Not again: GIDC funds misused

The recent news that GIDC (Goa Industrial Development Corporation) and the Government have decided to settle the SEZ land case by taking back the land and paying the promoters interest @15% is distressing and to add salt to the wounds the fact that the Government of the day with support from the Opposition has decided to drop the criminal cases against those involved in this fraud.

The High Court had stated that the lands despite being public property were transferred to private individuals with scant regard to any norms usually adhered to in such cases. There was no auction and what was apparent was the collusion between certain individuals (politicians as usual were in the background) in GIDC and the SEZ promoters to grab public property. The SEZ promoters challenged the decision in the Supreme Court. The Supreme Court asked the Goa Government and the promoters to arrive at an amicable settlement. This is as amicable as it can get.

At the negotiating table GIDC should have asked for the land back since it was already proven that the transfer was not above board and there were many lapses. They could have put a counter claim for damages as the land was blocked for so many years. Instead GIDC decided to take back the land and also pay the promoters 15% interest. The logic being that GIDC had placed the amount received for these lands in a Fixed Deposit. Assuming GIDC placed the money in fixed deposit, (given the tardiness at GIDC this may not have happened till much later if at all) did GIDC not pay tax on this income, so should they even consider paying 15% when they would have earned max 10.5%. The other question that begs an answer is which bank paid 15% on a fixed deposit?

In addition to paying off the promoters another strange decision was taken, that investigations into who committed the fraud on the State/GIDC would be dropped, as if nothing happened. There was not a whimper from the Opposition, leading to the conclusion that a quid pro quo was arrived at, since the current Opposition was ruling then.

What was the pressing hurry to get the land back? There is approx 1.37 lakh sq mts of land unutilised, so where is the need to hurriedly add 30 lakh sq mts? Even if there was a delay of another couple of years why worry, our children and grandchildren will need land for their ventures in the days to come. The GIDC’s explanation that despite making this huge payout they tend to gain because the land rates are much higher now sounds more like the “inherent formalin” response, it does not convince. If GIDC was concerned about availability of land or making a killing on the price, why did they transfer 2 lakh sq mts to Metastrips land at Sancoale from manufacturing to a single logistics operator against their own rules, and that to within a day, making “ease of doing business” look like a non issue in Goa.

Just before the last election, GIDC using the land freed by reduction in spaces by a new law hurriedly made 12 plots in Verna. Within one month and just before the election code came into play the land was advertised and allotted and lease premium collected by GIDC. More than a year later possession could not be given as the plots could not be found on the ground. At present GIDC is wondering if they should still charge penal interest from those investors who were not paying the second installment. So for SEZ promoters they are willing to pay 15% and to small investors they wish to charge penal interest when they have goofed up. GIDC made plots in a hurry and investors paid the price.

The current government is in a huge rush to close the case and move on by making plots is a case of two wrongs not making anything right. Just consider Verna which has better infrastructure than most other estates. Currently there is not enough power to take care of existing units leave alone expansion, there is a huge shortage of water to some extent addressed with the raw water facility. Units are forced to draw ecologically dangerous borewell water. So any new plots made in Verna and that is where the maximum land from SEZ will be returned would further stress the existing infrastructure putting existing units in peril.

In order to make plots, the GIDC will have to make roads and put street lights and lay water pipelines. From where will they generate the funds for this activity after they pay the promoters? Already they are cash starved and were attempting to raise the lease rentals to fund existing expenditure. One will recall that sometime back, Anil Kher got the Electricity Department to stop giving new connections because they did not have additional power and they were adding more units, thus threatening the existence of the existing units. The courts agreed with his contention and only when the Government/department made arrangements for more power were they allowed to give fresh connections. So, new plots are also detrimental to existing units. 

The best thing this Government can do is to step back, keep aside their pressing need to be election ready and think “Goa First”. Review this deal where interest is being paid to a party that tried to cheat the GIDC in collusion with some officials. Go after the people who made this possible and cost the State a lot of money in time and wasted effort. Make an example of them so in future people think twice before getting into sweetheart deals. If they can do this, surely they will be election ready even if a little poorer individually.

(The author prefers to write rather than chat in a balcao)