Arappor Iyakkam alleges that the former Chief Secretary misused his power to help companies linked to his son.

TN activists produce proof of Rama Mohana Raos corruption files CBI complaint
news Corruption Monday, January 09, 2017 - 17:29

Weeks after the Income Tax department carried out raids at the properties and office belonging to former Chief Secretary of TN government Rama Mohana Rao, Arappor Iyakkam, a Chennai-based activist group, has filed a complaint with the CBI alleging that the bureaucrat misused his powers to pressurise the Tamil Nadu Medical Services Commission into awarding a tender worth Rs. 520 crore to a company bearing links with his son.

Releasing documents that purportedly show corruption on the part of the top bureaucrat, Arappor Iyakkam requested CBI to file a case under the Prevention of Corruption Act against Rao and arrest him.  The group also called for a probe into the role of Health Secretary J Radhakrishnan and Health Minister C Vijayabhaskar into the tender process. It also called for the tender to be called off and fresh tenders to be floated.

According to Arappor Iyakkam, the Tamil Nadu Medical Services Commission (TNMSC) had floated a tender on January 8, 2016, for outsourcing of housekeeping and security services for a total of 37 Government Hospitals and 20 Medical Colleges that comes under the control of the Directorate of Medical Education. As per the original tender, “The bidder must be registered under Indian Companies Act 1956; the bidder must have experience of servicing atleast 1 lakh sq.ft in any of the last 5 years; the bidder must have had a turnover of atleast Rs 10 crores in any of the previous 3 years and many more.”  The original tender contract was also for a period of 2 years, noted Arappor Iyakkam.

While the last date of submission for bidders was January 28, 2016, a subsequent notification extended the deadline to February 5, 2016. Based on the original tender, Padmavathi Hospitality and Facilities Management was ineligible to compete given that it was not registered under the Indian Companies Act.

Padmavathi Hospitality, the group alleges, is Rao’s benami company with its Managing Director Bhaskar Naidu also a director in another concern called Swan Facilities Services, whose owner is Vivek Papisetty, who is Rao’s son.

In its complaint, Arappor Iyakkam states that a day before the February 5 deadline, Rama Mohana Rao, who was then Secretary to Chief Minister, misused his position so as to change the eligibility criteria of the tender and also extended deadline further to February 16.

“With absolutely no necessity, a corrigendum is issued and amendments were made to the eligibility criteria. One of the main change that was made to pave way for the entry of the Successful bidder was to change the type of firms that could participate in the bid. Instead of only Public/ Private Ltd, the amendment included Partnership and Propriety ship concerns as well to compete (Evidence Attached - Reference 5). This paved the way for the entry of the successful bidder Padmavathi Hospitality and Facility Management Services to become eligible for bidding,” the complaint says.

The complaint also alleges that more amendments were made so as to narrow the eligibility criteria, proving the conspiracy. The activist group notes,  

“The 1 lakh floor space experience in any of the last 5 years was increased to 10 lakhs. The turnover of Rs 10 crore requirement in any of the last 3 years was increased to Rs 20 crores. The contract period from being 2 years was increased to 3 years with a clause that it could be extended to the fourth year as well based on mutual consent (Evidence Attached - Reference 5). All these criterias have been changed to favour one Partnership company Padmavathi Hospitality and Facility Management Services.”  

Changes to the tender process, Aroppar Iyakkam alleges, broke Tamil Nadu Tender Transparency Rules and may have breached guidelines set by the Central Vigilance Commission on advertising changes to pre-qualification criteria.  

While six companies were shortlisted for the tender, Padmavathi Hospital and Facility Management Services was the lowest bidder. A contract of around Rs. 130 crore was signed for the first year between Padmavathi Hospital and Facility Management and the Directorate of Medical Education. Based on this contract, Arappor Iyakkam calculated that Padmavathi Hospital and Facility Management was awarded a four-year contract worth Rs 520 crore.  

The group alleged that evidence shows that P Srinivasa Rao, the brother of Rama Mohana Rao, was one of the witnesses who signed the contract, thus proving the conspiracy.

In the wee hours of December 20, officials of the I-T department raided Rao’s Anna Nagar residence, 13 other properties owned by him and his relatives, and his office at the Tamil Nadu Secretariat. According to reports, officials seized Rs. 30 lakh in new currency, 5kg gold and documents with details of undisclosed assets worth Rs. 5 crore.

A day after the raids, Rao was dropped as Chief Secretary of the state and was replaced by Girija Vaidyanathan. 

Following the I-T raids, Rao denied that his son Vivek had got any government contracts. Alleging that his life is in danger, Rao said, "I may be a big hurdle to many who think I may be a harcore man, who abides by Jayalalithaa."

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