Aug 6, 2011

Read Complete CAG Report on XIX Common wealth Games 2010 Final Part

Read Complete CAG Report on XIX Common wealth Games 2010 Final Part

Fraudulent payment to Great Big Events (GBE)
As per the January 2010 contract, GBE was to assign 9 personnel for contract
related activities. While three of them were to stay in India for the entire duration of 10 months, the other six had to stay for specified number of days. Fees were accordingly prescribed on monthly and daily basis for these two categories.
We ascertained that the three GBE executives required to stay in India did
not do so for the entire stipulated period as one executive did not even visit India
and was paid @ 7500 USD per month for 7 months. OC officials actively colluded
by duly certifying their payment invoices and work, despite their absence from
India. Shri ASV Prasad, JDG (Sports) even certified the presence of one executive
Ms. Kate Campbell , who never visited India.
The entire claim for the periods that the executives were not available in India
could be termed as fraudulent. However, even on a proportionate basis, such
fraudulent payments amounted to Rs 40.13 lakh (USD 89186).

OC also failed to utilise the services of GBE as per the contract.
we found a draft agreement signed by Greg Bowmen (for GBE) where in place of Kate Campbell, the name of Ms. Kavita Sontakay (who was an employee of OC till 2 weeks after this contract was signed with GBE) is mentioned.

The appointment of Shri Manish Kumar as Director, Press Operations was irregular
In September 2008, Shri Manish Kumar was appointed as Director, Press operations.
After 15 days of his appointment, Shri Kumar informed Shri Lalit Bhanot that
he was unwilling to accept the post at the remuneration offered. OC kept the post vacant for another 6 months and then interviewed Shri Manish Kumar again, offering him a
considerably higher salary. The post was neither advertised openly nor any other
interviews conducted.Due to complaints regarding his behaviour, Shri Manish Kumar was transferred out of Press Operations just 8 days before the commencement of the games to the Sustainability and Environment Functional Area office without any specific charge. Earlier in August 2010, a foreign hire of the OC, Shri Gnanapragasam, responsible for press operations across all venues, had left the organisation, complaining about Shri Manish Kumar's misbehaviour, but OC did not conduct an inquiry into these
complaints though Shri Manish Kumar's performance in Press Operations was far
from satisfactory, he was promoted from Director to DDG. Further on his transfer, Shri
Manish Kumar did not hand over records to his successor. Thus, during the Games, the
Press Operations FA had no access to its own records, including the GNS contract
documents (and the obligations of the GNS provider). Although the matter was brought
to the notice of higher management, no action was taken on this issue

in June 2010 OC awarded the GNS contract to Infostrada Sports:
OC made payments in foreign currency (USD), without approval, resulting in
additional financial burden of at least Rs. 58.09 lakh due to currency fluctuations. Even the conversion rate applied at the time of negotiation was incorrect.
OC accepted the liability for service tax payment of Rs 0.94 crore without the
EB's approval, although the LOI stipulated otherwise.

OC failed to utilise audio and video segments produced at a cost of Rs. 1.27
crore as it revised its media plan to cover only the print media for the launch of logo
and promotion on the “1000 days to go” campaign

OC deducted income tax of US $ 2.11 lakh @ 10 per cent, instead of 42.23 per cent as applicable to a Permanent Establishment (PE). This resulted in short deduction of income
tax of Rs. 3.07 crore.

Staff promoted despite low ratings on educational qualifications and experience
7 persons were granted two promotions in short span of 1-3 years, of which 5
were staff associated with CYG-2008, Pune, Chairman Secretariat and DG Secretariat.
Mr. Ram Mohan
Dr. G.S. Anand
Dr. G.S Bawa
Mr. Abrar Hussain
Mrs. Indu Anand

Cases of Gross Irregularities in Workforce Management
In September 2007, Shri Vijay Kumar Gautam, IAS (Maharahstra
cadre) was appointed to the post of COO, which had overall responsibility for the delivery of the Games in addition to certain functional areas. Despite complaints by his reporting officer (Shri VK Verma, DG) about his performance, Chairman OC did not allow him to be replaced. Shri Gautam was allowed to proceed on leave from December 2009 for the next 10 months (including the actual Games period) and was relieved from the OC w.e.f. 31 October 2010, while still on leave. Shri Gautam's leave applications were addressed directly to Chairman, OC and not to the DG. Despite his leave spells never being formally sanctioned, he was paid full salary for the period

Shri Mahindroo was interviewed for the post of Director (Information Services and Network) in May 2009, but appointed as DDG (Information Services-Technology). Approval was obtained for a salary of Rs.60,000, but Shri Mahindroo's
appointment letter indicated his salary as Rs. 1,00,000 and his post as DDG

Wing Commander Mohla was interviewed in April 2010 for the post of DDG (Chairman Sectt.), when he was also holding the post of Secretary in DDA (Sports Complex). He was appointed on 28 April 2010 as DDG (Chairman Sectt.), but continued to hold both the posts till October 2010.

Ms. Welinkar joined the OC during CYG-2008, Pune as a coordinator.
She was then appointed as DDG for 'Image and Look' in January 2009 by upgrading the post (without EB approval), and was promoted five months later as ADG 'Image and Look' with the approval of Chairman. We did not find Ms. Welinkar's qualifications and experience matching with her job profile.
OC hired 38 apartments in different parts of NCR Delhi for its consultants and employees
at a cost of Rs. 4.39 crore as rental charges. This hiring was done in an arbitrary manner
without any advertisements and prescribing entitlements in terms of maximum rent,
area etc. Inexplicably, the selection of apartments was done by Shri Lalit Bhanot's
office, despite the existence of a specific Functional Area for accommodation related
issues. Further, we found instances of hiring of multiple accommodation for the same
period and idle accommodations, with avoidable expenditure of Rs. 0.12 crore.
Further, as of March 2011, security deposit worth Rs.0.60 crore for these flats was still
lying with the property owners, though most contracts had ended in October 2010.

Despite knowing that these flats were lying vacant for a significant part of the lease period, OC continued to retain them and pay rent, resulting in expenditure of
Rs 0.21 crore towards rent on unoccupied flats.

The Ashok Hotel was nominated as the Flagship Hotel for the CWG 2010 and was
booked exclusively for accommodating guests/officials from 29 September 2010 to
16 October 2010 at a cost of Rs 12.01 crore. Of the 480 rooms provided by Hotel Ashok
as many as 155 to 399 rooms remained vacant during the period of reservation.

During the same period, OC booked accommodation for International
Technical officers (ITOs) and National Technical Officers (NTOs) with 11 others
hotels at a total cost of Rs 3.53 crore. As the guest arrival list was firmed up by then, OC
could have utilised at least 100 rooms in flagship hotels to accommodate the ITOs/NTOs, thereby saving Rs.1.15 crore. However, for some inexplicable reason, OC was apparently unwilling to accommodate ITOs/NTOs and other guests in the same hotel.

The initial budget for Cleaning and waste management work of Rs.11.22
crore was increased in June 2010 to Rs 31.22 crore.
We found that the consultant for cleaning and waste management was appointed only
in November 2008 and planning for this aspect was unduly delayed till July 2009.

A lanyard is a cord or rope worn around the neck to carry the identity
card. Without ascertaining the need for lanyards for the accreditation card,
a supply order for 1.5 lakh lanyards was placed on Tristar Enterprises in
July 2010 at a total cost of Rs. 0.68 crore; out of these, 48,040 lanyards
costing Rs. 0.22 crore were never used.

Inexplicably, the lanyard specifications for fire retardantness stipulated withstanding temperature of up to 800 degree Celsius, whereas for the plastic pouch (which would
contain the accreditation card) the requirement was 110 degree Celsius. We find no utility for such abnormal specification for the lanyard , except to restrict competitive tendering.

Incidentally, Tristar Enterprises, was also the consortium partner of Gold Medal Systems who supplied GMS
Incidentally, the selected lanyard contained PBDE (Polybrominated diphenyl ether), a chemical banned due to its harmful effects on the environment and humans.
Workforce and Other Supporting Activities of the Organising Committee –
The tendering was restrictive as the EOI stipulated an annual turnover,
specifically related to cleaning services, of at least Rs 5 crore, in each of the last
three financial years, for one tender package with a seating capacity of up to
5000, and Rs.10 crore for bigger venues. Consequently out of the 23 firms who
responded to the EOI, 9 firms were disqualified for not satisfying prequalification criteria.We found that the two successful bidders, A2Z and Sarvatra, also did not
fulfil the requirements indicated in the prequalification and technical bid stages, as details of experience were not provided by both of them.
OC consistently maintained during the tendering process that multiple tenders would not be allotted to the same vendor, A2Z was finally awarded eight out of nine tender packages.

The performance of A2Z was found deficient

A contract for Rs.0.98 crore was awarded to an ineligible vendor
Agility Logistics was appointed as the logistic service provider in July 2010, after a six
month long tendering processing, at a cost of Rs. 12.5 crore less VIK sponsorship of
Rs.11 crore. As of March 2011, OC could not provide details of the VIK services availed
from Agility Logistics. However, we found that 20 out of 34 Functional Areas of OC
did not avail of the centralised logistic services and made separate arrangements
even for warehousing and distribution of goods e.g. OC engaged Buhariwala Logistics
for the opening and closing ceremonies at a cost of Rs 0.69 crore.

Souvenir items worth Rs.3.51 crore were lying unutilized as of December 2010,
out of which commemorative medals constituted Rs.2.64 crore.

Out of 200 laptops purchased in April 2010, 52 laptops worth Rs.0.27 crore
were lying unutilised.

For CYG-2008 Pune, OC executed three insurance policies at a cost of Rs. 1.30 crore
with Reliance General Insurance and ICICI Lombard. No records pertaining to these
policies were made available for scrutiny. Strangely the insurance cover for 80 OC
officials was taken up to March 2009 (while the Games took place in October 2008).

In September 2009, EB approved execution of a Comprehensive General Liability policy
for US$ 20 million (Rs. 100 crore). However, on the intervention of Shri Mike Hooper in
October 2009, OC executed the said policy for US$ 100 million at a total premium of Rs.
2.90 crore. Shri Hooper insisted that OC should take the insurance for US$ 100
million based on the recommendations of CGF's insurance consultant Marsh . It was
noted in the EB meeting that there was a conflict of interest as Marsh was both a
consultant to CGF and an insurance broker to OC and had a vested interest in
Shri Hooper even threatened that if OC did not execute the policy for US$100 million, CGF would do so and charge it to OC

Despite EB's approval for a limit of US$ 100 million (i.e. Rs. 460 crore), OC executed the policy for an enhanced limit of Rs. 500 crore resulting in excess payment of premium of Rs. 0.23 crore

OC took insurance cover for 25000 volunteers (as against the actual 17667
volunteers and for a longer period than the volunteers' engagement, resulting in
excess expenditure of Rs.0.11 crore.

OC executed insurance policies for QBR personnel and equipment during the
international and national legs of QBR at a premium of 0.84 lakh, although this
was the responsibility of Maxxam, the QBR consultant.

Incidentally, Shri Jeyachandran submitted a claim for Rs. 5 crore (under the directors and officers liability cover) directly to the insurance company after his suspension

Suggested Reading –
Read Complete CAG Report on XIX Common wealth Games 2010 Part One

Read Complete CAG Report on XIX Common wealth Games 2010 Part Two

Read Complete CAG Report on XIX Common wealth Games 2010 Part 3

Read Complete CAG Report on XIX Common wealth Games 2010 Part 4

Read Complete CAG Report on XIX Common wealth Games 2010 Part Five

Reality views by sm –
Saturday, August 06, 2011

Tags – CAG Report On Common Wealth Games 2010 Corruption Report CAG

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