What the Emaar scam is all about

Hyderabad, January 31: On the orders of the AP High Court following a petition filed by Congress MLA P Shankar Rao, the CBI filed an FIR on August 17, 2011, against BP Acharya, directors of Emaar Properties, Dubai, Emaar Hills Township Pvt Ltd, Emaar-MGF Land Pvt Ltd, directors of Stylish Homes real Estate Pvt Ltd, unknown public servants of AP government, and others and charged them with criminal conspiracy, cheating, criminal breach of trust, showing forged documents as genuine under the Prevention of Corruption Act.

Earlier to this, declaring that the Manikonda land auction was akin to Emaar scam, counsel for State Wakf Board Shafeeq Mahajir urged the AP High Court on Friday to order a CBI probe into the episode on the grounds that the official machinery, both from the state and the AP Industrial Infrastructural Corporation, had suppressed information about the nature of the land in Manikonda in Ranga Reddy district.

The allegation is that BP Acharya and others named in the FIR entered into a criminal conspiracy to cheat APIIC during 2005-2010, and towards that end, Emaar Properties, Dubai, and Emaar Hills Township Pvt Ltd entered into an agreement with Stylish Homes to sell villa plots at pre-determined prices which was less than the market value and without the knowledge or consent of the APIIC board. Further, the CBI alleged that Emaar Hills Township assigned the rights of development to Emaar-MGF without in-principle approval of APIIC.

The joint venture between APIIC and Emaar Properties, Dubai, was to develop an integrated project consisting of golf course, club house, boutique, hotel, township, on 535 acres of land at Manikonda on the outskirts of Hyderabad in Ranga Reddy district besides a business hotel and convention centre on adjoining leased land. While APIIC’s stake in the Manikonda project was 26%, the same in the convention centre was 49%.

According to the CBI, while the GOs mandated that only Emaar Properties, Dubai, should execute the project, the MoUs signed between APIIC and Emaar later inserted a clause regarding assignment of rights towards development, management and operation of the project by the developer to a third party.

Subsequently, in April 2005, Emaar Properties, Dubai, assigned the project to three other firms, Emaar Hills Township Pvt Ltd, Boulder Hills Leisure Pvt Ltd and Cyberabad Convention Centre Pvt Ltd. Emaar Properties also entered into an agreement with Stylish Homes represented by its director T Ranga Rao, who, on behalf of Emaar Hills Township, was to sell plots and residential units in the project at Rs 5,000 per sq yard for which the latter was entitled to 4% commission on the sale value.

According to the CBI, Stylish Homes collected excess amounts in cash ranging from Rs 5,000 to Rs 50,000 per sq yd from villa plot buyers. In all, Stylish Homes sold 105 villa plots and pocketed at least Rs 95 crore over and above the documented rate of Rs 5,000 per sq.yd and deprived APIIC of its due share in the revenue generated by the sale of villa plots. In the meantime, the stake of APIIC was reduced both in the Emaar Hills Township and the convention centre projects, the CBI has charged.

Incidentally, CBI’s efforts in the case was facilitated by an inquiry in the matter earlier by the vigilance and enforcement department of the AP government then headed by Dinesh Reddy who is now the director general of police. The V&E report had unraveled the scandal and exposed the nexus.

CBI charges against Acharya

As VC and MD of APIIC, Acharya abused his official position and knowingly and intentionally did not object to the sale of villa plots at lower price besides failing to bring these facts to the knowledge of the APIIC board

Despite being the nominee director in these projects, Acharya did not ensure that the project was implemented as per norms and agreement executed between APIIC and Emaar Properties, Dubai

Though APIIC held 26% equity in Emaar Hills Township Project, Acharya did not raise any objection to the decision of Emaar Properties, Dubai, and Emaar Hills Township, to sell the villa plots through Stylish Homes

Despite being aware of the fact that Stylish Homes was selling the plots by accepting upfront payments from buyers without the APIIC board having finalized the rate, he did not raise any objection and thus was a willing partner in the criminal conspiracy

Did not raise any objection when Emaar Hills Township and Boulder Hills Leisure Pvt Ltd decided to bring in Emaar-MGF as a co-developer. He also did not bring this fact to the notice of APIIC or the state government at any stage even though he was aware that the induction of Emaar-MGF as a co-developer was not permissible and had a bearing on the revenue sharing detrimental to the interest of APIIC.

Did not object to the reduction of APIIC’s stake in the project and the reduction in revenue sharing. A team of officials constituted by Acharya to inspect the progress of the project submitted a detailed report raising questions about the execution of the project by the developers, but he did not initiate any until December 2009 when he left APIIC CBI conclusion.

Acharya did not protect the interests of APIIC, committed the offences of criminal conspiracy, criminal breach of trust, misappropriation of government property and, thereby, cheating APIIC. Being a senior IAS officer, Acharya’s role and complicity in the commission of the offence has been clearly made out, it contended.

Courtesy: TOI