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January 19, 2009
Follow the money.' Thus runs the classic line from the Oscar-winning film All the President's Men, based on the account of how two reporters brought down President Richard Nixon.
In the film the line is attributed to a man known only as 'Deep Throat', whose tips helped Washington Post reporters Bob Woodward and Carl Bernstein to uncover the Watergate scandal. It was, and still is, excellent advice, for any investigator. And I hope it will be applied to the ongoing Satyam [Get Quote] scandal.
But which money? Right now the focus seems to be on the 'non-existent' thousands of crores that Ramalinga Raju, former supremo of Satyam, wrote about in his now famous resignation letter. Various amounts are being bandied about, from Rs 5,000 crore (Rs 50 billion) to Rs 7,000 crore (Rs 70 billion). But Ramalinga Raju's family was involved in another potential scandal, one amounting to a breathtaking Rs 12,132 crore (Rs 121.32 billion).
The story begins in the second or third week of September 2008 when Ellatuvalapil Sreedharan wrote a letter to the Planning Commission, in which he was highly critical of the Hyderabad Metro project. E Sreedharan is no unknown, he is the technocrat who pulled off the Konkan Railway and then the Delhi Metro projects among other engineering projects, someone lauded for his work both in India and abroad.
Sections of Sreedharan's letter to the Planning Commission found their way into the media. Sreedharan, who had been asked to serve as a consultant for the Hyderabad Metro project, remarked that making 'available 296 acres of prime land to the BOT [build, operate and transfer] developer for commercial exploitation was like selling the family silver.' Saying he feared a 'big political scandal some time later,' he added, 'It is apparent the BOT operator has a hidden agenda which appears to be to extend the metro network to a large tract of his private land holdings so as to reap a windfall profit of four to five times the land price.'
How is this connected to Satyam? Because the BOT operator mentioned by E Sreedharan in his letter was Maytas Infra, controlled by the Raju family of Satyam infamy and run by Ramalinga Raju's son Teja. It was, as you may recall, Ramalinga Raju's aborted attempt in December 2008 to buy Maytas Infra and Maytas Properties that set off the chain of events that brought him down less than a month later.
Was Sreedharan being a little optimistic if he thought that putting his objections in writing would lead to a rethink? It has been reported that the Planning Commission, which is run by Dr Manmohan Singh's hand-picked nominee Montek Singh Ahluwalia, criticised Sreedharan for not backing up his allegations with facts. That report may or may not be true -- it would be interesting to go through the Planning Commission's records to ascertain the truth -- but it is certainly a fact that the Planning Commission did not order a second look at the Hyderabad Metro project.
And the response of the government of Andhra Pradesh is definitely on record. In November 2008, Finance Minister K Rosaiah, Municipal Administration Minister Koneru Ranga Rao and the managing director of Hyderabad Metro Rail Limited, N V S Reddy, stated at a press conference that they would sue E Sreedharan unless he took back his comments without reservation. They had misjudged their man.
Sreedharan refused to be cowed down by the threat of legal action. It is a little over two months later now and there is no longer any talk of suing E Sreedharan.
Given the Satyam scandal, is it too much to ask that Sreedharan's allegations should finally be taken seriously? And that while we are about it, how about taking another look at all the other BOT projects undertaken by Maytas Infra?
The government of Andhra Pradesh has, for instance, entrusted Maytas with the Rs 9,900 crore Machilpatnam Thermal Power Plant. Another BOT project is the Gautami Power Project in the state's East Godavari district. Other projects in which Maytas Infra is involved include the Rs 1,590 crore Machilipatnam Port project, the Rs 415 crore Cyberabad Expressway, and the Rs 362 crore Hyderabad Expressway.
It goes without saying that there is absolutely nothing to suggest that there is anything fishy about even one of these projects. For all we know they could all be managed with scrupulous honesty. But the fact remains that the unimpeachable E Sreedharan reportedly made very damaging allegations about one Maytas project, namely the Hyderabad Metro. It would be prudent, therefore, to run a quick scan over all the rest.
This may be necessary in any event. The unwinding of the Satyam scandal has taken a toll on Maytas Infra as well, and its stocks have been hammered. One year ago, Maytas Infra was quoted on the BSE at Rs 840; as I write the price has fallen to Rs 117.
Maytas Infra was supposed to give the government of Andhra Pradesh Rs 180 crore as a performance guarantee in the Hyderabad Metro project in March 2009. Given the manner in which its fortunes are sinking it is open to question if the company can raise the money. Will any bank lend it the funds? If not, how about the money it needs to operate other projects?
Maytas Infra's connection to the Hyderabad Metro Project may well be a thing of the past but how did Maytas become such a force to reckon with in the first place? The brief excerpts of Sreedharan's letter that were leaked speak of a 'political scandal' based on real estate dealings. It is time that they Sreedharan's misgivings were taken seriously and a full investigation was put in place. If the Rs 7,000 crore Satyam scandal is being probed so too should the Rs 12,132 crore Hyderabad Metro project.
It beggars belief even now that neither the Planning Commission in Delhi nor the Government of Andhra Pradesh took a man of E Sreedharan's eminence seriously. Mark Felt, then associate director of the FBI, was forced to operate anonymously as 'Deep Throat;' E Sreedharan was ready to talk openly but nobody was willing to listen.
Ironically, our beloved neighbours in Pakistan were far more eager to tap into Sreedharan's expertise, and invited him to inspect the viability of the Lahore Metro. Perhaps the Pakistanis were just recognising how much better we Indians are when it comes to economic matters, whether in construction or in destruction. A single Sreedharan may be better than 10 Pakistani technocrats, and 10 Pakistani terrorists let loose in Mumbai could not wreak as much financial damage as a single man, Ramalinga Raju!
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