Shunglu panel indicts Lalli, Aruna Sharma on CWG deal

New Delhi: A High Level Committee, which went
into alleged financial irregularities in Commonwealth Games,
has strongly indicted suspended Prasar Bharti CEO B S Lalli
and Doordarshan Director General Aruna Sharma, accusing them
of "collusion" with a UK-based firm which benefited Rs 135
crore in the broadcast deal.

The two-member Committee headed by former Comptroller and
Auditor General V K Shunglu has also recommended action
against the two officials saying "they cannot be recused from
the acts of omission and commission which facilitated this
wrong doing".

The 236-page interim report of the HLC was submitted
yesterday to the Government and Prime Minister Manmohan Singh
has taken a "serious view" of the findings. He has sent it to
the Cabinet Secretary and sought follow up steps within a

"Stern action is likely to be taken on the basis of the
Cabinet Secretary`s recommendations," a PMO statement said.

Lalli has already been suspended on a reference made to
the President for his removal.

The Committee said that based on documents available it
has concluded that the actual cost of the contract awarded to
SIS LIVE was at best about Rs 111 crore, thus resulting in a
profit of at least Rs 135 crore for SIS LIVE and Zoom

"The responsibility for providing undue benefit to SIS
LIVE and Zoom Communications is primarily that of the then
CEO, Prasar Bharti and Director General Doordarshan. They
cannot be recused from the acts of omission and commission
which facilitated this wrong doing," the report said.

The Committee found that the contract for production and
coverage of CWG last year was awarded to SIS LIVE (partnership
firm of SIS OB and SIS UK based firms) at a cost of Rs 246
crore on the basis of a single bid as the other nine responses
were either rejected or entities backed out due to unduly
restrictive and stringent conditions.

The contract was assigned by SIS LIVE to Zoom
Communications for Rs 177 crore on the same day on which the
contract was signed between Prasar Bharti and SIS LIVE.

"This was in gross violation of tender conditions. SIS
LIVE also issued a press release on March 8, 2010 announcing
award of a key and exclusive contract for broadcast services,
including technical equipment and diversified Production and
Coverage services for the 2010 Commonwealth Games in India, to
South East Asia`s largest broadcast services company, Zoom
Communications Ltd India," it said.

Thus, the Committee said, what appears to be the case is
that SIS LIVE secured the contract for Rs 246 crore; assigned
it to Zoom Communications for Rs 177 crore; provided no
service and made a profit of the difference between the
contracted price and the assigned price, i.e. Rs 69 crore.

Alternatively, Zoom Communications used SIS LIVE to
secure the contract. "Given the complexity, it is idle to
speculate which of this is true. Howsoever these transactions
are viewed, government overpaid at least Rs 135 crore in a
contract of Rs 246 crore," the report said.

The Committee pointed out that contracts were awarded by
Prasar Bharti for various host broadcast activities without
ensuring reasonableness of rates, overruling suggestions

Prasar Bharti received and supported highly inflated
bids. Most of the decisions to support and award the inflated
bids were taken by DG Doordarshan and the then CEO despite
strong contrary view.

"The procedures and best practises in the selection of
the service providers were ignored or bypassed to favour
certain entities. Superfluous legal advice was obtained on
matters requiring management decisions and this can only be
viewed as an attempt to foreclose the option of decisions
based on sound financial and management principles," the
report said.

The Committee found that there were deliberate delays in
following schedules endangering `emergency` situations leaving
virtually no option for re-tender or exploring other
competitive avenues in the face of high rates quoted.

The Ministry was also presented with fait-accompli
situations in view of the criticality of time and threat of
no- broadcast of Commonwealth Games situation.

Acts of omission and commission including inter alia
suppression of critical information necessary for informed
decisions, undue favours to service providers, inappropriate
changes in contractual terms and conditions and false /
incorrect recording of the minutes of meetings etc. by key
functionaries of Prasar Bharti such as CEO and DG (DD)
were also observed.

The technical staff of Doordarshan had confirmed their
capacity and readiness to cover the production of 10 out of 17
events in Commonwealth Games, Delhi 2010.

Coverage of the remaining 7 events and Opening and
Closing ceremony, which required specialisation, was proposed
to be outsourced. Despite initiation of preliminary work for
covering 10 events in-house in the year 2007 with the
assistance of an international consultant hired by OC, this
decision was abandoned by Prasar Bharti without any recorded

"The High Level Committee is of the opinion that the
decision to outsource entire work was motivated. This not only
cost the exchequer avoidable higher expenditure but also
deprived Doordarshan the opportunity to acquire the latest
broadcasting skills and equipments for delivering in future
events of similar scale," it said.

In the Commonwealth Youth Games, Pune, 2008, efforts
were made to award contract for Host Broadcasting to SIS
Outside Broadcast Ltd. UK which was declared as the only
technically qualified bid out of 10 responses received in the
year 2008.

The tender process was discharged as Central Vigilance
Commission had found the eligibility criteria flawed and
unduly restrictive.

The CWYG were covered in-house by Doordarshan at a cost
of Rs 7.50 crore against the bid amount of Rs 42.30 crore of
SIS Outside Broadcast. Irregular award of contract at a cost
of Rs 1.6 crore to Zoom Communications, Delhi for the hiring
of broadcast equipment in CWYG, Pune 2008 was also adversely
commented upon by Central Vigilance Commission.

Prasar Bharti did not heed the lessons of the CWYG, 2008
where it had glaring evidence of a highly inflated bid by SIS
LIVE which was almost six times the actual in-house cost of
production and coverage by Prasar Bharati.

It did not put in place systems to address the concerns
voiced by the Central Vigilance Commission on the contracts
for CWYG, 2008.

Prasar Bharati, the Host Broadcaster, could have chosen
to assign all requirements to a single entity. Alternatively,
it could have chosen to give part of the work to Doordarshan
which possessed the capability to coordinate and broadcast ten
of the seventeen games.

"These choices did not suit SIS LIVE / Zoom
Communications because they neither possessed ?turnkey?
competence nor had any desire to be a junior partner of
Doordarshan," it said.

A clear nexus between SIS LIVE, Zoom Communications and
elements of Prasar Bharti management was apparent from the
sequence of events, starting from CWYG, Pune 2008.

Prasar Bharti informed the Ministry and Oversight
Committee (Meeting of 22nd October, 2009) that the bid for
Production and Coverage of SIS LIVE ( Rs 246 crore) was 26
percent lower than the bid quoted for similar components and
activities during Request for Information.

"This was a misleading, false and factually incorrect
statement. Apart from the fact that the figure of 6.55 million
GBP ( Rs 52 crore) quoted by BBC Outside Broadcasts for
production and coverage of 12 events was never brought on
record or discussed, the offer of USD 84.93 million ( Rs 336
crore) by HBS-IMG consortium was for `turnkey` solution which
included overall management, IBC, production, venue
operations, other operational items and management fee.

"The amount quoted for Production and Coverage, as a
line item, was only USD 43.18 million ( Rs 172 crore)," the
report stated.