How CAG picked holes in IFFI 2004
HERALD REPORTER
PANJIM, APR 27
Notwithstanding the reactions to the CBI investigation on International Film Festival of India (IFFI) 2004 infrastructural development “scam”, the findings of Comptroller and Auditor General (CAG) of India make interesting reading as to how the government planned and executed projects and managed the finances.
In its analysis, GAG for the period 2004-05 had pointed out that the “tendering process suffered due to lack of transparency and that tender evaluation procedure was faulty.”
Its findings also revealed that “there were cases of excess payments/wasteful expenditure and over dependence on consultants on all the major works.”
It may be recalled that the BJP-led government had appointed Goa State Infrastructure Development Corporation (GSIDC) – the special purpose vehicle — as the nodal agency for the development of the facilities required for hosting IFFI 2004.
It was headed by then chief minister Manohar Parrikar who was the chairman of the Board of Directors and Additional Secretary (Budget) was the managing director. Importantly, Parrikar was also the finance minister of Goa.
FINANCES: GSIDC had estimated the total infrastructure project cost for IFFI 2004 at Rs 140 crore.
So, how did the government manage with the finances for the project?
According to CAG, the project cost was met by GSIDC from funds borrowed from the Housing and Urban Development Corporation Ltd (HUDCO) and commercial banks which were guaranteed by the Government of Goa.
During 2004-05, the company raised market loan of Rs 93 crore. What was worse was that the expenditure incurred by GSIDC on all the projects planned, was to be reimbursed by the State government. During the period (2004-05), GSIDC received a contribution of Rs 32.50 crore from the State government, CAG noted in its report.
PROJECTS: GSIDC took up the construction of a multiplex theatre (now called Inox), upgradation and restoration of facilities at the existing State-owned Kala Academy (which was the main festival theatre) and improvement of roads and other related projects including beautification works.
Politically, the BJP seems to have been pushed on the defensive following media coverage (not just in Goa but also on the internet) on the interrogation of Opposition Leader Manohar Parrikar (whose public image has been above board), for nearly two hours by CBI officers over the 22 allegations levelled against him.
Apparently, realizing the seriousness of the case the CBI has at hand – both from the CAG findings and also from its own enquiries, party spokesman Rajendra Arlekar demanded that chief minister Digambar Kamat should also be questioned being part of the Core Committee.
There is no doubt that Kamat having been the second in command of the BJP government, was an important member of the Core Committee which was packed with ministers and MLAs including some from the Congress.
According to CAG, a core committee “empowered for taking policy decisions” for hosting IFFI was formed by the State government.
However, enquiries revealed that while the Core Committee took the policy decisions, all the major decisions at the planning and execution levels, along with nitty-gritty of the projects, were taken by GSIDC.
For this, as CAG observed, GSIDC had appointed a lead consultant to advise and assist in development and planning for infrastructure necessary for IFFI.
CONSULTANTS: GSIDC appointed consultants/architects for various projects identified for IFFI.
For projects of estimated cost aggregating Rs 98.64 crore, the consulting fee agreed to with various consultants aggregated Rs 9.04 crore.
In an interesting observation, CAG report said that scrutiny in audit revealed that “the consultants were mostly appointed without calling for offers, ensuring technical capabilities and competitiveness of their fees and whenever the tendering process was adopted, the selection was not transparent.”
HOK Canada Inc, a foreign firm was appointed by the government as the lead consultant at a total fee of US $ 5,32,500 (equivalent to Rs 2.40 crore approx) to advice and assist in the development and planning of the infrastructure necessary for the IFFI.
CAG says in its report that HOK Inc was awarded the consultancy based on their own proposals and as recommended by the Core Committee headed by Manohar Parrikar “without following the normal procedures such as invitation of tenders, technical bids, financial bids, etc”.
In the absence of competitive tenders, the competitiveness of fees/expenses to and the technical expertise of the party could not be ensured, CAG said.
The report further said that the payments were made to the consultant based on their invoices and the agreement without any certification of the satisfactory completion of work by the competent authority – the department of information and publicity. DI saw two Directors appointed by the government during 2003-February 2005.
There was no record in DI to verify whether any deliverables were created in support of the work done/services rendered by HOK, CAG observed noting that hence the correctness of payments was not susceptible for any verification.
