First, I have to apologise for saying GIDC was going to pay the SEZ promoters 15 percent interest, the rate agreed is simple interest earned on the FDs made out of SEZ funds less tax paid. This appeared in my column ‘Not Again GIDC’ dated August 21, 2018. This error was pointed out to me in a healthy discussion on the functioning of the GIDC board by an industry colleague.
However, that was not the only error, the impression given in the news reports was that the GIDC Board had decided to pay the promoters the principal and interest, however, it was a decision apparently taken by the Council of Ministers sometime in July 18 and the job of GIDC was to organise the funds which at present are non-existent. Unfortunately, the GIDC board was not given complete information. GIDC management gave government information with mistakes without approval of the GIDC Board.
Assuming the SEZ promoters funds were parked in FDs and earning interest, it should be quite easy to believe that the principal is available. That it is not available is evident from the fact that GIDC is considering auctioning part of the SEZ land in Verna, proceeds of which will be used to pay the promoters. This itself will cause problems because GIDC already has a policy as to how much land can be allocated to utilities, which is the land that can be auctioned. GIDC proposes to auction 50 percent of the land available post allocation to open spaces and IPB, this is against the existing policy where utilities can be only 10 percent of available land. They also missed the fact that today as per GIDC policy only 7.5 percent needs to be allotted to open space. Whoever prepares documents which Board members rely on to take decisions should be careful and thorough so that Directors can make a good informed decision.
However, GIDC policy could not be considered by the GIDC board as they got instructions from GoG. The GIDC policy as notified, is very clear that interest cannot be paid on land that is surrendered to GIDC. This fact though mentioned clearly seems to have been missed in the decision making process both at the cabinet level and GIDC board level. Moreover, the fact that the High Court of Mumbai at Goa has declared “allotment of lands made to the companies is illegal, the possession of the lands will have to be restored to the GIDC”, was not highlighted to the decision makers. Was such an important aspect/fact left out by mistake or deliberately?
Another argument in favour of paying interest and getting the land back quickly was the analogy of the tenant and landlord. Landlords will agree to settle tenants quickly so that they can get back their land and make a killing rather than be stuck in litigation. If this logic were true we would not see so many landlords and tenants battling it out in the courts. The point is GIDC surely behaves like a landlord more and a development body less normally. In this case, because of the lack of information and veiled political expediency to get the land back and make it plots, the board lost the plot. Why should you pay interest for something illegally allotted in the first place. Why has the Board not demanded any action against those responsible? The money for the land auctioned/leased today or tomorrow will always be increasing given the fact that land is a finite commodity and not perishable. Time is on the side of GIDC.
Focusing on the interest component, it is a figure which should be constant. Meaning simple interest for Rs 100 at 8.5 percent per annum should be Rs 8.5 every year. In GIDC most of these calculations are done historically by the Estates department and not by the accountants. This leads to a situation where there is almost Rs 23 crore difference between what is reported in the balance sheet and what is calculated by the Chartered Accountant. There are four different interest calculations and each arrives at a different answer. Should this not raise eyebrows? Also, there is a difference between what GIDC has calculated i.e Rs 256.19 crore and what was submitted to the SC by the AG on behalf of Government of Goa/GIDC i.e Rs 256.56 crore. Approximately Rs 37 lakh, since it is public money should these figures not be accurate and if there are difference should they not be reconciled and corrected before submitting to Cabinet/ Supreme Court? Or does it not matter as no one asks questions? If anyone has questioned, there appears to be no record.
The Congress has demanded withdrawal of this payment or settlement but they fail to mention the fact that the Leader of the Opposition Babu Kavalekar, who was Chairman of GIDC during the allotment of SEZ, has been let off the hook by the same cabinet decision. So is the Congress making a noise for the sake of making a noise? Can we be sure that there is no quid pro quo? The Congress is threatening to hold liable all current board members who are party to this new decision but is silent on the greed of those who belong to their own party who created this mess in the first place.
Going forward, apart from taking a better decision based on facts with reference to paying interest, GIDC agendas, minutes and information presented to the Board must be considered a serious activity and if there are half truths or omission, someone must be held responsible so that every decision taken by the GIDC Board reflects the commitment of the board members. Let’s hope one day ‘Goa First’ will be the operating policy.
(The author prefers to write rather than chat in a balcao)