Loot From Prox­im­ity

Koneru Prasad is ac­cused of dup­ing the state to the tune of Rs 4,310 crore

India Today - - INSIDE - By Amar­nath K. Menon

Koneru Prasad is ac­cused of dup­ing the state to the tune of Rs 4,310 crore.

Koneru Ra­jen­dra Prasad, the UAEbased founder-chair­man and men­tor of the $100 mil­lion Trimex Group, is ac­cused, along with Emaar Prop­er­ties, Dubai, and other linked com­pa­nies, of caus­ing the Andhra Pradesh govern­ment a loss of Rs 4,310 crore. Ar­rested by the CBI on Novem­ber 3 in Hy­der­abad, Prasad is al­leged to have spir­ited away huge sums of money from In­dia to bank ac­counts abroad, in the process deal­ing a fi­nan­cial blow to Emaar Hills Town­ship Pri­vate Lim­ited ( EHTPL)— a joint ven­ture of Emaar Prop­er­ties, Dubai, a pub­lic joint stock com­pany, and the state-owned Andhra Pradesh In­dus­trial In­fra­struc­ture Cor­po­ra­tion ( APIIC).

Prasad, 61, us­ing his con­sid­er­able clout with the govern­ment, is al­legedly re­spon­si­ble for Emaar Prop­er­ties get­ting the in­te­grated res­i­den­tial and in­ter­na­tional con­ven­tion cen­tre project with a golf course, spread over 535 acres in Hy­der­abad, from APIIC in a steal of a deal. To start with, in 2003-04, Emaar was to have 74 per cent stake and APIIC 26 per cent in EHTPL by virtue of the land it of­fered for the project. All de­vel­op­ment costs were to be borne by Emaar Prop­er­ties. Con­se­quently, Emaar Prop­er­ties in­cor­po­rated a wholly owned sub­sidiary, Emaar Hold­ings, un­der the laws of Mau­ri­tius to start the project.

Af­ter Y.S. Ra­jasekhara Reddy re­placed N. Chan­drababu Naidu in May 2004 as chief min­is­ter, three dis­tinct en­ti­ties were in­sti­tuted by Emaar Hold­ings and fresh deals en­tered into with APIIC in De­cem­ber 2005. Sig­nif­i­cantly, ear­lier in Jan­uary 2005, Emaar Prop­er­ties en­tered into an agency agree­ment with Stylish Homes Pri­vate Lim­ited to mar­ket and pro­mote the sale of vil­las, en­ti­tling it to 4 per cent of the sale value as com­mis­sion. This was signed by a rep­re­sen­ta­tive of Emaar Prop­er­ties with­out the knowl­edge and con­sent of ei­ther EHTPL or APIIC. In 2006, the clan­des­tine en­try of an­other en­tity, Emaar- MGF, a joint ven­ture be­tween Emaar and the MGF Group reg­is­tered in Delhi, to de­velop the EHTPL town­ship whit­tled down APIIC’S stake to 6.5 per cent.

Prasad has been ar­rested for al­legedly re­ceiv­ing money to­wards plots de­vel­oped in the con­tro­ver­sial EHTPL


project from buy­ers af­ter grossly un­der­valu­ing them. The al­le­ga­tion is that plots were sold for be­tween Rs 10,000 and Rs 50,000 a square yard while on pa­per they were sold for Rs 5,000 a square yard. The Andhra Pradesh Direc­torate Gen­eral of Vig­i­lance and En­force­ment has com­puted the loss to the state ex­che­quer at Rs 4,310 crore by adding loss from un­der­val­ued sales, Rs 856 crore, to APIIC’S di­lu­tion of eq­uity.

Prasad has been booked and slapped with var­i­ous charges, in­clud­ing un­der the Pre­ven­tion of Cor­rup­tion Act.

The ar­rest was ef­fected af­ter CBI col­lected ev­i­dence against him which shows money paid by some buy­ers to­wards villa plots cred­ited into bank ac­counts in his name. It has state­ments from two per­sons made in court that a large part of the money for the plots was to be paid in cash while the rest, in­clud­ing the 4 per cent com­mis­sion, was to be re­mit­ted by cheque to the ac­count of Prasad’s son, Koneru Madhu.

The CBI sus­pects that Prasad had en­tered into a crim­i­nal con­spir­acy with the Emaar group to cheat APIIC. The agency es­ti­mates his per­sonal gains at Rs 150 crore. CBI says it has so far man­aged to track Rs 117 crore of the ex­cess money col­lected by Prasad from the sale of vil­las.

In 2002, ‘Dubai Prasad’, as he is known, got Chan­drababu Naidu of the TDP to agree to al­low the Trimex Group into the real es­tate sec­tor. This is a year af­ter the group signed an MOU for a beach sand min­ing project. In 2003, APIIC reached an agree­ment with Emaar Prop­er­ties, Dubai, to de­velop the Hy­der­abad project, with Prasad play­ing lob­by­ist. In 2004, Trimex Sands, a Prasad com­pany, got a sand min­ing lease in Srikaku­lam district.

Few doubted Prasad’s cre­den­tials given his ex­pe­ri­ence as an ex­porter based in Chen­nai since 1985. He man­aged to con­vince then Congress chief min­is­ter Ra­jasekhara Reddy about al­low­ing in­vest­ments from Ras Al Khaimah. “Both Reddy and Naidu have en­joyed Prasad’s hos­pi­tal­ity and were im­pressed by his con­nec­tions in UAE,” says an as­so­ci­ate. Emaar failed to re­spond to spe­cific queries raised by

IN­DIA TO­DAY but main­tained that the project is be­ing de­vel­oped within APIIC and the state govern­ment’s de­fined pa­ram­e­ters and reg­u­la­tions. The CBI spe­cial court in Hy­der­abad has granted Prasad in­terim bail for a week from Novem­ber 16 to visit the Sabari­mala shrine. But bail not­with­stand­ing, Prasad’s good luck seems to have run out.

Ad­vanced Man­age­ment of Elec­tions ( FAME), headed by former chief elec­tion com­mis­sioner J.M. Lyn­g­doh, that has been con­duct­ing IYC or­gan­i­sa­tional elec­tions across the coun­try. “We have voice record­ings of Rizwan’s car­tel speak­ing to some Lok Sabha re­turn­ing of­fi­cers ( LRO) and as­sis­tant re­turn­ing of­fi­cers ( ARO) to work out how to rig the votes. They pur­chased the LROS and

AROS with cash and in­duce­ments,” says an­other dis­grun­tled can­di­date. The “car­tel” is said to in­clude Ar­shad’s pre­de­ces­sor C. Kr­ishna Byre Gowda, who is ac­cused of “fix­ing” the elec­tion in an ef­fort to keep con­trol of the or­gan­i­sa­tion. The ‘fixed’ LROS and AROS, who were IYC cadres from out­side the state or FAME ap­pointees, al­legedly cast votes of ab­sen­tee del­e­gates, mis­counted votes and threat­ened voter-del­e­gates to sup­port Ar­shad’s can­di­dates.

In de­fence, an Ar­shad sup­porter says, “It is quite sim­ple. All that is needed to win these elec­tions is to get


the re­quired num­ber of peo­ple reg­is­tered as vot­ers. Those we reg­is­ter will vote for us. That is where we scored.” This “sim­ple” strat­egy, how­ever, in­volves spend­ing money. Ar­shad’s group says they spent Rs 18 per new mem­ber while op­po­nents claim he ac­tu­ally spent Rs 1,000 each. His ex­penses also in­volved touch­ing each district at least thrice in the six-month run-up to the poll. “You can­not dis­miss a com­mon youth’s vic­tory by at­tribut­ing it to mal­prac­tices. It’s grass­roots con­nect that got me elected,” Ar­shad told IN­DIA TO­DAY.

Priyank main­tains that the elec­tion was just a “friendly fight”. “The good thing about this elec­tion is that no one re­ally loses. I came sec­ond and have be­come vice-pres­i­dent. We will work as a team,” he says.

Pho­tographs by A PRAB­HAKAR RAO / www.in­di­a­to­day­im­ages.com

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