CURRENT ISSUE DECEMBER 19, 2005
Landing In Trouble
An investigation into a land-allotment deal signed by the caretaker TDP government in 2003 reveals the undue favours granted by N. Chandrababu Naidu to a company floated by his friends
By Amarnath K. Menon
IN SOUP: Naidu (centre) as caretaker chief minister gave 850 acres to his associates at a throwaway price
It is a deal that has not only raised many eyebrows but also reeks of a scandal. Telugu Desam Party chief N. Chandrababu Naidu’s efforts to win back the political legitimacy lost in the resounding defeat in last year’s assembly elections may just take a little longer. Last week, acting on an Andhra Pradesh High Court directive, the court for Anti-Corruption Bureau cases in Hyderabad slapped notices on Naidu, two of his former cabinet colleagues and a few officials in a controversial land allotment case.
The charges against Naidu are that as caretaker chief minister after the assembly elections were announced last year, he gave away 850 acres of land for a song to IMG Academies Bharata (IMGB) Pvt. Ltd, a hurriedly floated company whose avowed aim was to build sports infrastructure. IMGB was incorporated on August 5, 2003, with a share capital of Rs 5 lakh, the only stakeholders in the company being brothers Ahobala “Billy” Rao and Prabhakar “Pat” Rao, both known to Naidu. Six months later on February 10, 2004, the sale deed was executed and Naidu laid the foundation stone for the project the very next day (see box). “How can the government allot land worth Rs 850 crore to a company having a paid-up capital of only Rs 5 lakh and no credentials,” asked N. Kiran Kumar Reddy, the Congress chief whip, in the Legislative Assembly.
Reddy contends that Naidu offered the land for Rs 4.25 crore. The memorandum of understanding grants extraordinary rights to IMGB and puts unrealistic responsibilities on the state government. Besides, the MoU provides for the government to sell another five acres along the road leading from Banjara Hills to Cyber Towers at “reasonable rates” to enable IMGB put up its “international-class headquarters”. The Naidu government offered to lease seven stadia, built by the government at a cost of Rs 116.4 crore, to IMGB for 45 years. It has also granted IMGB the right to buy these properties by factoring in costs, which decrease with the passage of time.
The MoU lists many responsibilities on the Andhra Pradesh government:
Compensating costs incurred by IMGB for city promotion up to Rs 2.3 crore a year for five years.
Guarantee to pay for the training of 50 people at a fee 25 per cent less than the prescribed charges.
Persuade the Centre to waive customs and all other duties and taxes on all equipment IMGB may import.
Extend to it all concessions and incentives provided by the state government to the educational institutions.
Assure high-quality power supply and potable water to IMGB free of cost for the first three years and at 25 per cent discount for the next four years.
Ensure that there will be no entertainment tax for 10 years on any of the events held by IMGB at the stadia.
AUGUST 5, 2003: IMGB incorporated with a share capital of Rs 5 lakh by the Rao brothers, friends of Naidu.
AUGUST 9, 2003: Andhra Pradesh government signs an MoU with IMGB.
SEPTEMBER 1, 2003: State cabinet approves the proposal to set up IMGB with immense help.
JANUARY 13, 2004: Revenue secretary directs collector Ranga Reddy to give advance possession of land.
FEBRUARY 3, 2004: Land is transferred to the Sports Authority of Andhra Pradesh (SAAP).
FEBRUARY 10, 2004: SAAP registers the sale of land to IMGB.
FEBRUARY 11, 2004: Naidu lays foundation stone for the IMGB project.
Now, after a detailed investigation by a Group of Ministers headed by state Finance Minister Konjeti Rosaiah, the Government is preparing to take back possession of the land given to IMGB. It is a daunting task. The first lot of 400 acres, taken from the University of Hyderabad at Gachibowli and sold at a throwaway price of Rs 50,000 an acre, is already registered in the name of IMGB. But the sale of another 450 acres at a lowly Rs 25,000 an acre at Mamidipalli near Shamshabad, where the new international airport is coming up, has not yet happened.
The Group of Ministers came down heavily on Naidu for going out of the way to favour IMGB. “The former chief minister’s decision exceeded all limits of decency and democratic conventions,” says Rosaiah. He points out that there is no official communication from Florida-based IMG, supposedly the parent company, on the nature of the arrangement with IMGB. Equally significant is the fact that there is no mention of IMGB being a subsidiary of the IMG in its Memorandum of Association or Articles of Association. “Even the so-called parent company has 120 acres in Florida, while the ‘subsidiary’ was given 850 acres,” points out Rosaiah. After the probe was launched, IMGB offered to pay Rs 29 lakh per acre and hinted that it required only 120 acres. The government rejected the offer.
Evidently, Naidu is embroiled in the biggest land scandal in Andhra Pradesh. Promoters of IMGB prefer to keep a stoic silence. “It is not for me to comment on innuendos and what ministers and other politicians have to say,” says Ahobala. Significantly, the Rao brothers also run BHC Agro (India) Limited, which took up the task of implementing drip irrigation system in Kuppam, Naidu’s assembly constituency.
IMGB had dreamt big. In the first phase, the 400 acre complex was to have the basic sports infrastructure, training and housing facilities, a US-accredited school, luxury dormitories, a medical centre and a 18-hole golf course. This was to be ready by 2007 for the World Military Games that will be held in India for the first time and draw competitors from 130 countries. IMGB also planned the Bollettieri Tennis Academy and David Leadbetter Gold Academy, besides a basketball and a football academy, in the first phase.
The bigger plan was to develop the 450 acre complex as a leisure destination. The plans included a seven-star luxury hotel with 300 rooms, bar and multi-cuisine restaurants, a shopping mall spread over 4,00,000 sq ft, the world’s largest spa, entertainment centres with movie theatres and a theme park. IMGB had offered its help to the Andhra Pradesh government in bagging prestigious international sporting events.
Though IMGB and its plans have an uncertain future, the Government is still ready to play host to the World Military Games. It is working out an agreement with a developer to build the Games Village on a 13.5 acre site at Gachibowli. The Government is planning to spend nearly Rs 150 crore for this. Fortunately, the sporting spirit survives despite the scandal.
Same Ahobala Rao preaches today in Andhra Jyothi that how to Governments work: see tha link: