In a recent letter to chief secretary Uttar Pradesh, Noida CEO Rama Raman recommends CAG audit into the irregularities committed by the Delhi-Noida Toll bridge operator, which is IL&FS' subsidiary company Noida Toll Bridge Corporation Ltd (NTBCL).
It's official. Infrastructure behemoth Infrastructre Leasing & Financial Services (IL&FS) committed several financial irregularities in carrying out toll operations of the most prime Delhi-Noida link road, popularly known as DND Flyway.
In a recent letter to chief secretary Uttar Pradesh, Noida CEO Rama Raman recommends CAG audit into the irregularities committed by the Delhi-Noida Toll bridge operator, which is IL&FS' subsidiary company Noida Toll Bridge Corporation Ltd (NTBCL). The irregularities, the CEO's letter says, range from arbitrary appointment of independent auditor and independent engineer to illegally erecting advertising hoardings and office buildings.
The damning letter, written on April 29, 2015 (dna has accessed the letter) also alleges that IL&FS arbitrarily floated a subsidiary company and sold off government land to this subsidiary company for huge profits. IL&FS added its own expenses and paid huge salaries to its top executives to inflate expenses to be recovered from the DND toll taxes, alleges the letter. All this was done with the motive of making massive profits for the company.
The letter, more or less, reflects that IL&FS has plans to tax people commuting between Delhi and Noida through DND Flyway for many years, if the UP government continues to support the concession agreement signed at the time of the inception of the road. The company was reporting less profits and twisted terms of the concession agreement to continue toll collection almost eternally.
The letter says that NTBCL increased salary of its chief seven times in as many years to show huge expenditures so that the company is able to continue to collect toll for more than 30 years showing that they couldn't recover the promised amount in the stipulated time period.
Apart from this, NTBCL appointed ITNL Toll Management Service Limited, one of their own subsidiary, for running and maintaining DND flyover without following or inviting any competitive bidding process. NBTCL holds 51 per cent equity and IL&FS has 49 per cent equity in ITNL company. This was done with the intention to benefit IL&FS by including their expenses as well to swell DND amount and thus charge toll forever. This was a clear violation of the concession agreement. Besides, the company diverted funds to IL&FS and its promoting companies, the letter alleges.
NTBCL also sold off the remaining land measuring around 30 acre at an arbitrary rate of Rs 103.48 lakh to its subsidiary company DND Flyway Limited in March 2004 for commercial purposes. This was in violation of clauses of the concession agreement.
Moreover, the company constructed its office building without permission from Noida authority as approval was given only for the toll plaza.
Noida chairman and CEO Rama Raman confirmed sending a detailed report to the UP government highlighting violations by IL&FS. "We are examining the matter further and will take the necessary action," he added.
This is a major setback for IL&FS at a time when the company is desperately trying to defend this project. If a CAG audit endorses these irregularities, it may lead to an overhaul of the project, including revoking of the licence.
dna's mail to IL&FS seeking the company's response on the matter elicited no reply.
Major violations by IL&FS
Appointed Kampsax India Ltd as independent engineer without taking Noida authority's permission
Re-appointed A F Ferguson as independent auditor without permission
Erected advertising hoardings without permission
Constructed office building without permission
Increased salary of its chief seven times to show huge expenditures
Diversion of funds to promoting companies
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