Amaravati, A Rs. 66,000 Crore Swiss Challenge Scam

Led by Chandrababu Naidu, Telugu Desam leaders with insider information about the location of the prospective capital city are said to have quietly made at least Rs.1 lakh crore. The Swiss challenge method led to the possibility of siphoning at least Rs.66,000 crores, but it was a distorted version of the Swiss challenge method which was adopted in Amaravati. It was turned into a massive real estate project in Amaravati. The Andhra Pradesh High Court had clearly raised objections to the flawed procedure being adopted by the Chandrababu Naidu government, but that did little to deter AP chief minister and his aides from going about their clandestine business. They brazenly went about their job, but the entire process was kept under wraps.

Without any investment, a management company and consortium from Singapore comprising Chandrababu’s proxies drew up this scam amounting to Rs.66,000 crores. If Rs. 66,000 crores can be made in this manner from a single project over 1,691 acres, the big question which arises is how much would the total amount add up to if one were to factor the entire expanse of 54,000 acres into one’s reckoning? The figure would be mind-boggling, indeed.

Apart from 54,000 acres in the first phase, the Chandrababu government went about pooling another 14,000 acres with a plea to the Centre to part with forest land of 31,000 acres additionally. The Centre uncertain of the intentions and motives behind this proposal, decided to appoint a committee to probe the likelihood of giving such a large expanse of forest land to the state government.

Chandrababu Naidu had promised to build a world-class city in the form of Amaravati and for this, he turned to industrialists as well as farmers for help. However, betraying their trust, kickbacks had become the focus of the TDP leadership. What has Chandrababu Naidu and Amaravati into? In the minds of the people, it is synonymous with a massive real estate scam.

Singapore Consortium

How did the Chandrababu Naidu government go about this? Of the 34,000 acres of land acquired from farmers, the TDP government allotted 1,691 acres to a Singapore Consortium for what was supposedly the start-up area project. 371 acres out of this entire area was set out for roads, parks, sewerage and other public amenities. Of what was left, 1070 acres were earmarked to be sold as plots, while 250 acres were to be given to the Singapore consortium at no cost in two phases. This is the most interesting part of the deal. Now, take a look at some of the other features:

1. The Singapore consortium and the Capital City Development Management Company (CCDMC) came together to form the Amaravati Development Partner (ADP). The government conveniently handed over 1691 acres of land to the ADP. The minimum rate of an acre in this area is around Rs.4 crores and if one were to assess the AP government‘s actions in terms of putting a figure to them this step alone would mean that it had given away land worth Rs.6,764 crores free of cost to ADP!

2. The state government decided to earmark another Rs.5,500 crores for water facilities and storm water drains to prevent flooding, as also for other basic amenities. It also invested Rs.221.9 crores in ADP as equity on the part of CCDMC. The government investment in the start-up area project then adds up to Rs.12,485.9 crores (Rs. 6,764 crores plus Rs.5, 550 crores plus Rs.2 21.9 crores)! How much does the CCMDC get in return? A meagre 42% of the share which is baffling!

3. The Singapore consortium whose investment is a mere Rs.306 crores ended up with 58% share in Chandrababu’s scheme of things. Additionally, the Singapore consortium will also get 250 acres of land in two phases. The most interesting part of it is that it will get this extent of land free of cost!

Management Company Steps In...

While the start-up area project was meant to be executed by ADP, the sales of the plots interestingly enough, were to be conducted by the management company! The state government, oddly enough, was to have no representation in this company.

It is not difficult to guess who owns this management company. It is widely believed that representatives of the Singapore consortium and proxies of Chandrababu Naidu are the names behind this firm. While the development cost of an acre of land in this region is estimated at Rs.50 lakhs at best, the TDP government hiked that to anabnormal high of Rs.2 crore per acre. This itself is one of the massive frauds perpetrated on the cash strapped state of Andhra Pradesh.

According to estimates put out by the ADP, the development cost of the start-up area adds up to Rs.3,137 Cr. The Singapore consortium's contribution towards the equity is a meagre Rs. 306.4 crores, the CCDMC's share is estimated to be Rs. 221.9 cr
and the remaining amount of Rs. 2,618.70 cr is meant to be sourced from banking institutions by mortgaging the project land apart from selling the plots.

That is not the end of the story. Rs.1, 255.40 crores out of this amount has been earmarked to be spent on advertisement costs, consultancy fees, development fees, management fees and salaries. Who will get this entire amount? Who will spend this sum? It is not difficult to guess, the so-called management company.

A massive scam of Rs.66,000 crores

As per the plan, the start-up area project will be in place for 20 years. What does this mean? The state government has made sure that the start-up area project remains in the hands of the Singapore consortium for this period of time. The tricky part is that should the state government ever decide to terminate the project at an earlier point, it
is bound to pay the consortium 150% of its investment. This is not all. The state government is bound to repay the loans taken by the consortium! Worse, even if this consortium decides to abandon the project, the state government has to pay the full hundred percent of its investment to the consortium apart from repaying the loans it has undertaken! There is more to come—in case of any dispute, both parties shall opt for arbitration in London. In other words they cannot approach Indian courts.

This entire sinister plan devised by Chandrababu Naidu and his aides will be carried out under the disguise of the so-called management company. Transparency goes for a toss in this entire matter because the company, for example, can sell the land at Rs.20 crores and show a nominal amount in its accounts while the black money component will go into the pockets of the bigwigs. This was exactly the model adopted by Chandrababu Naidu in the Emmar real estate scam in Hyderabad during his tenure as chief minister of undivided AP.

The value of a square yard in Amaravati was estimated at Rs.40,000. The market value of an acre of land then would amount to Rs.20 crores and if one were to add to this the CM's statement predicting a rise of up to Rs. 50 cr in the value of the land over the next two decades, one can gauge the enormity of the scam! If one were to take Chandrababu Naidu's statement and judge the issue, then the Singapore companies and his proxies will end up making a clean Rs.53,500 crores by selling 1070+250 acres of land. The Singapore consortium can easily make as much as Rs.12,500 crore by selling their part of the 250 acres land at Rs.50 crores per acre. This would mean that Chandrababu Naidu's proxies would end up making a minimum of Rs.66,000 crore! Now the big question is, if he can make such a humongous amount in one project over 1691 acres, how much will Chandrababu make in this 34,000 acre capital city?

Start-up area project... at whose cost?

The start-up area project was entirely conceived in a way so as to benefit the Singapore consortium and the mysterious management company. Both these entities, it is believed, are proxies of Chandrababu Naidu.

The most bizarre feature of it all, which may be the most lucrative part for some entities and individuals, is that the Singapore companies will not invest a penny in the project nor will they construct a single building! They will develop 1070 acres of land break them up into plots and sell them, apart from developing eight lakh square metres of commercial real estate on the 250- acre land which they have been given and the commercial space, as well!

Global Tenders... A Hypothetical Scenario

Had the TDP government called for a global tendering process at Rs.4 crore as the base price for an expanse of land of 1691 acres, it could have fetched the government Rs.6764 crore. In such an event, it would not have had to spend Rs.5 500 crores on the development of in frastructure. Similarly the need for equity of Rs.22 1.9 cr would not have arisen nor would there have been a need for a bank guarantee of Rs.3, 137 crore for bank loans. The government and the state alone would have benefited and not any individual or corporate entities. The state would not have suffered in the process, as there would have been no burden on the state exchequer.

Source: Chandrababu, Emperor of corruption (book)