted from the Special Component Plan (SCP) of the Delhi government to the Games funds. The SCP was introduced in 1979 by the Government of India for micro-economic development and promotion of the welfare of the Scheduled Castes.

Paul Divakar of the NCDHR said: With a clear and visible diversion of funds, how does the Planning Commission approve these State plans year after year? What are the monitoring and review mechanisms? Who is to be held responsible for the diversion and denial of funds under this progressive and innovative programme?

Adding insult to injury, an order in late June by the Union Heavy Industries and Public Enterprises Ministry asked all public sector enterprises to raise funds for the CWG, as part of corporate social responsibility. The Ministry, headed by Vilasrao Deshmukh, said that since the event was of great national importance it would be appropriate for our public sector undertakings to contribute their share so that the Games organisation and management scale new heights. But organising committee insiders say that the CWG is short of sponsorship because the Australian firm SMAM (Sports Marketing and Management), which had to get private sponsorship of around Rs.1,200 crore, could only manage around Rs.400 crore. It got a 15-20 per cent commission in the sponsorship it raised. The contract with SMAM was cancelled after the controversy broke out. SMAM was the sole and exclusive negotiator and procurer of sponsorship for licensing contract, according to the agreement signed in 2007 between the company and the Games committee.

The organising committee is now in face-saving mode. It has cancelled many contracts since the scandal came to light. It is another matter that many feel it is making scapegoats of individuals rather than getting at the root of the scandal. The committee has already begun the blame game.

I guess the government had good reason to delay the construction, the release of funds and all that. There is no way to explain this. If we had completed construction by 2006, or say 2008, the 10 per cent share the sarkari officers get is, say x, today, it is 2x, maybe. So my 10 per cent has grown. So the longer I delay as a babu or a Minister, the better it is for me. See the point. All contracts are written now with a 10 per cent commission. It's not illegal anymore, G. Rajaraman, Kalmadi's press secretary, was quoted as saying in an English-language magazine. He blamed the Sports Ministry for delaying the release of funds, suggesting that this was the reason for the committee's inability to complete the projects on time.

Apart from the string of controversies, the CWG extravaganza will be remembered as an event that displaced many poor people, deprived many of their livelihoods, wasted taxpayers' money and left a negative social and economic legacy.

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