Touted as India’s first smart city and the country’s first International Financial Service Centre (IFSC), Gujarat International Financial Tec-City better known as GIFT City has seen only a handful of building come up in the last 11 years.
The project – a joint venture between the Gujarat Government and Infrastructure Leasing & Financial Services (IL&FS) – was commissioned to host Indian and multinational financial conglomerates, and stock exchanges along with commercial and residential spaces
The project started in 2007 with around 110 buildings in the pipeline, with features such as a district cooling system, underground utility tunnel, and automated vacuum waste collection. But the slow pace of the work is not the only problem that the project faces.
According to former independent director and head of audit committee in GIFT City, DC Anjaria, IL&FS has indulged in serious financial, operational and corporate governance-related irregularities. In November 2015, Anjaria filed a PIL in the Gujarat High Court against IL&FS and GIFT City.
With IL&FS defaulting over Rs 53,000 crores to banks, the Gujarat government has indicated that it will buy out the infrastructure giant’s 50 percent stake in GIFT City. However, IL&FS already owes thousands of crores to the Gujarat government in profits made from the sale of development rights of GIFT City.
Anjaria spoke to The Quint and explained what irregularities were plaguing the multi-crore infrastructure project.
The Quint also approached Ajay Pandey, Managing Director of GIFT City Project and wrote to Sharad Goel, Chief Communications Officer of IL&FS group. However, both refused to comment stating the matter is sub judice.
‘IL&FS Didn’t Adhere to Revenue Sharing Model’
Spread across 886 acres in the outskirts of state capital, Gandhinagar, the land was given away to GIFT for Re 1/acre on a 99-year lease. However, IL&FS was to pay back the Gujarat government at least 50 percent of the proceeds earned from the sale of development rights, which Anjaria claims was never paid.
“GIFT claims to have sold 16 million square feet at Rs 5,000/sq ft. That’s an income of Rs 8,000 crores of revenue. On that 8,000 crores I anticipate at least 25 percent would be land related profit – Rs2,000 crores – which they have not yet paid.”DC Anjaria
Anjaria further claimed that GUDC was not paid 1 percent premium on development rights sold – around Rs 80 crores on Rs 8,000.
Contracts Awarded Without Competitive Bidding
Anjaria in his PIL claims that one of the biggest red flags he observed during his stint in GIFT city was awarding architectural and engineering contracts to Fairwood Consultants without engaging in any competitive bidding process.
According to Anjaria, Fairwood was small and operated out of small office provided by IL&FS at the Delhi-Noida toll gate with few staffers who didn’t have any real experience in big infrastructure projects.
“Right from the beginning I question how the contract was given to Fairwood Consultant. As the scale of the project is quite huge, Fairwood Consultants earned anywhere from Rs 1,200-1,500 crores in fees.”DC Anjaria
Anjaria made efforts to recover fees from Fairwood for incomplete projects; however, “the contract with Fairwood had a stipulation where fees paid in advance to it will not be repaid even if the project is left incomplete,” Anjaria said.
As it turns out, even IL&FS was given the contract by Gujarat Government without competitive bidding,
“Both the contracts were given without competitive bidding. I have pointed out in my PIL that both these contracts are ultra vires, as they were awarded without due process in violation of Gujarat Infrastructure Development Act.”
Brazen Violation of Corporate Governance
In his PIL Anjaria has claimed that the minutes of the board meeting were doctored. He said he had suggested sweeping changes to improve finances and operations, all of which were altered in the written record of the meeting.
“Finally, I wrote the official minutes and as I was still a director and I insisted that the minutes should be filed. But they were not filed within the 30-day period mandated by Company Law. I called for an inspection of minutes as it was my right as a director and observed more irregularities and doctoring of the minutes.”DC Anjaria
According to Anjaria, since the GIFT project is a public infrastructure project funded by the government, it should fall under the purview of the Comptroller and Auditor General (CAG) and the Right to Information (RTI) Act.
“CAG doesn’t need anybody’s permission to audit GIFT city. The board is actively avoiding GIFT from CAG and RTI’s ambit. When I tried to raise this issue during my tenure as director, I was simply told CAG and RTI is not applicable to the project,” Anjaria said.
PIL Filed After End of Tenure
Anjaria told The Quint that before he was ousted as independent director, he requested the board to promote him to an executive role in the GIFT Project.
“The board agreed initially, but later they shunned me out on rotation-basis, claiming that I was the most senior independent auditor in GIFT. The truth is I was the second most senior auditor in GIFT, yet I understood why I was shown the door.”
In November 2015, Anjaria filed a PIL against, GIFT, IL&FS and GUDC pointing several irregularities in the GIFT City Project.
“This PIL does not mention Gujarat government as a party. Unfortunately, the case has not been heard for the last three years now. The judge, however, did issue notices to the parties concerned. Their main defence was why am I raising flags now. I have all the evidence that proves that I had indeed raised red flags during my tenure in GIFT City.”DC Anjaria
Anjaria staunchly believes that the Gujarat government is doing the right thing by buying out IL&FS’ stake in the GIFT City Project.
“IL&FS is a hinderance to the project and GIFT should be managed and controlled by the government. However, there are thousands of crores in dues that are pending and IL&FS is in no position to pay back the state,” Anjaria concluded.
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