Raju brothers, the disgraced promoters of Satyam, stand accused of not merely duping investors but several state governments also. The Supreme Court is scrutinising the non-competitive method through which Emergency Management and Research Institute (EMRI), an ambulance service promoted by the brothers, won government contracts to run services in 10 states.
EMRI was started and publicised as a charity by the brothers originally.
After the Satyam fraud came to light, two directors of the EMRI — CII mentor Tarun Das and Harvard professor Krishan G Palepu —have resigned while a third, former bureaucrat Jayaprakash Narayan has sought details about the way EMRI won government partnerships.
A self-proclaimed not-for-profit organisation, EMRI, has managed to enter into partnerships with governments in 10 states without any competition. Selection procedure in all 10 states followed tailor-made procedures that qualified none but EMRI. The SC sent notices on November 19 to these governments. B Ramalinga Raju is chairman and his brother B Rama Raju is among the directors of EMRI. Former president A.P.J. Abdul Kalam is on the board of EMRI.
“I have sought details about how EMRI won these contracts from state governments. If the reply is not satisfactory I will resign,” said Narayan.
In financial year 2008-09, public money to the tune of Rs 450 to 600 crore could have moved to the accounts of EMRI under the Private-Public Partnership (PPP) model. The money comes mostly from the Union government's National Rural Health Mission (NRHM) that is administered through the state governments.
The government’s role is limited to be part of an advisory council and the money is given as grant- in-aid and beyond the purview of government audit, usually done by the Controller and Auditor General in projects involving public money.
EMRI can engage a firm to audit its account and it gives a utilization certificate to the government. For instance, in one line, it told Andhra Pradesh government on 27 November 2007: “Certified that out of Rs 11,97,02,258 (rupees eleven crores ninety-seven lacs and two hundred and fifty eight only) sanctioned in favour of EMRI, a sum of Rs 11,97,02,258 has been utilized for the purpose for which it has been sanctioned.”
Venkat Changavalli, CEO of EMRI defended the practices on grounds that the respective state governments chose the organisation.
Speaking to HT before the Satyam fraud came to light, Changavalli said: “You will not entrust the cheapest doctor with your heart surgery. State governments found that only we were qualified to provide these services and therefore we got the contracts. All assets are owned by the government and we are merely running it. Satyam gives free software and lot of free manpower for the EMRI project.”