New Delhi: India’s Central Vigilance Commission (CVC) has investigated three large contracts awarded by the Dedicated Freight Corridor Corp. of India Ltd (DFCCIL) for corruption, adding to the controversy surrounding a marquee national project that is threatening to go nowhere.
CVC, the government-appointed watchdog that investigates possible instances of corruption in government departments and companies, specifically looked at whether DFCCIL tampered with contract documents, hired officials who did not have appropriate qualifications, and conducted improper negotiations with bidders. The investigation report shows that it had cause to believe these had happened.
CVC also looked at the involvement of DFCCIL’s managing director V.K. Kaul.
Kaul didn’t respond to an email seeking comment on each of the issues highlighted by CVC. He also didn’t respond to calls seeking comment that were made after the email was sent last week. A spokesperson for the railway ministry, under the purview of which DFCCIL falls, declined to comment.
CVC’s report was sent to the rail ministry in May, but there has been no subsequent action. The ministry is sitting on the report, said a CVC official, who did not want to be identified.
DFCCIL aims to connect India’s busiest freight lanes from Mumbai to Delhi in the west and from Ludhiana (Punjab) to Dankuni (West Bengal) in the east.
The project was first conceived in 2005, and since then the rail ministry has struggled to get a fix on what it could cost. Last week, DFCCIL’s board approved a business plan for the freight corridors, which involves a cost of Rs76,000 crore, excluding the cost of land acquisition.
The contracts being investigated are: the award of a consultancy contract for the eastern corridor to a consortium of international consulting firms in September 2008 for Rs133.86 crore; another worth Rs781 crore awarded to BSCPL Infrastructure Ltd in December 2008; and a third worth Rs605 crore issued to Soma Enterprise Ltd in December 2008.
The three are among the most expensive contracts awarded by DFCCIL.
Two senior government officials separately told Mint that CVC started its investigation after complaints from a whistle-blower about the three contracts.
In the first case, the consortium of consultants, including Parsons Brinckerhoff and Halcrow Consulting, did not report for work on the project for two months after they were selected. The bid lapsed in this period. And when they did report, CVC’s report says, their work wasn’t acceptable to several officers at DFCCL. Kaul forced these officers to relent, the report adds.
Bill Peacock, a regional managing director with Halcrow Consulting India Pvt. Ltd, declined to comment citing client confidentiality.
In the second instance, BSCPL was awarded a contract for “earth work” despite its bid being 35% higher than the tender estimate.
And in the third instance, Soma was awarded a contract for design and construction of bridges on sections of the western corridors despite its bid being 40% higher than the estimate.
To be sure, the variance in costs need not necessarily indicate corruption. It could be that the costs were underestimated while preparing tender documents, another CVC official said.
Mint couldn’t ascertain the lowest bids for these projects or even if there were multiple bidders for them.
Bollineni Seenaiah, the managing director of BSCPL Infrastructure, said the start of the project was delayed due to delays in approving the designs. He also said initial payments were low because of the nature of the “earth work”.
“They (DFCCIL) have to approve their designs. We submitted the drawings. Unless they are approved by them, we can’t start. In earth work, the volume is very high but the value is very low,” Seenaiah said.
Soma’s chief executive officer Ankineedu Maganti confirmed in an email that his firm had originally quoted Rs637 crore and later offered a discount to DFCCIL.
Maganti refuted allegations that the contract document was tampered with.
According to documents reviewed by Mint, BSCPL has been paid only 0.1% of the contract amount at the time of the investigation despite the fact that almost 40% of the original time in which the project was to be completed had elapsed.
And no payment, apart from a so-called mobilization advance, has been made to Soma despite the passing of a full year since the award of the contract.
BSCPL’s Seenaiah said the company has, as of June, submitted bills worth around Rs55 crore or roughly 7% of the contract amount.