THE GREAT DAMAGER-II LOAN RAISING SCAM OF THE KLAC GM

By Firoz.T.Totanawala

The Bangalore Metro Reporter

1st March 2011 issue-

                                  THE GREAT DAMAGER-II

                    LOAN RAISING SCAM OF THE KLAC GM

TBMR in its past edition had covered a story about the corrupt official of Karnataka Land Army Corporation, now known as Karnataka Rural Infrastructure Development Limited. The General Manager Mr. S.V.Venkatesh Murthy, has credited himself with bundles of manipulations. He is not an ordinary or notorious corrupt official but a bulldozer of corruption who enjoys the unadulterated support of few IAS officials. While suspension is the logical decision for corrupt practices, the culprit here was abundantly rewarded and promoted for undertaking manipulations.  

While there are myriads of manipulations of S.V.Venkatesh, we are featuring an exclusive loan raising story of the manipulative General Manager.

THE BEGINNING

When M.R.Srinivasa Murthy became the BMP (now BBMP) Commissioner, Footpath works worth more than 20 crores were entrusted to KLAC and S.V.Venkatesh was entrusted the same. However, the works executed by S.V.Venkatesh were all out and out substandard. The Foot path works were entrusted to sub contractors and more than 60% of the works were done by private contractors who got it on sub contract from S.V.Venkatesh.

FORCEFUL NEED

Primarily there was no need of laying concrete block footpaths after removing the cobble stone foothpaths. The cobble stone foothpaths have stood the test of the time and the BMP would have saved several crores if the renovation of footpaths were done by replacing the damaged stone slabs and relaying the existing slabs. But the story was different here.

BLUNDER IN WORK

Almost total of the footpath work undertaken by KLAC had gone waste. Most of the cement curbstones and tiles that were laid came off and the footpaths worn out. The BBMP was forced to lay many footpaths afresh, some with Sira stones or mosaic tiles. The BBMP had also entrusted the Hi tech toilets numbering around 100, at cost of more than 9 crores and within two-three years, most of the hi-tech toilets also become non-functional. Shockingly, in spite of all these, nobody in the BMP questioned the quality and quantum of works done by S.V.Venkatesh. On the contrary, even the payments were made to him.

WITHOUT THE GODFATHER

Later, after the exit of M.R.Srinivas Murthy, S.V.Venkatesh faced hurdles in getting the BMP to settle the bills, most of which were with excess claims. The BMP adopted a tough stand of releasing of payment only after inspection of work. Up till then, S.V.Venkatesh had submitted claims to the tune of more than Rs. 18 crores towards final settlement. But the BBMP estimated the works worth a little above 10 crores.

As the BBMP tightened the screws, S.V.Venkatesh had no money to complete many other works. The BBMP officials had made it clear that they will clear the bills only after the inspection of quality and quantity of the executed work.

RAISING THE LOSS

While he was in trouble, he did the most unimaginable. The KLAC had to undertake works, after the entrusting agencies deposit money. In many cases, the money was released in installments depending upon the progress of the works. In the case of BBMP also, the KLAC had got substantial money to start the works. But when the BBMP took the tough stand that it will pay the final bills only after the claims were checked and counterchecked, S.V.Venkatesh felt the heat. He then forced the then MD Ravishankar to divert some of KLAC money to BBMP zone, still not enough money could be diverted. S.V.Venkatesh therefore forced the then MD to procure a loan of 3.60 crores from Corporation Bank, Shivajinagar. The KLAC had kept an FD of more than 20 crores at the said bank branch, being the savings on works accrued in the past several years. The FD was mortgaged and 3.60 crore loan was raised.

There was absolutely no need for raising a loan and that too on the FD. Rather, S.V.Venkatesh could have made efforts to get the BBMP payments released. The loan was however raised and spent within a few days on works. But what are the returns? Even assuming 10% savings (or profits in other words) the KLAC could have earned 36 lakhs. Further, if we deduct the interest for the three months, the KLAC would have netted 23-24 lakhs, provided the work was completed and the bill was then settled.

But what is the reality? After taking the loan on 7.3.2007, S.V.Venkatesh simply spent it on works and kickbacks. The work therefore suffered and the repayment delayed resulting in KLAC paying lakhs of rupees as interest charges against the loan. Any agency works for profit and what is the use to exist and undertake work that is bound to give no returns. The loan raised by KLAC has inflicted losses to the department rather than benefiting them. On the contrary, the amount if it remained in Fixed Deposit scheme would have fetched them more. 

PROFIT V/S LOSS

The KLAC could have earned lakhs of rupees as interest if 3.60 crores were kept in FD. In stead, the KLAC had to pay lakhs of rupees towards interest to the Bank on the loan. Normally, finances are taken from Banks for short term works with a good profit margin. But in this case, a huge loan was raised and that too for a long period. Further, if the loan amount was spent on the work, it would have been completed and payment too would have been realized. But, as said above, the story was different here.

Of course, the then MD A.K. Singh is believed to be an honest and pious man. His endorsement of raising the loan can be due to the pressure from S.V.Venkatesh with realizing that he is backed by many powerful officials.

CAN YOU BELIEVE THIS?

The Rural Development and Panchayat Raj Department which was controlling the department for KLAC had spent more than Rs. 3500 crores towards development works. It executed the works through its Rural Development Engineering Department and interestingly, the RDED had only two Chief Engineers to look after entire works.

Compared to this, the KLAC had executed works to the extent of about 300 crores during 2007-08. And to execute these projects, KLAC had three Chief Engineers! Calculating the average, each the RDED Chief Engineers executed the work to the tune of Rs. 1800 crores and KLAC Chief Engineers, which is its subsidiary, executed works to the tune of 100 plus crores only.

RDPR - Two CEs for 3500 crore works

KLAC - Three CEs for 350 crore works

Well, there are many more scams and manipulations of the great General Manager. The best way to conclude is to stay that in spite of all such misdeeds, S.V.Venkatesh even today is the General Manager of KLAC which is now known as KRIDL.