| The AMSS case is the most interesting since the firm that drafted (with inputs from ABN Amro) the Operation, Management, and Development Agreement (OMDA) for the AAI is now advising DIAL! Citing a conflict of interest, the ministry of civil aviation has advised the AAI to file a formal complaint with the Bar Council of India. The case is simple. DIAL won the airport bid after promising to pay the AAI 46 per cent of all top line revenue and, under OMDA, was allowed to develop 250 acres of airport land for hotels, offices and shopping malls "" it is not sharing the huge deposits it is taking on this land, arguing this is not top line revenue. |
| AMSS, on its part, admits no conflict. Its partner Pallavi Shroff told this reporter the firm was only advising DIAL on third-party contracts and not on the land "" third-party contracts, she said by way of example, could be DIAL signing a contract for car-parking arrangements or for a duty-free shop. An email sent later also said much the same: "AMSS' advice to DIAL ... has been focused on implementation and furtherance of (the 'OMDA') and has been limited to advice in relation to DIAL('s) ... relationship with third party 'outsiders'. Naturally, therefore, it cannot be in conflict with the interests of the AAI." |
| Indeed, AMSS argues that while its original consultancy agreement with the AAI in March 2001 had barred it from advising any of the bidders for three years, this was abandoned in 2003; and the new consulting agreement did not bar AMSS from "acting for the joint venture ... DIAL ... as the interests of the AAI and the winning consortia were merged in the joint ventures". (Well, since the AAI is not getting the 46 per cent of top line revenue it was promised and so, though it owns 26 per cent of DIAL, its interests are not the same as those of the GMR-consortium that owns the rest of DIAL.) |
| Two points are important. One, the AAI says the original agreement was never abandoned, but was modified since the government had changed its mind "" instead of giving out four airports on long lease (Delhi, Mumbai, Kolkata and Chennai), it decided to create joint ventures for two of them. So, the letter sought to highlight just the amendments (the fees were lowered, for instance) "" the AAI argues that the "general conditions" that included, among others, clauses banning AMSS from consulting with the bidders for three years remained the same. In which case, AMSS cannot consult with DIAL till May 2008. AMSS disputes this "" in which case, it is arguing somewhat incredibly, that the new legal agreement had no general conditions at all. Two, while AMSS says it is advising DIAL on "third party" matters and not on the land, DIAL's internal agenda notes as well as Request for Proposals it sent out to firms which wanted to build hotels and shopping malls on airport land list AMSS as the legal counsel! |
| Even more shocking is the AG's opinion for, while absolving DIAL, he does not answer the AAI's specific query on whether the 46 per cent top line revenue share clause has been breached. On whether the huge up-front deposits which DIAL will not share will hit the AAI's revenues, he said "the same may or may not impact the revenues ..." |
| What's the way forward, given it will be difficult for the ministry to overrule the AG? It would be ironical, though helpful, if losing bidders, such as the Anil Dhirubhai Ambani Group went to court arguing the bidding was null and void as GMR's structuring would ensure it paid the AAI much less than what it had won the bid on! The AG may have ducked this question, but the country's courts can't. And since all concessionaires will be keen to reduce revenue-share payments to the government, how the AAI deals with ABN Amro/AMSS will have a crucial bearing on the future of all PPP projects in the country. |
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