Highway Robbery

IN THE 2G scam proceedings before the Supreme Court and the trial court, the Central Bureau of
Investigation (CBI) has been variously caricatured by both the complainants and the accused as the
Congress Bureau of Investigation, the Confused Bureau of Investigation and Central Bureau of Imagination.
Its an undeniable fact that when it comes to bringing to book the high and mighty, the track record of the
countrys so-called premier investigating agency has been dismal. The Bofors scam, the Babri Masjid
demolition case and the anti-Sikh riots cases are only some of the sensitive cases that ran aground
because of the CBIs biased and subservient approach towards ruling politicians.
Will the case be over in seven years? Seven months down the
line we have seen paper book after paper book being filed,
rolled-up chargesheets filed, witness after witness being called.
This has been going on without a trial for months together now,
a Bench comprising Justice GS Singhvi and Justice HL Dattu
quipped on 14 October while hearing the bail application of the
2G scam accused. The court wanted to know from the CBI how
long it planned to continue with the investigation.
Many believe perhaps justifiably so that but for the
sustained judicial activism of the SC Bench comprising Justice
Singhvi and Justice AK Ganguly, former telecom minister A Raja
would have still been in Sanchar Bhawan while Swan Telecom
Director Vinod Goenka, Unitech Managing Director Sanjay
Chandra and DB Realty promoter Shahid Balwa would have still
been jet-setting.
From Tehelka Magazine, Vol 8, Issue 43, Dated 29 Oct 2011
COVER STORY
INVESTIGATION
There is corruption beyond the 2G scam. Indias highways and road construction projects are mired
Ashish Khetan exposes the builder-official nexus that plagues our roads.
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in multi-million financial scandals.
as an engine for economic development, has been defeated. In a
statement issued on 18 October, the Associated Chambers of
Commerce and Industry (ASSOCHAM) estimated the economic
loss due to bad condition of roads at over Rs 30,000 crore per
year. In August 2010, the road transport ministry told the Rajya
Sabha that out of 441 projects undertaken by the NHAI since its
inception, 299 (67.80 percent) had been delayed, resulting in
massive cost and time overruns.
THE ROT within the NHAI first came to the fore when, during the
NDA rule in 2002, a NHAI engineer, Satyendra Dubey (later
murdered under mysterious circumstances) wrote to then prime
minister Atal Bihari Vajpayee blowing the whistle on the rampant
corruption and crony capitalism prevailing in the ministry.
Over the past three years, the CBI has received over 100
complaints, some anonymous and some official, alleging a
deeprooted nexus between officials in the NHAI and the road
transport ministry and various private developers. It is alleged
that crores of rupees are routinely paid as kickbacks to procure
highway development contracts, manipulate bid documents, rig
the tendering process, inflate project costs, avoid penalty for
delays in execution, shoddy construction and for the officers to
look the other way while private firms collect toll much before the
highways got completed. Each complaint spoke about a specific
project running into hundreds of crores and gave details about
the irregularities and graft involved.
But out of over 100 complaints of corruption received, all of
which were about the projects awarded during Kamal Nath and
his predecessor TR Baalus tenure, the agency in its wisdom
saw merit in just three. It registered cases of regular offence and
then carried out raids and made arrests. Two of these cases
were registered in December 2009, and one was registered in
May 2010. But shockingly, in none of these three cases has the
CBI so far filed even a single chargesheet.
Ironically, in two out of the three cases, the 2G Supreme Court
Bench judge Justice Singhvis younger brother SS Singhvi was
named as the main accused. It was alleged that Singhvi, while
he was posted as chief general manager of NHAIs Chennai
regional office, entered into a conspiracy with two private
infrastructure companies Indu- Navayuga Infra Pvt Ltd and
Madhucon Projects Ltd and by abusing his official position
allowed the companies to collect massive amount of toll even
though road construction was far from complete. The CBI had
alleged that Singhvis act allowed the contractor to make illegal
gains and put the lives of those using the incomplete highway at
risk. Irregularities in toll collection constitute a big area of
corruption in the management of national highways.
Photo: Shailendra Pandey
Institutionalised corruption The
NHAI stands for all that is wrong with
the road transport ministry
Photo: Tarun Sehrawat
Off road Contractors allege that at
least 3-5 percent of every projects
cost is paid in bribes
Photo: Indian Express Archives
But what about those cases of graft that are not being monitored
by the court? After all, telecom is not the only ministry afflicted by
the malaise of corruption. The Ministry of Road Transport and
Highways, particularly its apex agency for development of
national highways the National Highways Authority of India
(NHAI) has been mired in a spate of allegations of corruption
and crony capitalism. Because of rampant corruption, poor
planning, inefficiency in execution, cost overruns and inordinate
project delays, the very objective behind creating NHAI, which
was to take national highways to global standards and thus work
In the line of fire Over 100
complaints of alleged corruption
pertain to Kamal Naths tenure
were eliminated at different stages of the tendering process
before the tender was finally awarded to it.
Non investigation The CBIs dismal
efforts have ensured that the guilty
are let off the hook
Photo: Shailendra Pandey
A tale of Two roads
Multi-crore scams involving two highways in which the builder-official nexus has been exposed.
The CBI has acted on three complaints and registered cases of regular offence. Two were registered
in December 2009 and the third in May 2010. So far, the agency has not filed a single chargesheet.
SS Singhvi, brother of Supreme Court judge GS Singhvi, is the main accused in two of the three
cases. Singhvi was posted as chief general manager of NHAIs Chennai regional office at the time
It was alleged that as CGM, Singhvi had entered into a conspiracy with two private infrastructure
companies Indu Navayuga Infra Pvt Ltd and Madhucon Projects Ltd
official position and allowed the companies to collect toll even though the work was miles from
completion.
The NHAI had entered into a concession agreement with Hyderabad
for construction and maintenance of the highway from Karur to Dindigul and improvement and
maintenance of the road from the start of Karur Bypass to the end of the Bypass on NH
Nadu on Build, Operate and Transfer (BOT) basis.
According to the agreement, the company was entitled to collect toll for 20 years after completing the
work by 16 April 2009. Misusing his official position, Singhvi allowed the contractor to start collecting
the toll, which was about Rs 1.5 lakh per day, at a time when the work on the highways was far from
complete.
The third scam in which the NHAI is involved is the alleged rigging of the Rs 2,500 crore tender to
build a 174 km highway connecting Nagpur in Maharashtra to Betul in Madhya Pradesh.
Acting on a tip-off, the CBI found that the tender process for the project was rigged in favour of
Oriental Structural Engineers Pvt Ltd (OSEPL). The agency found that all bidders except OSEPL were
eliminated at different stages of the tendering process.
A year-and-a-half later, the CBI has still not concluded its investigation. The NHAI awarded the Rs
2,500 crore contract to OSEPL.
Only five out of 17 firms made it past the pre-bid technical qualification stage. According to the CBI,
tenders of four companies, including Larsen & Toubro were rejected on frivolous grounds.
But surprisingly, over a year after the FIRs were registered
against Singhvi, the CBI in February this year filed a wishywashy
closure report in one out of the two cases, saying the FIRwas a
mistake of fact. The report, a copy of which is available with
TEHELKA, is full of baffling non sequiturs. It concludes by saying
that the agency could not find any mala fide intention in
Singhvis conduct but at the same time recommended suitable
action to be taken against him by the NHAI for showing undue
haste in granting sanctions to the contractor. The agency didnt
spell out what it meant by suitable action. However, while
closing the case, the agency curiously chose to keep the second
case open. The modus operandi of the scam alleged in both
cases was exactly the same. Till date, the CBI has not concluded
its investigation in the second case.
THE THIRD case registered by the CBI against the NHAI is even
more curious. It involved the alleged rigging of the Rs 2,500
crore tender to build a 174 km highway connecting Nagpur in
Maharashtra to Betul in Madhya Pradesh. Sometime in the
month of April 2010 while the tendering process for the project
was still on, the CBI got a specific tip-off that the bid was going to
be rigged in favour of a company named Oriental Structural
Engineers Pvt Ltd (OSEPL). The CBI conducted a preliminary
inquiry and found enough merit in the allegations. The agency,
after seeking necessary approvals from the Ministry of Home
Affairs, started tapping the telephone lines of a few top company
executives and two senior NHAI officials. A few weeks of tapping
yielded incriminating evidence of the builder-official nexus. As
informed by the complainant, all other bidders except OSEPL
In the initial stages at least, the agency showed firm intent and
moved fast to register an FIR. On 26 May, the agency carried out
simultaneous raids at the offices of NHAI and OSEPL. Two
senior NHAI officials and two top executives, including OSEPLs
managing director, were arrested and sent to jail. According to
an official press release, the sleuths had found a whopping Rs
2.87 crore in cash at the homes of the two NHAI officials. But
more than a year-and-a-half later, the CBI has not yet concluded
its investigation nor has it filed its first chargesheet. As a result,
the accused are out on bail, going about their usual business.
More shockingly, despite the FIR in which the CBI had laid down
the modus regisoperandi in great detail, and the subsequent
raids and arrests, the NHAI went ahead and awarded the Rs
2,500 crore contract to the same company with which it is
alleged to have entered into a conspiracy. When the award was
contracted, Kamal Nath was the surface transport minister.
If you thought this wasnt bad enough, consider the following. A few months after the FIR was registered,
the CBI wrote several letters to then Cabinet secretary KM Chandrashekhar and the road transport ministry
seeking sanction to investigate the then member (Projects) SI Patel, as the investigation had yielded prima
facie evidence suggesting Patels involvement in the alleged rigged tender. Patel was an IAS officer of the
additional secretary level and thus prior permission from the ministry was required before the CBI could
move against him. But Nath steadfastly refused the CBI the necessary sanction, frustrating its attempts to
go to the depth of the conspiracy. A helpless CBI then wrote to the government to at least transfer Patel
from NHAI. Last November, Patel was repatriated to his parent cadre of Gujarat.
Repeated attempts to seek an official response from the office of NHAI Chairman AK Upadhyay and also
the authoritys official spokesperson Vishnu Darbari proved to be futile. A senior NHAI official, speaking on
condition of anonymity, justified the decision to give the contract to OSEPL, saying that signing the
concession agreement was perfectly logical since the firm was the lowest bidder and a letter of award had
already been issued when the CBI registered the case.
According to a contractor, at every stage of a project, one has to bribe officials. From getting monthly bills
cleared to clearances of quality control to completion certificates, the contractor has to give a certain
percentage of the money cleared to officers in charge. At least 3-5 percent of the cost of every project is
paid in bribes, they allege. In some cases, the contractors pay kickbacks to the NHAI engineers and
overseeing consultants and inflate the project cost many times over. The officers pass the cost overruns on
some pretext or the other.
The NHAI has often been rapped by the CAG for irregularities in project execution and cost overruns. Three
years ago, the CAG estimated a revenue loss of Rs 384.25 crore to the exchequer because of the
irregularities in two major national highways. The same CAG report also blamed the NHAI for faulty
preparation of detailed project reports (DPR) in many projects, resulting in cost overruns. But unlike its
report on the 2G spectrum sale, which led to a political storm, the CAGs adverse observations about
NHAIs poor functioning and losses estimated in different projects have caught little attention.
Many in the industry see the past five years of UPA as
Well begun half done That seems
to be the NHAIs mantra when
starting highway projects
Photo: Shailendra Pandey
one of policy stalemate within the road transport ministry.
Id not like to comment on individual ministers but the fact
is that there is rampant corruption in the NHAI, says a
senior Planning Commission official on condition of
anonymity. The system of checks and balances has
clearly failed to tackle this menace. The CBI also has
proved to be completely ineffective in nailing the culprits. Either they dont understand the modus operandi
or they just lack the capabilities to investigate sophisticated and institutionalised corruption like that which
prevails in the NHAI.
The CBI had alleged that Singhvi allowed
the contractor to make illegal gains and
put the lives of those using the highway
at risk
Or is it the case that the agency is afraid that if these investigations are taken to their logical conclusion,
many more heads in the UPA may roll? People who are aware of the details of the investigation told
TEHELKA that like the Niira Radia tapes, the tapped phone conversations between top NHAI officials and
owners of OSEPL carry incriminating statements which, if placed in the public domain, are bound to
embarrass an already scam-ridden government. Whatever its reasons, the fact is that with no court or
special body to monitor it in NHAI-related matters, the CBI seems to be unwilling to carry the ball.
Reacting to the charges, CBI spokesperson Dharini Mishra told TEHELKA, The CBI had registered two
cases against SS Singhvi on 9 November 2009. The allegations in both cases were similar, which was
abuse of official position to cause pecuniary advantage to private persons. In the case pertaining to
Madhucon, the CBI filed a closure report u/s 173 (2) (i) of CrPC and it was accepted by the court. The
second case is still under investigation. When contacted, Singhvi refused to comment.
CBI files closure report in one case against Singhvi, keeps the second case open
On 10 December 2009, the CBI carried out simultaneous day-long raids at Singhvis offices and premises
in three cities Chennai, Delhi and Jaipur.
The CBI told the media that it was a multi-crore scam and that they had seized several documents and
details of assets worth over Rs 1 crore from the possession of Singhvi and his family. The CBI disclosed
that the searches at Singhvis posh Shyam Nagar residence had yielded documents of a 400-sq yard plot at
Jagdamba Nagar on Ajmer Road purchased for Rs 25 lakh, besides Rs 4.70 lakh in cash and gold
weighing around 500g. A large number of bundles containing NHAI office files were found stacked in the
basement. We have also seized passbooks of 30 bank accounts and details of two bank lockers of Singhvi
in Chennai. A large quantity of Indian and foreign liquor was also recovered, a CBI spokesperson had told
the media.
Raids were also carried out at the residence and office premises of private contractors at Samayapuram,
Aravakurichi and Tiruchendur in Tamil Nadu and in some places in Andhra Pradesh. The CBI also claimed
to have seized several highend mobile phones and laptops, which they claimed were allegedly gifted to
Singhvi by private contractors. Consequently, the agency registered two cases against Singhvi, one for the
alleged favours to a private firm named Madhucon and another with regard to Indu Navayuga Infra Pvt Ltd.
On various occasions in the past, Madhucon had been issued official warnings by the NHAI for shoddy and
delayed work. But on each occasion the company managed to evade penalties or blacklisting.
In the case involving Singhvi registered by the CBI, the crux of the matter is as follows: The NHAI had
entered into a concession agreement dated 20 April 2006 with Hyderabad-based Madhucon Projects Ltd
for (i) design, engineering, construction, development, finance, operation and maintenance of the stretch
from Karur Bypass to Dindigul (68 km) and (ii) improvement, operation and maintenance of the 13 km Karur
Bypass on NH-7 in Tamil Nadu on Build, Operate and Transfer (BOT) basis. The validity of the agreement
was for a period of 20 years, which means the company was entitled to collect toll for 20 years after
completing the contracted work. But Singhvi, by misusing his position, the FIR alleged, allowed the
contractor to start collecting the toll, which was about Rs 1.5 lakh per day, at a time when work on these
highways was far from complete.
Over a year after the FIRs were registered, the CBI filed the closure report in this case. The report was first
filed before the principal sessions judge, Chennai, on 24 February this year. In March, the judge returned
the report and asked the investigating officer (IO) P Rama Mohana Rao, a deputy SP with the CBI, to
submit the report along with statements of witnesses recorded by the agency. On 29 March, the IO
resubmitted the report along with the witnesses statements. On the same day, the judge passed the order
saying, Reasons stated therein are convincing. Hence the FIR is closed. However, a quick read of the
report reveals glaring gaps in the CBIs investigation. The report, running into over 70 pages, leaves several
key questions unanswered and the suspicious circumstances surrounding the act unexplained. The judge
clearly erred by not asking the agency pertinent questions seeking explanations about the glaring lacunae
in its investigation and closed the case in unjustifiable haste. The CBIs final report made the following
arguments justifying the closure of the case:
THE INDEPENDENT consultant in-charge of the project, a foreign firm named Egis Bceom International,
issued the provisional certificate of completion after which the contractor started collecting the toll (The
NHAI has independent consultants monitoring projects).
The certificate was issued after due consultation with and approval from the NHAI. At the time of issuing the
provisional certificate, the work on the highway was not over but it was still issued in accordance with a
provision provided in the agreement by which the contractor could be given permission to collect toll if most
of the work was over and what remained was only minor work that would not hamper the commercial use of
the highway.
Singhvi only passed on the request proposal from the consultant to issue the provisional certificate to NHAI
headquarters and accordingly permission came from officials in Delhi and not from Singhvi.
Since the FIR alleged that Singhvi had given permission to collect toll and this could not be substantiated
by the investigation, the agency sought to close the case.
However, the CBI failed to give any justification for the
following irregularities in the entire process of giving the
permission of toll collection, which even in its extremely
limp report it has found to be improper:
The deadline for the contracted work was 16 April 2009.
But as late as August 2009, the work was far from over. On 25 August, the NHAI regional office, Chennai
wrote a letter to the project director, NHAI, Karur, and sought the reasons for delay in project completion.
Subsequently, on 1 and 2 October, discussions over delay were held in the office of the project director.
This shows that at least till these dates, Singhvi was unhappy with the progress of construction.
From 17 August 2009, the contractor was requesting the consultant for issuance of provisional completion
certificate. A consultant is required to issue such certificate only after he is satisfied that the work on the
main highway is complete and it could be thrown open for vehicular movement. Such a certificate is issued
after due consultation with and permission from the NHAI. But the proposal is initiated by the consultant
and first vetted by the regional CGM, who in this case was Singhvi, who in turn forwarded it to the NHAI
headquarters in Delhi. Clearly, its the consultant and CGM who held the key for the issuance of any such
certificate as the NHAI headquarters would go by the advice of its CGM. In this case, the consultant was a
foreign firm and the person in charge was a foreign national, Ian Pragnell. Despite repeated requests from
the contractor, Pragnell refused to initiate any such proposal.
However, when on 1 October 2009, Pragnell went on leave and his place was taken by his deputy
Viswanatha Rao, the latter initiated the proposal for provisional completion certificate hitherto denied by
Pragnell. Rao sent the proposal to NHAI Project Director M Thangamani. It was received by the project
director on the same day, who, for his part, did not waste another day in forwarding it to Singhvi. Along with
this proposal, a list of both work pending on the main highway and some minor work was annexed. As per
rules, such a proposal could only be moved if the main carriageway is ready for use. But Singhvi
overlooked this fact and forwarded the proposal to NHAI, Delhi, with an assurance that all pending work on
the main carriageway would be completed by 20 October. The proposal was duly approved and permission
to collect toll granted.
In the meantime, Pragnell came back from leave and shot off a letter dated 12 October saying that the
acting team leaders move to initiate the proposal for provisional certificate was unjustified. He said that
upon his return, he visited the site and found many parts of work far from complete. He also said that the
assurance given by his deputy in his absence that all pending work would be completed by 20 October was
unrealistic. But the CBI in its closure report has claimed that this letter, both the fax and posted copy, were
received by Thangamani, not by Singhvis office. The CBI has not bothered to nail Singhvi on the fact that
even if Pragnells letter did not reach him, surely the project director would have informed Singhvi.
The contractor started collecting the toll from 5 November 2009, but failed to finish the work on time. The
consultant recommended the imposition of a total penalty of Rs 5.95 crore for the delay. At the time the CBI
filed the closure report, the NHAI had not realised the penalty.
From the above-mentioned facts, which are part of the
CBIs own closure report, its quite clear that the agency
has left gaping holes in its own investigation. Besides, the
report does not even talk about the 30 bank passbooks,
the papers related to various properties owned by
Singhvi, the NHAI files recovered from his residence in
Jaipur, the expensive mobile phones and liquor bottles which the CBI claimed it recovered during the raids.
Its also silent on the other case in which a similar modus operandi of illegally allowing the contractor to
collect the toll was alleged.
Is the CBI afraid that if these
investigations are taken to their logical
conclusion, many more heads in the
UPA may roll?
Every day, the government loses at
least Rs 1 crore to road contractors by
way of tolling, says a senior NHAI
official
The CBI FIR, a copy of which is available with TEHELKA, says that Nirmal and Jain rejected the offer of
four companies, including Larsen & Toubro, at the prequalifying stage on frivolous grounds. It further says
that in order to eliminate potential competitors, both got issued a new circular No. 54/2010 on 2 April 2010
specifying that only those applications would be considered that were submitted with original documents
and thereby eliminated four bidders Valecha Engineers, Nagarjuna Construction Company, Transstroy
and Reliance Infrastructure. During the processing of the present tender, the ground for disqualification
was submission of scanned documents but during the same period, the scanned documents of Transstroy
were accepted at Request for Proposal stage in a different tender by the same two officers, the FIR
alleged. It concluded by saying that the two NHAI officers used to part with key confidential and vital details
of the tender process and documents and facilitated the calculation of annuity by applying financial
parameters on the upper side so that the firm can fetch maximum financial benefits and subsequently
awarded the contract to OSEPL.
Now, a year-and-a-half later, the CBI is yet to conclude its investigation. The CBI spokesperson failed to
respond on the status of the case at the time of going to press. On the other hand, VC Verma, Director,
OSEPL, told TEHELKA that though the project was still with them, the construction work had not yet
commenced because of lack of environmental clearance.
A mix of corruption, inefficiency and red-tapism is crippling our roadways. There is an urgent need to give
some of our collective time and attention that is devoted by the media, courts and constitutional bodies
to issues other than the 2G scam.
With additional reporting by Brijesh Pandey and G Vishnu
shish hetan is ditor, In estigations with Tehelka.
[Link]@[Link]
A senior NHAI official speaking on condition of anonymity told TEHELKA that toll collection is a mega scam
within the NHAI. Every day, the government loses at least Rs 1 crore to private contractors by way of
illegal tolling, he says.
The agency taps into phones, carries out raids and arrests, Seizes crores of rupees of cash but finally fails
to file a chargesheet
On 26 May 2010, the CBI arrested two senior NHAI officials a Chief General Manager named SK Nirmal
and a General Manager, Nitin Jain and two senior executives from OSEPL, including its Managing
Director KS Bakshi. The arrests were made after extensive raids at the homes and offices of all the
accused. All four were produced before a designated CBI court in Delhi following which the court sent them
to CBI custody for five days. The accused were subjected to sustained interrogation and were later sent to
judicial custody. They remained in jail for over 50 days before being granted bail. In fact, the accused
managed to secure the bail because of the CBIs inability to file the chargesheet within the stipulated 60
days of the arrest.
TEHELKA found that as many as 17 firms had participated at the pre-bid technical qualification stage. But
only the following five firms made to the final stage of the bid:
1) SEL-GDCL-GKC Consortium
2) Oriental Structural Engineers Pvt Ltd - Continental Engines Ltd
3) Shapoorji Pallonji & Co Ltd
4) IL&FS Transportation Networks Ltd
5) Soma Enterprises Ltd