The Bangalore Metro Reporter
KRIDL’S UNIQUE MANIPULATION!
JV with Ramalingam Company: Company offered 5% service charges; MD settled for only 3%!
The Ramalingam Construction Company (RCC) which bid for TN Housing Board's Mega project on behalf of KRIDL (ex-Karnatka Land Army Corporations) was prepared to pay the normal service charge of 5% to the Corporation. But the then MD of KRIDL G.C.Prakash (now transferred) got the Board to approve only 3% service charge! The TNHB project, for which the KRIDL is the third lowest bidder with 38% above SR, is to be executed by the Ramalingam Construction Company (RCC) from the bidding to completion stage, in the name of the corporation. On paper, the KRIDL will be executing agency but in reality, it is the RCC which does everything. Why did the ex-MD settle for 3% while in fact the company was prepared to pay 5% service charge?
In order to grab a mega project of Tamil Nadu Housing Board in Chennai, the Karnataka Rural Infrastructure Limited (formerly KLAC) has lent its 'name' to a private company. This is just like KRIDL acting on behalf of a private company to grab the mega project in the name of the corporation and getting a certain percentage as royalty or service charge! As this private company based in Erode, does not have the eligibility to bid for the tender, it approached the corporation and convinced the then MD G.C.Prakash to lend the corporation's name for the tender process. It is just like the corporation acting as the benami company of the private company Ramalingam Coustruction Company (RCC) which opened its office in Bengaluru.
As per the tie up, the RCC would be authorised to participate in the tender on behalf of the KRIDL. The RCC would pay the EMD and other financial and technical factors and decide the bid amount. The company will execute the project at their cost. If the tender is awarded to KRIDL, it is the RCC which makes investments and completes the work. And as the project would be awarded to KRIDL, the TN Housing Board will pay the Bill to the KRIDL which in turn releases the amount to RCC. To put it simply, KRIDL will be only a ‘name lending’ agency!
It all began with RCC writing a letter to the then MD of KRIDL G.C.Prakash, drawing his attention to the Tamil Nadu Housing Board’s tender for construction of multi storied residential complex and office complex at ONGC campus in Chennai and showing its interest to apply for the tender by associating with KRIDL. The MD of RCC wanted the KRIDL to authorise them to participate in the tender and take up the work if the tender is awarded to KRIDL. The RCC in its letter had made it clear that they will invest their own finance from the application to tender form to the completion stage. And what more, the RCC had agreed to pay the normal service charge of 5% to the KRIDL on back to back basis.
This implies that after the work gets started, the TNHB will release the running bill amount to the KRIDL and KRIDL in turn will release the amount to the RCC after deducting 5% service charge. It is to be recalled that KRIDL charges 5% service charge for all the works executed by it entrusted by the government and government agencies.
Regarding the tender, RCC participated in it on behalf of KRIDL and quoted 38% above SR. This implies that the project will cost a little over 175 crores. If all goes well and the RCC completes the work, the Corporation will be getting about 8.75 crores as service charges for mere name lending. As these mega projects drag over for more than two years, there would be escalation etc which finally may reach Rs. 200 crore! But, if the work was found to be unsatisfactory and sub standard, what would be the result? The TN government as it is today will not even bait an eye lid to blacklist the KRIDL! And why did the KRIDL without knowing the antecedents of RCC allow itself to be used as its front?
Whatsoever, G.C.Prakash, the ex-MD of the Corporation is allegedly, a notorious corrupt official who would do anything for money. He clinched a deal with the RCC in a hurry through his legman Balasubramaya, a DD. What more, he got a resolution passed by the Board in a hurry. As the Chairman Chikkana Gowdar too is allegedly possessive of money, Prakash easily misled him and got the board to authorise the RCC to bid for the tender in the name of KRIDL (Additional Subject No 170-A 5) on the pretext of Joint Venture on 13-7-2012 itself.
Interestingly, Prakash had shown his manipulative skills by making the Board to accept 3% service charges instead of the normal 5% service charge. In fact, the RCC itself had agreed to pay 5% service charges to the KRIDL. 3% service charge means that if the project is executed by the RCC satisfactorily, the KRIDL would be getting about 5 crores as service charge. And interestingly RCC itself had agreed for 5% service charge which comes to 9 crores! It is also said that Prakash had not brought the offer of 5% services charge by RCC to the notice of the Board.
This is not the end of the story. Even though the RCC had never asked for any financial help from the corporation, Prakash got the Board to approve advancing a credit of Rs. 18 crores to the RCC against bank guarantee. It is another matter that KRIDL used to release 20% of the contract amount to the sub contractors as advance against bank guarantee. In spite of the company not asking for any financial or technical support, why did Prakash force the Board to advance 18 crores credit?
What is the implication of this huge advance provided to the RCC without asking for the same? On the face of it, the project may drag on for more than two years. And this 18 crores advance to the RCC is a dead investment without any return. Mere Bank interest of this amount would have fetched KRIDL around 4 crores. And what is the total service charge the KRIDL gets from RCC at 3%? It is about 5 crores! The difference is just one crores! Is it justifiable by any stretch of imagination that the KRIDL would stake its reputation, credibility and money for the sake of one crore earnings and that too over a period of time? It is obvious that Prakash and the Chairman would be having their share in the “credit” business.
Of course, the KRIDL's (or RCC) bid is the third lowest. Being a state government undertaking and considering the hundreds of crores of works done by it in the last couple of years, it still stands a chance to get the contract. But there are some suspicions about the corporation getting the contract as the other companies who have participated in the tender are sore over the tricks played by RCC with active connivance of the KRIDL. Strictly speaking, the KRIDL stands to lose in the entire contract.
At the same time, Prakash and Chikkana Gowdar have heavily benefitted by agreeing to 3% service charge against the 5% and advancing 18 crores unnecessarily to the company. At the end of the successful completion of the project, the KRIDL can get at the maximum one crore as service charges deducting the interest part of the 18 crores advance to the company. This is how IAS officers take everybody granted and make crores and crores. Interestingly, Prakash was the 'guest' of Lokayukta also and that explains everything. More shockingly, GC Prakash, is been transferred to even more plum post in spite of enquiries pending against him. G.C. Prakash is now, the DC Bangalore Urban. That is all.
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