The CBI has registered a case against GVK’s Dr. GVK Reddy, his son GV Sanjay Reddy and 13 others for alleged irregularities to the tune of Rs.705 crore in running the Mumbai airport.
The Mumbai airport, MIAL (Mumbai International Airport Limited) is developed in a JV – a Public Private Partnership of PP model under which GVK holds 50.5%, the Airport Authority of India holds 26% while the remaining shareholding rests with foreign companies. Under this deal, GVK is responsible for the modernization and up-gradation, operation and maintenance of the Mumbai airport. MIAL will share 38.7% of their revenue as annual fee with the AAI and that the government authority will have the first right on the revenue.
The CBI, in its FIR said, “the promoters of the GVK group in the MIAL, in connivance with their executives and the unknown officials of the AAI, resorted to siphoning of funds fraudulently adopting various modus operandi.”
Take a look at the various allegations, the modus operandi which CBI unearthed and filed it in the FIR:
a) For developing the 200 acres of land, given to MIAL under the agreement, it entered into fake contracts during FY18 with at least 9 companies for realty development – MIAL transferred a total of Rs.310 crore but till date not a single project has been executed on the ground. This entire execution remained merely on paper though money has disappeared.
b) These nine companies also took advantage of fake credit Input Tax Credit (ITC) based on fake invoices.
c) From 2012 onwards, GVK used the surplus funds from MIAL to the tune of Rs 395 crore to finance their other group companies – it created fake/forged Board Meeting Resolutions of the MIAL, authorizing to keep the reserve/surplus funds of the MIAL as FDRs with public sector banks at Hyderabad.
d) GVK Group raised loans/overdraft facilities against these FDRs and used these funds for its own benefit.
e) GVK inflated expenses – shifted staff of their head office in Hyderabad and the employees of their group companies on the payrolls of the MIAL.
f) GVK group connived with their family members, relatives and employees - assigned the premium retail areas of Mumbai airport to their family members at exorbitantly low rates.
g) GVK entered into agreements with a company owned by family members, relatives, employees to book train, air travel tickets and hotel booking for personal interest as well as for group employees of the GVK who were not connected to the MIAL.
The CBI alleges that all this happened right under the eyes and nose of AAI, which instead of crying out loud, chose to turn a blind eye.
The stock exchanges have asked the company today afternoon to clarify on this news but the company is yet to respond. Today, the stock price hit the 5% lower circuit at Rs.3.23 and its 52-week low is at Rs.2. Already quoted at a pitiable rate, wonder how much more it will get beaten down to?
But more than the stock price, it’s the credibility which is at stake. This is the same company which is being trusted to develop another airport near Mumbai; doesn’t a fraud put this entire trust under a huge question mark? Or are we all so immune to frauds that given the other frauds, this one is milder or smaller and hence can be trusted?
We have accepted that every politician is corrupt but what matters is that they do some work for the country along with making money. Similarly, we have slowly come to accept that every company which becomes big, secures huge contracts cannot do so without having resorted to some degree of corruption; what we are now looking at is the “degree” of corruption. What is the acceptable threshold? Anything over Rs.1000 crore is ‘medium’ and over and above that is “big” and over Rs.5000 crore is ‘large.’
Seriously, our chalta hai attitude is eating the country away and we ask why we cannot become atmanirbhar?