Millennium Post

Locked in a corporate battle with Adani, GVK Group booked by CBI over alleged Rs 805 cr MIAL corruption case

New Delhi: Locked in a fierce legal battle with Adani Properties over acquiring a 13.5 per cent stake in the Joint Venture Company that runs Mumbai International Airport Limited, GVK Group has now suddenly been booked by the CBI in an alleged corruption case involving the misappropriation of over Rs 805 crore of funds belonging to the public exchequer by way of alleged bogus deals and expense inflation.

Significantly, in 2015, it was reported that a similar enquiry was started by the Central Bureau of Investigation against GMR of the Delhi International Airport Limited JVC, which till at least 2019 has not been converted into an FIR.

However, while the GMR probe was initiated as a Preliminary Enquiry, the agency's first step to check whether a prima facie case is made out to register an FIR, the case against GVK has been registered on the basis of what the agency has called "detailed information" provided by a source in the form of a complaint.

According to the agency's FIR, which names GVK Group and MIAL chairman GV Krishna Reddy and MIAL, officials of the group company had allegedly conspired with unknown officials of the Airports Authority of India to execute bogus work contracts, misuse reserves and surplus of MIAL, inflate expenditures through diversion of funds and underreport revenue earnings of MIAL to cause wrongful loss to the tune of over Rs 805 crore to the public exchequer between 2012 and 2018.

The agency has alleged that at least Rs 310 crore was siphoned off by MIAL into the accounts of nine companies by entering into "fake or bogus work contracts during 2017-2018" with relation to the monetisation of 200 acres of land allotted to the MIAL by AAI.

These nine companies, including ones like Aishwaryagiri Constructions Private Limited, Kotia Enterprises Limited, SBK Trade and Infrastructure Pvt Ltd, Subhash Infraengineers Pvt Ltd, Omni Projects (India) Ltd and four others have also been named by the agency in its FIR. The CBI has alleged that they were paid the money under a contract to develop the land but these "contracts have never been executed on ground and the transactions were only on papers".

In addition, the federal agency has accused promoters of the GVK Group of misusing around Rs 395 crore of MIAL's reserves and surplus funds by opening FDRs with PSUs in Hyderabad. The agency's FIR says, "MIAL is a Mumbai based company but they chose to deposit the funds in the form of FDRs with PSU banks at Hyderabad based branch of Bank of India." The CBI said that these FDRs were used by GVK Group to raise loans and OD facilities for the benefit of their Hyderabad based group companies "at the expense of MIAL".

Moreover, the agency has accused the promoters of GVK Group in MIAL of "embezzling" more than Rs 100 crore by allegedly resorting to inflating MIAL expenditures. The agency alleged that the group shifted its head office and group company employees onto MIAL's payroll, "in contravention to the OMDA agreement".

Interestingly, Adani Properties had faced a major roadblock in their bid to acquire the 13.5 per cent stake in MIAL from Bid Services Division (Mauritius) when an arbitration tribunal restrained Bidvest from in any way selling the stake to anyone in January after the Supreme Court had directed the tribunal to decide the matter.

While Adani and signed a deal with Bidvest to buy it out from MIAL in March 2019, GVK Group had gone to the Delhi High Court which then referred the matter to an arbitration tribunal bench of three judges. While the tribunal had restrained the stake sale in September last year and asked GVK to prove its intent to exercise it's right to first refusal, the Adanis had approached the Bombay High Court for interim relief which was refused by the court when GVK submitted that it had already deposited Rs 1,250 crore in an escrow account to show its intent to purchase Bidvest's stake.

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