The Central Bureau of Investigation (CBI) has booked GVK Reddy, director of Mumbai International Airport Ltd (MIAL) and promoter of GVK Group, which runs the Mumbai airport, in an alleged corruption case causing a loss of Rs 805 crore to the exchequer. CBI has also included in its FIR 13 others, including Reddy's son G V Sanjay Reddy, who is the managing director of MIAL, under the charges of criminal conspiracy, cheating and prevention of corruption act.
According to an NDTV report citing an FIR, the accused caused "wrongful gain of over 805 crore to themselves and causing a loss to the public exchequer between 2012-2018."
Formation of MIAL as JV between GVK, AAI
GVK Airport Holdings, Airport Authority of India and few other foreign entities formed a joint venture company called Mumbai International Airport Ltd or MIAL for the operation, maintenance and modernization of the airport. As per the agreement between the parties, GVK owned majority shares of 50.5 percent and AAI owned 26 percent. In 2006, MIAL and AAI signed an agreement to allow the former to run the Mumbai airport and share 38.7 percent of their revenue with the AAI as annual fees.
"The essence of agreement was to create a world class facility and at the same time protect the interests of the Government of India, promoters and passengers," CBI said in its FIR.
"Despite there being a clear cut understanding in the OMDA, the promoters of GVK group in MIAL, in connivance with their executives and the unknown officials of AAI, resorted to siphoning of funds fraudulently adopting various modus operandi," CBI added, according to the Hindustan Times.
In response to the accusation of a huge scam, MIAL spokesperson issued a statement on behalf of the organization.
MIAL is surprised to note the registration of the case by CBI against MIAL and others. MIAL would have provided every assistance had the agency sought explanation or any document even if a preliminary enquiry had been initiated. MIAL is a transparent and responsible corporate entity, which is committed to co-operate with the agency in its investigation to arrive at the truth," MIAL spokesperson said in a statement.
Embezzlement of funds
CBI's investigation uncovered that MIAL signed fake work contracts with at least 9 companies for the real estate development in the 200-acre undeveloped land around the airport between 2017-18. This way, the accused siphoned off Rs 310 crore.
Then between 2012 and 2018, CBI found that GVK Group promoters with the intention to cause loss to AAI used surplus funds of MIAL totalling to Rs 395 crore to finance other group companies. GVK Group promotors in MIAL also embezzled more than Rs 100 crore by inflating the expenditure costs of MIAL.
"The wrongful gain to the accused, mainly the promoters of GVK Group of Companies works out to be around Rs 805 crore as per the complaint. But investigation has revealed that these accused have also under-reported the revenue of MIAL during the same period. If added, the total loss to the public exchequer will be more than Rs 1,000 crore," sources in the CBI told NDTV.
(The article has been updated with a response from MIAL spokesperson)
