Sometime in the month of May, the anti-corruption unit of the Central Bureau of Investigation (CBI) got an anonymous tip off. The caller was an official in the National Highways Authority of India (NHAI). The whistleblower told the CBI that some of his colleagues were on the take, helping contractors with sensitive inside information on highway projects. The caller gave the investigators names and asked them to watch an upcoming tender that was rigged.
The information trail led the CBI to NHAI’s chief general manager, S.K. Nirmal, a general manager, Nitin Jain and a Rs. 2,000-crore upcoming tender to build a 174-km highway connecting Nagpur in Maharashtra to Betul in Madhya Pradesh. “Our investigators came to know that these two were regularly in touch with executives with some private companies and had discussed details pertaining to a particular tender that was soon to be opened,” a CBI official told Forbes India, preferring to remain unnamed.
A few days later Oriental Structural Engineers Pvt. Ltd. (OSEL) won the Nagpur-Betul highway tender. The CBI moved quickly and raided the two NHAI officials’ residences and also the homes of OSEL managing director, K.S. Bakshi, and an employee of the firm, S.K. Dixit. Sleuths found Rs. 2.87 crore in cash at the homes of the two NHAI officials. What happened later was intriguing. All the four arrested persons were released on bail because the CBI did not file a charge sheet and NHAI signed the concession agreement with OSEL for the Nagpur-Betul highway. The CBI insists that investigations are continuing but enquiries reveal that the pace is snail like. NHAI says that signing the concession agreement was perfectly normal since the letter of award had already been issued. It says the contract will be terminated if fraud is proven.
The incident brought to light the nexus between powerful contractors and officials of NHAI that not only undermines the tendering process but also roads minister Kamal Nath’s target of building 20 km of highway every day. Yet when CBI wanted to question NHAI board member S.I. Patel in connection with the case, the road transport ministry did not allow it. Minister Kamal Nath did not speak to Forbes India for the story, neither did his office reply to emailed queries. NHAI insists that the clearance has to come from the ministry. But the real mess is at the Authority.
“I don’t think the NHAI is completely clean,” says its chairman Brijeshwar Singh in a rare admission for a government arm.
It would be difficult for the tall, soft-spoken bureaucrat to maintain otherwise. Insiders and people familiar with the organisation say that NHAI officials have capped their signing pens after the CBI started showing interest in highway contracts. NHAI has given out just three contracts in as many months. “No one’s willing to sign on files any more. People are scared that every contract they sign on would be investigated,” says a top bureaucrat familiar with the situation.
Rigging the Wheel
The Nagpur-Betul highway project began courting controversy even before the CBI entered the picture. NHAI disqualified L&T, one of the 13 companies that had participated in the tender, saying that its request for qualification (RFQ) document was not serially numbered. The company filed a writ petition before the Delhi High Court challenging the disqualification but later withdrew it. In its petition, the company had said that the ground on which it was disqualified was “…an incorrect observation and was very easily rectifiable.”
NHAI responded that other applicants could accuse it of acting in an arbitrary manner if it prequalified L&T despite its application not conforming with RFQ documents. Enquiries suggest something else. An executive with one of the bidders in the Nagpur-Betul contract says that his company as well as others got telephone calls from a rival asking them to withdraw their bids. He says it was not the first time.
“There have been several instances of companies getting calls asking them to withdraw their bids. In this case too, such calls were made,” says the executive whose company has participated in several large tenders. He said that it was difficult to imagine that the top brass at NHAI was unaware of such incidents.
“The bane of this whole highways programme is corruption. The Authority never penalises the contractors despite their shoddy performance and thus you cannot expect discipline from them,” says a senior bureaucrat who has closely watched the Authority’s performance.
Contractors pay overseeing engineers to raise the cost of projects to increase their profit margins. They bribe officials to deviate from the terms of contracts and allow execution delays. “They are allowed to overrun the costs as well as time, and that too many times over,” the bureaucrat says.
The Roadblocks
(This story appears in the 05 November, 2010 issue of Forbes India. To visit our Archives, click here.)
Grant for Questioning S I Patel will ultimately lead to interrogation of MoRTH Kamal Nath. As such it will never be granted. The case will remain pending with Congress Bureau of Investigation until Press, Media & General Public tend to forgot it.
on Nov 3, 2010