Satyam fiasco may raise political storm ?

15 Jan 2009


NEW DELHI: Just like the Enron scandal, the dizzyingly complex fraud perpetrated by Ramalinga Raju has acquired clear political overtones.
The Satyam scam like Enron chief executive Kenneth Lay, who was endearingly called ‘Kenny boy’ by president George Bush, brought image deficit for the Republicans, the Satyam scandal is threatening to engulf the ruling Congress in Andhra Pradesh.

Ramalinga Raju, once the poster boy of Andhra Pradesh, was promoted by the TDP government led by Chandrababu Naidu as a rival to Narayana Murthy of Infosys in Karnataka. But it was left to the Congress government led by YSR to invest crores of public money into Satyam’s sister concern, Maytas, led by Raju’s son. In over four-and-a-half years, the Andhra government has pumped in around Rs 30,000 crore in infrastructure projects led by consortiums headed by Maytas.

The controversial Hyderabad metro project was awarded to Maytas and the government pledged to invest Rs 12,000 crore. Unlike its competitors, Maytas demanded no returns. Instead Maytas promised to give the state government Rs 30,000 crore over 15-20 years.

Delhi Metro Rail Corporation chief E Sreedharan had warned in last September that a huge scandal was brewing in the Hyderabad Metro project. “The Hyderabad Metro project is being cited as a successful example of BOT approach. Here, I would like to caution that the example of Hyderabad Metro is quite misleading as the negative viability gap funding has resulted solely on account of 296 acres of prime land being made available to the BOT operator for commercial exploitation. This is like selling family silver. Apart from the fact that this might lead to a big political scandal sometime later, it is apparent that the BOT operator has a hidden agenda that appears to be to extend the metro network to a large tract of his private land holdings so as to reap a windfall profit of 4-5 times the land price,” Mr Sreedharan had said in a letter to the Planning Commission.

Irrigation projects were also awarded to Maytas by the state government. Sources say the company was awarded infra contracts without any experience to its credit. The Pranahita Chevala lift irrigation project in Ranga Reddy district for Rs 9,200 crore and an all weather port project at Machlipatnam were two other big projects that Maytas was rewarded with.

Slow to take off due to financial issues, it was only last April that YSR laid the foundation stone for the Machlipatnam project. The project is being promoted by a consortium led by Nagarjuna Construction Company in which Maytas has 26% stake. The consortium includes SREI and Sarat Chatterjee group. The consortium is to develop 7,000 acres of government land as SEZ.

A worried Congress is attempting to lay the blame for Satyam’s prominence on the TDP. But the Congress will find it difficult to explain its promotion of the company by awarding it key infrastrastructure projects without proper scutinty or flawless procedure.

ET Bureau