Andhra govt cancels Maytas metro project
The other side of the Satyam corporate fraud scandal took a major scalp on Tuesday as the Andhra Pradesh government decided to scrap an ambitious metro rail project contract awarded to Maytas Infrastructure Ltd, controlled by the family of B Ramalinga Raju, the jailed and disgraced founder of Satyam Computer Services Ltd.business Updated: Jul 07, 2009 21:17 IST
The other side of the Satyam corporate fraud scandal took a major scalp on Tuesday as the Andhra Pradesh government decided to scrap an ambitious metro rail project contract awarded to Maytas Infrastructure Ltd, controlled by the family of B Ramalinga Raju, the jailed and disgraced founder of Satyam Computer Services Ltd.
The Hyderabad-based Maytas, whose name is only the inversion of Satyam, is seen as a beneficiary of political links of the Raju family, and has come under intense scrutiny after Raju confessed in January cooking up profits in Satyam’s accounts. Satyam, after government intervention, is now a part of the Mahindra group after a takeover.
The decision to cancel the Rs 12,000-crore deal was taken at a high power meeting chaired by Chief Minister YS Rajasekhara Reddy.
State Municipal Administration and Urban Development Minister Anam Ramnarayan Reddy said that the government decided to cancel the project as the company had failed to achieve financial closure even more than three months after the initial deadline ended in March 2009.
“It was getting too late. It was not going to be viable for us. The twin cities (Secunderabad and Hyderabad) needed metro rail quickly to solve the acute traffic problem. Though we gave a deadline till July 6 they could not provide the performance guarantee of Rs 240 crore nor could they achieve financial closure. This left us with no scope but to cancel the project," Reddy told Hindustan Times.
Ruling Congress party circles seemed happy over the scrapping of the project to Maytas because of its association with much-tainted Ramalinga Raju. “It’s a birthday present for the party and government from the Chief Minister(whose birthday is on July 8). Now all finger pointing will come to an end,” said a legislator.
Consequent to the scrapping of the contract, the government issued instructions to forfeit the Rs 71 crore deposited by the company in two tranches as part of the contractual obligations.
Maytas and its consortium partners Navbharat Ventures, Ital Thai and IL&FS bagged the prestigious project in a global bid in 2008.
Repeated attempts to get Maytas Infrastructure’s reactions could not succeed.