New Delhi: The information and broadcasting (I&B) ministry has mounted a vigorous defence of itself against allegations of wrongdoing levelled by a government panel in the award of contracts for coverage of the Commonwealth Games (CWG) last October.
The ministry rebuttal has been addressed to cabinet secretary K.M. Chandrashekar, according to three officials familiar with the development. The note and the documents accompanying it have also been reviewed by Mint.
The ministry said proper procedures were followed in making the contract amendments at the centre of the inquiry, including seeking the legal opinion of government law officers and the views of the appropriate authorities.
Inappropriate changes were made in the terms of a Rs246 crore deal between state-run broadcaster Prasar Bharati and the UK’s SIS Live, which led to undue financial benefit to the British company, according to a report by the panel headed by former comptroller and auditor general of India V.K. Shunglu. The panel had been appointed by Prime Minister Manmohan Singh to examine the irregularities in the conduct of the Games.
The report recommended action against the then chief executive of Prasar Bharati, B.S Lalli, and director general of Doordarshan, Aruna Sharma, for providing undue benefits to SIS Live. (Doordarshan runs Prasar Bharati’s television operations.)
“A detailed report with supporting documents, which include the minutes of the oversight committee meetings and advice from the ministry of law and justice, etc., was sent on Monday (7 February),” said a senior official in the I&B ministry, who is privy to the contents of the letter. “The ministry has given a detailed response challenging the findings of Shunglu committee.”
Another official belonging to the ministry and one belonging to the cabinet secretariat confirmed the development. Cabinet secretary Chandrashekar had been asked to submit his recommendations on the report, which was submitted on 29 January, within a week.
“The secretariat is reviewing the contents of the ministry’s response,” the cabinet secretariat official said.
The Shunglu committee had also questioned the subcontracting of work by SIS Live to Indian firm Zoom Communication. It recommended action against Lalli and Sharma, saying that the “contract was assigned to Zoom Communication in its entirety... This constitutes fundamental breach of contract conditions by SIS Live as actual contract was performed by Zoom Communications, an Indian firm, which was not otherwise eligible to bid for this service”.
The ministry’s defence points to additional solicitor general Vivek K. Tankha’s legal opinion, also reviewed by Mint, having cleared this.
“I am of the considerate opinion that the arrangement between the entity and M/s Zoom Communication Ltd cannot be held to be a breach of clause 14 of the principal contract,” reads Tankha’s opinion, as cited by the ministry.
Tankha told Mint his opinion was based on the brief that he had been given.
The opinion, one of the documents accompanying the ministry’s note, had been given in response to a query by the ministry in December on whether the sub-contracting amounted to a breach of contract.
The Shunglu committee also said that changes in the schedule of payment, and waiver of performance and bank guarantees resulted in “undue financial benefit to SIS Live”.
The ministry has cited two office memoranda (dated 3 September and 8 September), which say the changes in the schedule of payment were a decision taken by the “competent authority”. This “is a generic committee appointed by ministry of finance for the purpose of sanctioning budget-related changes in the organizing of the Commonwealth Games”, said the second ministry official cited above.
The decision to waive guarantees was taken by the oversight committee, chaired by I&B minister Ambika Soni and co-chaired by minister for law and justice M. Veerappa Moily, according to the documents reviewed by Mint.
Neither Soni nor Moily could be immediately reached for comment.
The extension of benefits and concessions after the award of the contract to SIS Live was also cited by the Shunglu panel as reason for action against Lalli and Sharma.
“The changes agreed to by Prasar Bharati were significant as these included changes in terms of payments, performance guarantee, liquidated damages, and duties and liabilities of Prasar Bharati and SIS Live and sub-contracting, etc.,” the committee observed.
The minutes of the oversight committee meeting on Thursday suggest that the changes in the draft contract were supervised by solicitor general Gopal Subramaniam and were actively discussed by those attending before approval. Mint had reported this on Tuesday.
Subramaniam had said his opinion was based on the need to ensure that the CWG broadcast wasn’t disrupted.
“If the decision is taken by the oversight committee, which was vested with powers to take all decisions related to the production and coverage of the Commonwealth Games, how can the Shunglu committee term it as illegal? And how does it become the mistake of the officials?” asked the second ministry official cited above.
Sharma defended herself against the charges in the Shunglu report in a phone interview with Mint. “I took over charge as DG (director general) after the EoI (expression of interest) responses were sent to the EoI evaluation committee,” she said. “I could have in no way favoured SIS Live.”
Lalli could not be immediately contacted.
One of the Shunglu report’s findings against Sharma was that she, along with Lalli, flouted “established practices vis-à-vis expression of interest, request for proposal, etc., thereby vitiating the selection process to the advantage of SIS Live”.
SIS Live also challenged the Shunglu committee findings in a press statement issued on 2 February.
“The report claims that SIS Live had ‘acknowledged’ profit of Rs135 crore on the Games. SIS Live has made no such acknowledgment, and documents submitted to the Indian tax authorities provide clear evidence that the profits made by SIS were in fact very modest and likely to be less than Rs1 crore,” it said in the release.
“The report also claims that the actual cost of the broadcast elements of CWG was no more than Rs111 crore. The assumptions made by the committee are fundamentally flawed as it assumes Zoom delivered the entire contract, when it only delivered a proportion, and that SIS Live incurred no expenses on its own account. Thus, the assumption that this event could have been delivered for Rs111 crore is untrue and completely without foundation,” the SIS statement said.
Mint was informed by Shunglu’s office that he was not available for comment. An email to his office also went unanswered.