Suresh Kalmadi and co. fooled everyone about the supposed profitability of the Commonwealth Games. He conjured blinding figures of revenue generation from the Games which both the Union Finance and Sports ministries fell for repeatedly.
Of all the things the Comptroller and Auditor General (CAG) found after probing the Commonwealth Games accounts, it is this fictitious notion of the Games being a "money spinner" that has invited the strongest reactions from the auditors in the 773-page report.
"At all points of time (right from bidding for the Games in May 2003), IOA and the OC consistently presented staging of the Games as revenue neutral, if not revenue surplus. This argument was used to justify the independence of the OC and lack of government," the CAG says.
"This assertion of revenue neutrality was never supported by robust and appropriately validated revenue projections."
After going through past records, minutes of meetings and file notings as far back as 2003-04, the auditors found that between March 2007 and July 2008, revenue projections jumped from R900 crore to R1,780 crore, primarily on account of inflating receipts from sponsorship and donations without any justification.
The CAG says this increase was made with the objective of keeping pace with the increased operating expenditure estimates to maintain the claim of revenue neutrality.
"Both Sports and Finance ministries failed to exercise necessary due diligence, and did not adequately scrutinise the revenue projections or raise 'red flags' on this critical issue at the highest levels of government… and chose to go along with the OC's claims…," the report said.
In 2006, the expenditure finance committee recommended that a risk analysis study of the projected revenue streams be undertaken by the OC and incorporated in the Cabinet note on the OC budget, so as to validate the principle of revenue neutrality.
However, the Cabinet note of March 2007 did not insist on the risk analysis study on the grounds that the OC had engaged Ernst & Young for a risk assessment study, and a draft report was currently under examination of the OC.
"Far from being revenue neutral, OC's budget was hugely revenue deficit," the CAG said.
Emaar, 10 others were eligible, says DDA
New Delhi: The audit of the Commonwealth Games by the Comptroller and Auditor General (CAG) has indicted the Delhi Development Authority (DDA) for 'serious irregularities' in the award of the contract for construction of the Games village to Emaar MGF.
The report says even though Emaar MGF was not qualified, it emerged as an eligible bidder through the consortium route.
DDA had received two bids, from Emaar MGF and DLF Ltd. While DLF's conditional bid was summarily rejected, Emaar MGF was finally declared technically qualified, the report says.
The authority clarified that the technical bid of DLF Ltd. laid down seven conditions, including an assurance from DDA to obtain all approvals from statutory authorities within three months of signing the development project. DDA says as per rules no condition was allowed in the bid.
CAG has also found that Emaar MGF didn't qualify for any of the three conditions fixed by DDA for pre-qualification — three years' experience in building residential facilities, minimum average annual turnover of R200 crore in preceding three years and net worth of R100 crore on last day of financial year. If a consortium bid, its lead member should have had 26% of equity shareholding and voting rights.
DDA counters that at the request for quotation stage, the consortium had applied and was pre-qualified along with 10 other agencies and fulfilled all conditions.