Proceed under Indian Penal Code, Prevention of Corruption Act, says interim report

Strongly indicting the suspended Prasar Bharti CEO B.S. Lalli and Doordarshan Director-General Aruna Sharma of colluding with U.K.-based broadcast firm SIS LIVE during the Commonwealth Games 2010 that resulted in a loss of Rs.135 crore, the Shunglu Committee has called for strict action against them under the Indian Penal Code (IPC) and the Prevention of Corruption Act.

Accusing Mr. Lalli, Ms. Sharma and some other officials of colluding with SIS LIVE and Zoom Communications Ltd. to cause them a benefit of Rs.135 crore, the two-member committee, in its interim report into wrong-doings in the award of contract for the Games, has suggested that certain actions seemed to attract penal provisions under the IPC and the Prevention of Corruption Act, and that these should be separately investigated and action initiated.

“The government may decide on action against B.S. Lalli, Aruna Sharma and others who acted in concert with them for providing undue gain to SIS LIVE and Zoom Communications Limited. These officials cannot be recused from the acts of omission and commission that facilitated this wrong-doing,” the committee has stated in its first report.

The panel, headed by the former Comptroller and Auditor-General, V.K. Shunglu, submitted the 236-page interim report to the government on Monday.

The report further stated that the value of services provided in the production and coverage contract was estimated at below Rs.100 crore. Certain other expenditures have been incurred contrary to the contract, which are to be viewed in the context of the Rs.147.60 crore (60 per cent of the contract price) paid by Prasar Bharti up to October 2010 and the need to recover the “excess” amount from SIS LIVE.

“Based on the documents, the actual cost of the contract awarded to SIS LIVE was at best about Rs.111 crore, thus resulting in a profit of at least Rs.135 crore for SIS LIVE and Zoom Communications,” it said.

On the role of Mr. Lalli and Ms. Sharma, the report said: “The CEO of Prasar Bharti and the DD Director-General, in concert with some others in these entities, were able to: impose restrictive and inflexible conditions in the tendering process to discourage competition; misrepresent and suppress information crucial for informed decision-making; disregard/flout established practices vis-à-vis Expression of Interest (EOI), Request for Proposal (RFP), thereby vitiating the selection process to the advantage of SIS LIVE; extend post award of contract benefits and concessions to SIS LIVE — the service provider selected for production and coverage of the Games.”

The report said that both had feigned ignorance of an “illegal contract” assignment by SIS LIVE to Zoom Communications — an ineligible entity — even though both contracts had been signed on March, 5, 2010, “back-to-back,” and SIS LIVE had announced having done so in a press release issued on March, 8, 2010.

It said that Prasar Bharti assumed no role in planning, methodology and management by outsourcing Host Broadcast operations in their entirety, and that it ignored quantitative and qualitative deviations in supply of equipment and instances of breach of contract, including non-supply of key personnel, other staff and deliverables.

The report added that Prasar Bharti deliberately delayed decisions to accomplish its pre-meditated objective as fait accompli. “These actions/inactions are strongly suggestive of collusion between the CEO of Prasar Bharti, the Director-General of Doordarshan, and the service provider(s), SIS LIVE and Zoom Communications,” it said.

The committee found that the contract for production was awarded to SIS LIVE at a cost of Rs.246 crore on the basis of a single bid, as the other nine responses were either rejected or entities backed out due to unduly restrictive and stringent conditions.

It said that SIS LIVE secured the contract for Rs.246 crore, assigned it to Zoom Communications for Rs.177 crore, provided no service, and made a profit of the difference between the contracted price and the assigned price — Rs.69 crore.

“The procedures and best practises in the selection of the service providers were ignored or bypassed to favour certain entities. Superfluous legal advice was obtained on matters requiring management decisions, and this can only be viewed as an attempt to foreclose the option of decisions based on sound financial and management principles,” the report said.

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