CBI case against GVK group that runs Mumbai airport over alleged Rs 705 crore scam

The Central Bureau of Investigation (CBI), performing on supply data, has registered a case towards GVK Group- firm that runs the Mumbai airport, its chairman Dr G V Okay Reddy, his son G V Sanjay Reddy and a number of other different corporations in addition to unknown public servants for alleged irregularities value over Rs 705 crore within the improvement of Mumbai airport, officers acquainted with the developments mentioned.

The company has named 13 individuals together with G V Okay Reddy, his son G V Sanjay Reddy, who’s the managing director of three way partnership firm – MIAL (Mumbai International Airport Limited), registered on June 27 for felony conspiracy, dishonest and prevention of corruption act.

Officials acquainted with improvement mentioned CBI even carried out searches after registering the FIR.

MIAL is a PPP (public personal partnership) between AAI (Airports Authority of India), GVK and overseas entities within the identify of MIAL beneath which GVK has a shareholding of 50.5%, AAI with 26% and remaining with shareholding is with overseas corporations.

The AAI entered an OMDA (operation, administration and improvement settlement) in April, 2006 for modernization and up gradation, operation and upkeep of Mumbai airport as a part of three way partnership known as –MIAL. As per the settlement, it was determined that MIAL will share 38.7% of their income as annual payment with AAI and that the federal government authority may have the primary proper on the income. “The essence of agreement was to create a world class facility and at the same time protecting the interests of government of India, promoters and passengers,” CBI FIR states.

“Despite there being a clear cut understanding in the OMDA, the promoters of GVK group in MIAL, in connivance with their executives and the unknown officials of AAI resorted to siphoning of funds fraudulently adopting various modus operandi,” CBI says.

For the challenge, round 200 acres of undeveloped parcel of land was given to MIAL across the airport in order that it might develop the world and generate revenues.

“The MIAL entered into fake work contracts during 2017-18 with at least nine companies on the pretext of real estate development. MIAL transferred the funds to them but these projects have never been executed on the ground, and the transactions were only on papers. Using this modus operandi, Rs 310 crore have been fraudulently siphoned off which resulted in wrongful loss to AAI and corresponding gain to themselves,” mentioned CBI FIR.

These 9 corporations, CBI provides, have additionally availed faux credit score Input Tax Credit (ITC) and trigger additional income loss to the federal government exchequer primarily based on these faux invoices.

“Source information has also revealed that there are many more such fake contracts which MIAL has fraudulently entered into with non-existing/non-functional entities and have embezzled the funds of MIAL,” CBI provides.

In one other modus operandi, from 2012 onwards, GVK used the excess of MIAL to the tune of Rs 395 crore to finance their different group corporations. “They fraudulently created forged Board Meeting Resolutions of MIAL authorizing to keep the reserve/surplus funds of MIAL as FDRs with public sector banks at Hyderabad,” CBI says.

Interestingly, CBI says, MIAL is a Mumbai primarily based firm however they selected to deposit the FDRs in Hyderabad department of Bank of Baroda.

“GVK Group raised loans/overdraft facilities against these FDRs and used these funds for the benefit of their Hyderabad based company at the expense of MIAL,” it provides.

It mentioned that surplus funds have been deposited in different banks’ branches as nicely in Hyderabad.

The promoters of GVK, CBI provides, additionally embezzled funds by resorting to inflating the expenditure of MIAL. For instance, CBI says – “they shifted the staff of their head office in Hyderabad and the employees of their group companies on the payrolls of MIAL. So, in contravention of the agreement, employees who were not part of MIAL were being paid for all these years”.

Subsequently, CBI FIR alleges that the GVK group connived with their members of the family, family members and staff they assigned the premium retail areas of Mumbai airport to their members of the family at exorbitantly low charges thereby lowering the income of MIAL on account of leases and gross sales.

The GVK group even used funds of MIAL by coming into into agreements with an organization owned by members of the family, family members, staff to e-book practice, air journey tickets and lodge reserving for private in addition to group staff of GVK who weren’t linked to MIAL, it provides.

CBI provides that AAI officers knew about all of the irregularities however their turned a blind eye and let these practices of siphoning, diverting and misusing of funds of MIAL to proceed.

For now, the company has estimated the loss to be round Rs 705 crore however officers who didn’t want to be named mentioned it could exit few extra hundred crores.