GMR in Spotlight Now
GMR is one of India’s largest infrastructure/construction companies with presence in roads, power, airports, construction etc. Like other infra majors the company has been facing a tough time as interest costs have increased, projects have got delayed and growth has slowed. The company now faces attack to its showpiece airport project, for unfairly wrangling out major concessions worth billions from the regulators (corruption and collusion implied by the Indian auditing statutory body CAG).
Note regulatory capture by major corporate groups is quite well known but the proactive approach of low key Government body CAG in recent times has exposed massive corruption in multiple sectors. The 2G scam has already caused the jailing of ministers and CEOs (though, out on bail as usual) and led to cancellation of licenses for many companies. Now the spotlight has fallen on the PPP model followed in giving India’s capital airport to a consortium led by GMR.
The report exposes how:
- Capital costs were escalated in the middle of the project
- Additional real estate development was done
- How the concessionaire manipulated to lower the Government’s revenue share through JV with related entities.
The report is scathing and likely to lead to a long drawn court case with major financial implications on GMR. While the current spotlight in on the huge coal allocation scam, the airport scam is not to be dismissed either.
India has lately become a nation known for endemic corruption rather than the world’s poster growth boy with the ruling party members implicated in a number of corruption scams. With the Government reluctant to take action against its own, the Supreme Court was forced to take over the supervision of the investigating agency CBI. In the first charge sheet top corporate honchos and CEOs were put under arrest along with the former telecom minister Raja and his cronies. With the ruling party under pressure from a civil society movement against corruption, the ability to manipulate the investigation process is limited. Not that the Government is not trying put impediments in the court cases of top ministers and leaders, indulging in character assassination of the eminent social activists like Santosh Hegde and others. This comes even as other chief ministers of the Congress like Gehlot get caught in nepotism.
Kalmadi who is a Congress member of Parliament and the Chairman of the powerful Olympic Association in India has been arrested in the CWG scam. Note the Commonwealth Games has been known to be one of the most corrupt ones organized in India. Some of the organizing members and Kalmadi friends have already been arrested and released. It is almost 6 months after the Games, with conclusion that Kalmadi has been arrested even as numerous cases of manipulation and siphoning of money have been reported. Not a surprise, given that the Government routinely manipulate the investigation process and agencies like CBI to its own ends.
Government auditor CAG today slammed the government for giving out Delhi airport and its land with a potential earning capacity of Rs 1,63,557 crore to private-led operator DIAL which made a total equity contribution of only Rs 2,450 crore.
With an equity contribution of Rs 2,450 crore of which the private GMR-led consortium’s share was Rs 1,813 crore, the Delhi International Airport Limited (DIAL) got a brownfield airport for 60 years, the report of the Comptroller and Auditor General (CAG) said. A brownfield airport is one which is already in existence.