 "Court to hear PIL on GIFT City today")
The Gujarat High Court will hear a public interest litigation (PIL) alleging financial and governance irregularities in the prestigious Gujarat International Finance Tec-City (GIFT City) project on Tuesday.
The PIL, filed by D C Anjaria, a former independent director and audit committee chairman, has pleaded that a special investigation team (SIT) be formed to investigate the systematic manner in which the interest of the state has been allegedly compromised, and allegations of irregularities in awarding of contracts and consultancies for the project.
GIFT City, the pet project of Prime Minister Narendra Modi, is being marketed as the first "global financial hub" in the country. A part of the city was notified as a multi-services special economic zone for development of an international financial services centre. It is a 50:50 joint venture between Gujarat Urban Development, a Gujarat government undertaking, and publicly held Infrastructure Leasing & Financial Services (IL&FS).
Anjaria, who claims to have been involved in the project since its genesis in 2006, alleged contrary to signed contract terms, a project that was to come up on government-owned land leased to the GIFT Company has been used to acquire effective ownership. All risks have been transferred to the state, he alleged.
However, people who were involved in the project till recently have a different story to tell. Ramakant Jha, who was the managing director and group chief executive of GIFT City between 2009 and 2015, when many of the irregularities allegedly took place, told Business Standard: "Governance by the board has been very pragmatic and transparent with competent directors. GIFT City has a very competent professional team for the ambitious project. It has, therefore, been possible to achieve, in fact exceed the target set for Phase 1. Conflict of interest has been avoided all the time."
Jha has since joined IL&FS as CEO of its smart city initiative.
Anjaria's petition names IL&FS as Respondent No 2 and levels several allegations about the manner in which IL&FS has gone about implementing the project. "Respondent No 2 who is supposed to bring technical expertise so as to execute Gift City Project, has not contributed by way of its alleged technical expertise in infrastructure project management and in financial-sector establishment and regulations in which it has no technical expertise," the petition said. It also wanted the SIT to investigate fee paid to a consortium lead by Noida-based Fairwood Consultants and procedures followed in awarding the mandate to Fairwood. Allotment of development rights to MPPL, a wholly-owned subsidiary of IL&FS, was another key issue raised.
Anjaria, part of the original team that conceived and presented the Rs 70,000-crore project in 2006-07 to the then Gujarat chief minister Narendra Modi, wanted the court to direct GIFT City to be named a 'public authority' under the Right to Information Act and appoint a public information officer. He also pleaded the court to direct the entity to be amenable to the audit by Comptroller and Auditor General of India.
An email seeking comments sent to Ajay Pandey, managing director and group CEO of GIFT City, on Friday did not elicit any response. Ravi Parthasarathy, managing director of IL&FS, also did not respond to an email questionnaire.
Sources close to the Gujarat government said the PIL has not been admitted by the high court and that no notice has been issued by HC to any parties. Tuesday's hearing will decide if the petition merits admission. Questions were also being raised about Anjaria's motives saying he himself wanted to be a consultant for the project.
Jha added the board was empowered to formulate marketing policies for expeditious development of the GIFT City. To attract reputed developers, the board approved the policy to allot development right on fixed lease premium consistent with the terms and conditions of allotment of land by the government. "Accordingly, the required development right is allotted to user agencies at the predetermined lease premium on first-come-first-served basis and private developers are selected on merit by inviting request for proposal (RFP) by open advertisement in leading news papers," he said.
According to the financial statements for 2012-13, there are 10 affiliates of IL&FS that have service contracts with GIFT City. The transactions with 10 affiliates are classified under the heading of transactions with 'related parties' in the financial statement, the PIL noted. The petitioner alleged these appointments went against the fundamentals of the public-private partnership model and resulted in revenue leakages. "In fact, Respondent No 2 ought to have brought in such skills in form of matching capital as it is a private equity partner."
IL&FS was also charging Rs 20 lakh a month as consultancy fee and other out-of-pocket expenses despite objections from the petitioner, when he was the audit committee chairman. The appointment of a consortium headed by Fairwood Consultants was another contentious issue where several crores have been allegedly "siphoned out". The award of contract to Fairwood Consultants "that is apparently seems to be connected with IL&FS" and tampering of minutes of board meetings are among other allegations in the petition. Some of these attract even criminal charges, according to the PIL.
When Business Standard contacted the office of Ranbir Saran Das, managing director of Fairwood Group, seeking a response to the allegations in the PIL, his secretary said he was in a meeting. Subsequent calls did not receive any response. Senior Gujarat government officials also did not respond to calls and a text message.
CURSING THE GIFT
The PIL, filed by D C Anjaria, a former independent director and audit committee chairman, has pleaded that a special investigation team (SIT) be formed to investigate the systematic manner in which the interest of the state has been allegedly compromised, and allegations of irregularities in awarding of contracts and consultancies for the project.
GIFT City, the pet project of Prime Minister Narendra Modi, is being marketed as the first "global financial hub" in the country. A part of the city was notified as a multi-services special economic zone for development of an international financial services centre. It is a 50:50 joint venture between Gujarat Urban Development, a Gujarat government undertaking, and publicly held Infrastructure Leasing & Financial Services (IL&FS).
Also Read
The 69-year-old Anjaria said he was seeking the court's intervention because the government-nominated directors failed to protect the government's interest and the state's resources had been frittered away in connivance with the private partner.
Anjaria, who claims to have been involved in the project since its genesis in 2006, alleged contrary to signed contract terms, a project that was to come up on government-owned land leased to the GIFT Company has been used to acquire effective ownership. All risks have been transferred to the state, he alleged.
However, people who were involved in the project till recently have a different story to tell. Ramakant Jha, who was the managing director and group chief executive of GIFT City between 2009 and 2015, when many of the irregularities allegedly took place, told Business Standard: "Governance by the board has been very pragmatic and transparent with competent directors. GIFT City has a very competent professional team for the ambitious project. It has, therefore, been possible to achieve, in fact exceed the target set for Phase 1. Conflict of interest has been avoided all the time."
Jha has since joined IL&FS as CEO of its smart city initiative.
Anjaria's petition names IL&FS as Respondent No 2 and levels several allegations about the manner in which IL&FS has gone about implementing the project. "Respondent No 2 who is supposed to bring technical expertise so as to execute Gift City Project, has not contributed by way of its alleged technical expertise in infrastructure project management and in financial-sector establishment and regulations in which it has no technical expertise," the petition said. It also wanted the SIT to investigate fee paid to a consortium lead by Noida-based Fairwood Consultants and procedures followed in awarding the mandate to Fairwood. Allotment of development rights to MPPL, a wholly-owned subsidiary of IL&FS, was another key issue raised.
Anjaria, part of the original team that conceived and presented the Rs 70,000-crore project in 2006-07 to the then Gujarat chief minister Narendra Modi, wanted the court to direct GIFT City to be named a 'public authority' under the Right to Information Act and appoint a public information officer. He also pleaded the court to direct the entity to be amenable to the audit by Comptroller and Auditor General of India.
An email seeking comments sent to Ajay Pandey, managing director and group CEO of GIFT City, on Friday did not elicit any response. Ravi Parthasarathy, managing director of IL&FS, also did not respond to an email questionnaire.
Sources close to the Gujarat government said the PIL has not been admitted by the high court and that no notice has been issued by HC to any parties. Tuesday's hearing will decide if the petition merits admission. Questions were also being raised about Anjaria's motives saying he himself wanted to be a consultant for the project.
Jha added the board was empowered to formulate marketing policies for expeditious development of the GIFT City. To attract reputed developers, the board approved the policy to allot development right on fixed lease premium consistent with the terms and conditions of allotment of land by the government. "Accordingly, the required development right is allotted to user agencies at the predetermined lease premium on first-come-first-served basis and private developers are selected on merit by inviting request for proposal (RFP) by open advertisement in leading news papers," he said.
According to the financial statements for 2012-13, there are 10 affiliates of IL&FS that have service contracts with GIFT City. The transactions with 10 affiliates are classified under the heading of transactions with 'related parties' in the financial statement, the PIL noted. The petitioner alleged these appointments went against the fundamentals of the public-private partnership model and resulted in revenue leakages. "In fact, Respondent No 2 ought to have brought in such skills in form of matching capital as it is a private equity partner."
IL&FS was also charging Rs 20 lakh a month as consultancy fee and other out-of-pocket expenses despite objections from the petitioner, when he was the audit committee chairman. The appointment of a consortium headed by Fairwood Consultants was another contentious issue where several crores have been allegedly "siphoned out". The award of contract to Fairwood Consultants "that is apparently seems to be connected with IL&FS" and tampering of minutes of board meetings are among other allegations in the petition. Some of these attract even criminal charges, according to the PIL.
When Business Standard contacted the office of Ranbir Saran Das, managing director of Fairwood Group, seeking a response to the allegations in the PIL, his secretary said he was in a meeting. Subsequent calls did not receive any response. Senior Gujarat government officials also did not respond to calls and a text message.
CURSING THE GIFT
- Anjaria's PIL levels financial, corporate governance and crimimal charges
- Connivance of govt nominees and IL&FS executives alleged
- Appointment of Fairwood Consultants questioned
- Former GIFT executives say everything was in done according to rules
- Court to decide on admitting the petition