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Adarsh, a classic case of fence eating crop: CAG

The Adarsh Housing Society scam is a case of how State and Central government departments across the board failed to uphold the very rules they were in charge of implementing, the Comptroller and Auditor-General of India has concluded.

However, the CAG is not in favour of demolishing the building and has recommended that the houses be given to deserving ex-servicemen and war widows.

Adarsh “is a classic example of the fence eating the crops; of those holding fiduciary responsibility betraying the same for personal aggrandisement. It reflects a consistent failure across all departments, State and Central government and a cross-section of the officialdom. It is an example of how a group of select and powerful elite could collude to subvert rules and regulations for personal benefit,” says the CAG report given out at a press conference here on Saturday.

A series of letters for concessions, extra FSI and approvals, sent by the society to the State and the Centre “liberally” used phrases such as “members who are from the Armed forces and serving the motherland,” and “reward for heroes of Kargil operations who bravely fought at Kargil and protected our motherland.”

However, on the final list of 102 members of 2010, the largest share of the residences went to the kith and kin of the powerful. There were 37 defence officers including civilians, 15 service and retired government servants, 8 MPs or MLAs, and 42 individuals, who were mostly relatives of government officers and politicians.

Eligibility conditions were also relaxed in favour of the members. “The government of Maharashtra amended [February 15, 2005] the provisions of the GR of July 1999 by raising the income limit of all and waiving the requirement of domicile in respect of retired State government employees and serving and retired service personnel from Maharashtra,” the CAG found.

It also stated how certain memberships in Adarsh were linked to the decisions or approvals given by officials. For instance, the former Municipal Commissioner, Jairaj Phatak, accepted the society's contention that there was no need to obtain a fresh no-objection certificate for construction of an additional floor. “However, the appropriate authority i.e. MMRDA's approval may be obtained.” MMRDA [Mumbai Metropolitan Region Development Authority] then issued the NOC. “The son of Jairaj Phatak eventually became a member of the society.”

In another instance, the society forwarded eight names to the Collector to be included as members “if the additional FSI was sanctioned by the government.” This “conditional membership was unusual,” the CAG observed. In the same letter, the society also “intimated the approval of membership of...I A Kundan, [who] on that date, [was] Collector, Mumbai City, and was directly dealing with the matters relating to the society.”

Misleading letter

The CAG noted that the society member and then Deputy Secretary, Urban Development, P.V. Deshmukh, issued a letter which was “misleading and indeed false.”

He said: “The Ministry of Environment and Forests have communicated their ‘no objection' to allow the said residential development since it falls within the Coastal Regulation Zone II area.”

This letter “enabled the society to overcome a significant barrier of environmental clearance for the building.”

Thus, “a building more than 100 metres tall could come up within a few kilometres of Mantralaya without requisite clearance and also receive an occupancy certificate from the concerned local authorities.”

The report has no mention of the missing Adarsh files. Mala Sinha, principal accountant general (Audit)-I said: “We have prepared the report on the basis of the records available to us.”

In light of the “glaring examples of dereliction of duty and severe lack of probity and accountability,” the CAG has called for a “detailed inquiry and investigation.”

Kalmadi in the dock

The Third Commonwealth Youth Games (CYG), 2008, held in Pune was a fitting precursor to the Commonwealth Games scam of 2010. According to the CAG report, a series of irregularities took place in award of contracts and favours, which became a hallmark of the CWG.

“Lack of effective planning and execution resulted in non-completion of many city infrastructure works before CYG. Commencement of work without ensuring clear sites resulted in blocking of funds and an avoidable expenditure of Rs. 177.04 crore,” the report says.

The 2008 CYG was organised as a sub-event of CWG 2010 under the stewardship of Organising Committee chairman Suresh Kalmadi.

The CAG found that “concerned rules and regulations were openly flouted in the award of contracts for construction and refurbishment of the sports complex and procurement of electronic, sports and other equipment.”

One of the things the CAG found “serious deficiencies” in was the construction of a three-star hotel on a public-private partnership basis.

“The tendering process…was severely flawed. The contract was awarded to Unity Infra Projects on a single financial bid with a net present value far below that recommended by the Finance Department. The Review Committee abdicated its responsibility in regard to this contract. Further, the entrepreneur did not pay the annual premium as per the agreement.”

Authorities changed land use norms, relaxed building and tender conditions. “The change in land use was approved by the Chief Minister [Vilasrao Deshmukh] in October 2007 under clause 58 of the Maharashtra Regional Town Planning Act, 1966. We noted that there was negligence and oversight at all stages and levels, which permitted a prime piece of government land designated for public purposes to be handed over to private agencies for commercial exploitation for 60 years and that too, without commensurate compensation accruing to the public exchequer,” the report says.

Arrears of annual premium amounting to Rs. 4.70 crore had not been collected from Unity as of January 2011.

“Photographs of the hotel indicate that the facility constructed was primarily oriented towards a superior class hotel, rather than a functional hostel… While it is well-appreciated that suitable accommodation had to be provided to the participants of CYG, evidently under the guise of hosting the athletes and officials of CYG, a hotel was allowed to be constructed through change of land use with a minimal premium accruing to government.”

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