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Op-Ed

Nagaland’s Muddy Roads in Soiled Hands of Satyam

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By EMN Updated: Sep 04, 2013 12:12 am
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Al Ngullie

EARLY during New Year’s week in January 2009, newspaper headlines across the subcontinent announced one of the biggest corporate scams in India in decades – a scam that caused investors loss of at least 141.62 billion and triggered a dirty wave of headhunting in the hallowed corridors of the corporate honchos. According to the estimates of the Central Bureau of Investigation (CBI) blue-collared fraudster B Ramalinga Raju went home richer by at least Rs. 2,743 crores (27.43 billion) of dirty money.

The Satyam Corporate scam – also called the ‘Satyam Computers scam’ – shook India’s Wall Street to its foundation before post-liberalization economic reforms and a rattled Indian government reined in the unprecedented cataclysm.

Four years and eight months later, weeks ago on August 19, 2013, in Longleng district of Nagaland, Minister for Roads & Bridges Kuzholuzo Nienu stood annoyed and sweaty on a muddy patch of what appeared to be a road once. Squinting angrily through his Aviators, Nagaland’s minister for roads stood there scanning the ‘road,’ calculating a faint detail in his head.

The muddy, squelching stretch of mud and meshed plants he stood on was none other than the much-publicized Longleng-Ladaigarh highway. “The central government sends Maytas-Gayatri not to build roads but to destroy the existing road,” the minister declared to a journalist in front of him. “Maytas-Gayatri will always be in a mess,” he spat as he removed his foot out from a patch of mud. He demanded that the project must be handed over to local contractors “who are more capable.”

The target of Neinu’s anger was Indian construction companies Maytas Infra Limited and Gayatri Projects who bagged a contract worth Rs 1,130.67 crore in December 2010 from the Government of Nagaland. The contract was to widen a number of roads in the state under the Special Accelerated Road Development Project for North East (SRDP-NE). The two companies had formed into the Maytas-Gayatri Joint Venture (JV) for the project on June 17, 2010. The venture was “for widening to 2 laning” of the Longleng-Changtongya Road, Mon Tamlu–Merankong Road, Phek–Pfutsero Road and Zunheboto-Chakabama Road under phase-A of SARDP –NE.

The words of Minister Nienu were analogous to the tirade of resentful contractors who met on a misty September morning, two years ago in Kohima. Their protests were aimed at the same construction group – Maytas Gayatri Joint Venture. On September 21, 2011 in Kohima, members of the Nagaland Government-Registered Class One Contractors (NGRC-U) announced a slew of information Nagaland’s government and her docile citizens either ignored – or overlooked.

Even more interestingly, Neinu’s demand on August 19 in 2013 that the ‘messy’ Maytas Infra-Gayatri project ought to be handed over to Nagaland’s local contractors was a demand that had already been raised by the contractors as far as year 2011.
Revelations in 2011 that Nagaland ignored

“The issue of contract work under SARDP-NE awarded to Gayatri-Maytas Infrastructure JV in the state of Nagaland amounting to 1130.67 Crores was the prime agenda for the meeting,” the union had informed the media after the meeting. The contractors called the company “hostile” including a “manipulative” sublet firm called M/s Ratna Infrastructure Project Pvt Ltd.

The contractors revealed unsavory details to journalists:

“The said work was awarded at an abnormal price of 1130.67 crores to Gayatri-Maytas Infrastructure JV at the rate 21.74% above the Nagaland PWD Schedule of Rates which is a highly prejudiced decision of the officials of the Ministry of Roads Transport Highways, New Delhi. Till date, no such rates has ever been awarded or conceded to any local contractors in the State of Nagaland by the PWD Roads and Bridges Department Nagaland,” the union revealed in the media. “This extra 21.74% above SOR 2010 granted to Gayatri Projects Limited- Maytas Infrastructure amounts to an additional bonus of 245.81 crores being gifted by the National Highway authorities to Gayatri-Maytas Infrastructure.”

The recommendations was ‘totally biased and one-sided and a prejudice’, the contractors said. There was no need to increase the project by 21.74 %. This, the contractors said, also meant that by the time the roads were complete (originally costing 1130.67 Crores), the final bill for Gayatri Projects Limited and Maytas Infrastructure will roughly escalate to around 1,500 crores!
The Naga contractors sought information through Right to Information Act (RTI) about the “conduct of the tender, how it took place at New Delhi, and how such decisions were arrived at by the concern authorities in favor of Gayatri Projects Limited-Maytas Infrastructure JV.” No information was provided either by the Ministry of Road and Surface Transport or the PWD of Nagaland.

They learned that the principle contracting firm “Gayatri Projects Limited-Maytas Infrastructure JV” had further sublet the entire works to one Ratna Infrastructure Projects Pvt Ltd., after deducting around 21.74 % i.e. 245.81 crores. In fact, the union declared, Ratna Infrastructure Project Pvt Ltd. contacted several local contractors asking them to ‘work at less than 50% below the rates off loaded price to it by Gayatri Projects Limited-Maytas Infrastructure JV.’

The contractors disclosed that the “pre-conceived plans” of the stated companies was to finally leave only around Rs. 350 crores for the ‘actual ground implementation’ for all the four works under SARDP-NE in Nagaland (if the works were accepted under their terms). “This means that 688 crores would become profit and around 1000 crores if escalations are fully effected during the final stages (The total work at a cost of 1130.67 crores with the escalation-provisions built into the agreement of the work order, the project at its completion stage shall finally touch 1,500 crores),” the contractors have said.

The details were published in the media in 2011. As for the two firms, Nagaland’s contractors’ organization summoned them for explanation but they “consented not to meet the NGRC-1CU executives through the patronization and support of local elements and engineers of the PWD.” The union has confirmed that 113.30 crores have already been paid to “Gayatri Projects Limited Maytas Infrastructure JV” by the PWD (National Highways) in June 2010 as “mobilization advance.”

Once the union published the disturbing details, the firms started moving heavy machines to ‘start work’. In fact, the union stated:

“The union has learned that Gayatri Projects Limited-Maytas Infrastructure JV have started performing a huge cover up exercise… have started changing all its records, identifications, letterheads, visiting cards, identity cards etc. Copies of earlier agreements and other power of attorney agreements executed by the landowners and Ratna Infrastructure Project Pvt Ltd. for the said project is now in the custody of the NGRC-1CU as concrete proof and evidence of the entire modus operandi of the so called ‘global firms’ who’s shady method of procuring the work from the Ministry of Roads Transport and Highways at New Delhi now fully stands transparently exposed.”

Ministry of Roads & Surface Transport: Alarm and Inquiry

The escalation predicted by the contractors came true – in fact, it surpassed their own calculations. In the second week of August in 2012, the central roads and surface transport ministry found that the project awarded to M/s Maytas-Gayatri JV had escalated from Rs 1,296 crore to Rs 2,988 crore! It was much higher than Nagaland’s annual plan allocation of Rs 2, 300 crore for the year 2012.

The Economic Times reported on August 16, 2012 that the project was to be completed in 36 months ‘but not a single kilometer has been built’ although advances and “mobilization” funds amounting to more than 100 crore had been paid for. The report said the projects were merged and awarded as a single joint venture to attract bigger players in northeast.

Shocked by the sudden escalation, a preliminary inquiry and a CBI probe were recommended. There still is no word on what happened to the CBI inquiry. According to updates on the preliminary inquiry conducted by the ministry, the contractor “has only been involved in preliminary work so far. The ministry suspects that the contractor may have been involved in excavation rather than two-laning the road as the rates for earthwork are very lucrative.” After the construction of the 35-kilometer two-lane road from Changtongya to Longleng, under SARDP-NE, the project was abandoned by M/s Maytas-Gayatri JV in 2012.

Satyam scam and Maytas Infra: The Nagaland Connection

So what is Maytas Infra Limited, which drew the ire of Minister Kuzholuzo Neinu, hundreds of local contractors in Nagaland and citizens of the areas the road projects fall under? If one spells the word M-A-Y-T-A-S it comes to none other than ‘Satyam’ – the villain of India’s biggest corporate scam, the Satyam Computers scam’ of 2009, and owned by none other than B Ramalinga Raju, who was convicted for the scam. Even NGRCU noted that.

But the alphabets are not the story itself. Maytas Infra Limited – the target of Neinu’s wrath – is one of the companies owned by B Ramalinga Raju himself, the founder of Satyam Computer Services – the company that fell from grace after the 2009 scam. Raju’s group of companies includes Maytas Properties and Maytas Infra Limited. Most interestingly, Maytas Infra is now formed as “IL&FS Engineering Services Limited.” Earlier, the Nagaland contractors’ union had alleged in the media that M/s Gayatri and Maytas Infrastructure had been blacklisted even in North East India in Assam and also in Andhra Pradesh itself.

Maytas Andhra Pradesh and Maytas Nagaland

Following the Satyam scam, the Citizens for a Better Public Transport in Hyderabad (CBPTH) demanded a CBI inquiry into how Maytas bagged the Hyderabad Metro Rail project. CBPTH’s convener C Ramachandraiah alleged that Hyderabad had favored Maytas for infrastructure projects. The Economic Times reported that the Andhra Pradesh government has had paid Rs. 1,800 crore to Maytas Infra towards works under the irrigation department’s Jalayagnam project.

Information portals said that the then irrigation minister Ponnala Lakshmaiah has said works totaling another Rs 11,000 crore had been sanctioned to Maytas Infra since Y S Rajasekhara Reddy became the chief minister in 2004. The Andhra Pradesh government then cancelled concession agreement with the group on the Rs 12,132-crore Hyderabad Metro Rail project. On July 21, 2009, a case was registered against the “promoters of the company” under Section 406 (breach of trust) and Section 420 (cheating) of the Indian Penal Code.

Maytas and Satyam: Sharing origin and history

Contractors in Nagaland had accused Matyas-Gayatri JV of ‘escalating’ the cost of the road project. The escalation alarmed the central road ministry while earning the wrath of Kuzholuzo Neinu. The question of escalation of cost (from Rs 1,296 crore to Rs 2,988 crore) is a strange coincidence, if one recalls the Satyam scam in 2009. When the Central Bureau of Investigation cracked the case, the investigative organization observed thus:

“This was perhaps India’s biggest corporate fraud case where M/s Satyam Computer Services Limited caused loss to the investors to the tune of Rs.14, 162 crore. The company head, Ramalinga Raju and members of his family secured illegal gains to the tune of about Rs.2, 743 crore by various tricks.”

“The fraud was perpetrated by inflating the revenue of the company through false sales invoices and showing corresponding gains by forging the bank statements with the connivance of the Statutory and Internal Auditors of the company. The annual financial statements of the company with inflated revenue were published for several years and this lead to higher price of the scrip in the market…”

The ball is now in the court of the leaders of Nagaland government and the citizens of Nagaland.

The writer  is a senior reporter. Described as a “brilliant, witty… unpredictable prankster,” he is a fellow of several prestigious Indian Journalism Fellowships awards and one of the Nagaland’s pioneers of Creative Content Literature.

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By EMN Updated: Sep 04, 2013 12:12:15 am