Author: Kanak Kumari, Symbiosis law school, Nagpur
To the Point
The 2010 Commonwealth Games scandal in particular can be viewed as the most disastrous breakdown of the organizational of administration and financial control in the history of modern Indian sports. What is alarming in this form of high-level corruption is the intentional overcharging, to a level of over 70,000 crores out of an original estimate of 6000 crores which cannot be passed off as any kind of necessity of the project or the process of inflation.
The scandal also included several aspects of wrongdoing: procurement fraud in the form of fixed bids, the construction of an infrastructure of low quality, which endangered the lives of the athletes, the institutionalized kickbacks system, and wilful violation of financial controls. The key players of systematic misappropriation of resources, in place of proper administrative structures, included the Delhi Development Authority, Commonwealth Games Organising Committee and some of its sub bodies.
Abstract
The Commonwealth Games corruption scandal of 2010 is a paradigmatic example on systematic administrative malfunction and mega-financial misconduct in the Indian public sector. Planned to be hosted in Delhi, India, the Commonwealth Games of 2010 (CWG) was touted to be an international performance of the rising economic strength and organizational genius of the country. Nevertheless, this dream was grossly dented by a rife corruption scandal that brought huge financial anomalies, organizational mismanagement and a huge loss of social confidence. This report thoroughly considers the multi-dimensional character of the CWG scam, which entailed its sources, the complex nature of modus operandi by the illegal activities and the following investigations carried out by leading agencies in India namely the Comptroller and Auditor General (CAG), Central Bureau of Investigation (CBI), Central Vigilance Commission (CVC) and Enforcement Directorate (ED).
Use of legal jargon
Charges against the accused mostly involved all the sections of the Indian Penal Code (IPC) such as:
Section 120B: Criminal Conspiracy it is an agreement made between two or more people in order to commit a crime or do such an act through an illegal way.
Section 420: Cheating deals with defrauding someone with an intent to defraud somebody of property by causing him/her, without identifying it, to transfer the cows or parts of a valuable security.
Section 467: This section deals with Forgery of Valuable Security, Section 468 deals with Forgery to defraud, whereas Section 471 deals with Using forged document as genuine, hence refers to the interference of official records and documents in order to create or propagate a fraud.
The Prevention of Corruption Act, 1988 (PCA) was also harshly charged in most cases especially taking into consideration that it involved public servants:
Section 13(1)(d): Criminal offence of a public servant, namely, by abusing his/her official position to acquire to him (and to any other person) of any valuable commodity or pecuniary advantage.
Section 13(2): Sets out the penalty of wrongful act of a criminal public servant.
At the same time, the Enforcement Directorate implemented the Prevention of Money Laundering Act (PMLA), 2002, to probe the illegal monetary transfers:
Section 3: Money laundering includes any person who is directly or indirectly involved or have the knowledge of such act to be illegal and participate in such acts.
Section 4: Defines the punishment that will be given to the crime of money laundering.
The proof
CGF General Assembly in Montego Bay at the, Jamaica in November 2003; the host of the Games was Delhi after a competitive process with Hamilton, Ontario, Canada. The underlying philosophy of the bid was summarized by the motto of New Frontiers and Friendships that was intended to deliver the increasing global status of India.
Another major aspect, which pushed the trends towards India, as indicated was a large-scale financial investment: a pledge to give US$100,000 to every participating Commonwealth Games Association and a full package of air travel services, accommodation, lodging, and local transport. Such a financial bait, although it won the bid, established a precedent of huge fiscal responsibility. The Government of Delhi along with the Government of India officially guarantee the financial expenditures for hosting the Games. This assurance was presented although there was warning express caution advice given by the Ministry of Finance, Department of Expenditure in the year 2003 which had been concerned about underwriting such wide expenditures.
Back in the year 2003 the Indian Olympic Association had estimated the total budget of the Games at 16.2 billion rupees (about US$190 million). A willingness to make financial commitment at the very start added to a bidding process subsequently criticized as lacking transparency and generally undemocratic perspectives, which resulted in a situation when financial responsibility was not considered as a primary objective, but the prospect of having a mega-event. This early commitment to substantially make the funding a financial carte blanche to the organizers preconditioned a basic lack of control over spending and the possibility of financial irregularity as the project would grow.
Costs Increasing and Contravention of Funds
The Commonwealth Games started with an incredible and sudden increase in the budget which was a warning of some deep financial malpractices. Based on the original estimate of 16.2 billion (US 190 million) in 2003, the estimated total budget had swelled to an estimate of 115 billion (US 1.4 billion) by 2010 and this was excluding non-sports infrastructure development. Even on independent evaluations, a grimmer scenario was drawn with an estimation of 700 billion (US) being given by Business Today magazine.
It was this injustice that the HLRN report raised a critical voice on the logic behind the heavy expenditures running up into thousands of crores of rupees in order to host a sporting event that lasted twelve days, when there was a big issue of poverty, hunger and malnutrition in the country. The report claimed that the expenditure instead of being beneficial to the masses ended up causing numerous human rights violations, particularly to the marginalized communities, with the estimation of more than 100,000 families being displaced out of their homes, because of the Games-related projects. One of the most shocking elements that were discovered was the appropriation of funds belonging to the 2009-10 Scheduled Caste Sub Plan (Special Component Plan) in Delhi to meet CWG expenditures. Union Budget allocation of the Ministry of Youth Affairs and Sports on the CWG showed a shocking hike of 6235 percent between 2005-06 and 2009-10.
Particular Fraud Claims and Fraud Processes
Inquiries in the CWG scam revealed a complex web of frauds which means that there was a coordinated attempt to rip off the people of the nation. Manipulated tenders, rigged bids, setting up dummy companies, gross over-invoicing and malicious disposal of discretionary powers given to the officials by the government directly absorbed a large slice of the cost escalation.
The notorious case of malfeasance was that of the Swiss Timing Scam. Swiss Timing Ltd. was given the contract on timekeeping and scoring systems where the Organising Committee (OC) paid out 141 crores. In follow up investigations, it was discovered that the true worth of these equipment and services were lower than 46 crores thus realizing a probable loss of more than 90 crore. The whole tender was actually seen as being rigged with the purpose of giving the Swiss Timing company a competitive edge, and no fair comparison was done with the other bidding offers, like one much lower, the MSL Spain offer. Suresh Kalmadi, Lalit Bhanot, and V.K. Verma were accused by the CBI of conspiring to remove opponents among the bidders and then to give away the contract at an inflated price, which meant that the exchequer lost more than 900 million (US11 million). Worst, Kalmadi and Verma had even declared the bid on public on October 12, 2009 before bids were actually opened on November 4, 2009 hence, it was a pre-planned conspiracy.
There was a wide spread of Overpricing and Fake Billing in several procurements. Apparently harmless objects were being charged with ridiculously high prices. Some of the examples which were uncovered were treadmill being purchased at the price of 9.75 lakh rupees per treadmill, umbrella at 6300 rupees per umbrella and toilet paper rolls at a mind boggling 4000 rupees per toilet paper roll. It was reported that chairs had been purchased five times its market value.
Many infrastructure projects were marred with Construction Irregularities. The Games Village, other stadiums and some major road networks were only ready a few days to the start of the games or even after the event was over. The investigation has shown big differences between the amount of money set aside and what was in fact done hence lesser quality faculties.
The contracts of the companies which were directly sold by Suresh Kalmadi and other seniors of the organisation were handed either to their own family members or without disclosure.
There was also a great deal of impropriety disclosed in the Queen s Baton Relay (QBR) Case. The decision was made to contract out the transportation services during the QBR event that was held in London at inflated rates awarded to AM Car and Van Hire Ltd. by the OC without use of the due tender processes. The CBI claimed that there was a conspiracy to give the company a contract under inflated prices to those companies related to the London based businessperson Ashish Patel.
Case Laws
Directorate of Enforcement versus. Deepak Mahajan: This is the landmark case in which they set guidelines that are comprehensive in investigating complex crimes which deal with the financial crimes that involve the public officials.
Central Bureau of Investigation v. V.C. Shukla: The ruling of this case made it clear how conspiracy provisions can be applied in corruption offences where there are more than one accused person and elaborate financial transactions. This case law sealed the adoption of circumstantial evidence that could prove conspiracy when direct evidence was lacking and this formed the key principle in Commonwealth Games prosecution.
State of Maharashtra vs. Balakrishna Dattatraya Kumbhar: The case dealt in matters of the burden of evidence in corruption cases by a public servant. The court ruled that unknown wealth and a lifestyle irrelevant to the known sources of income may justified the corruption charges, which directly apply to the Commonwealth Games defendants.
Conclusion
The 2010 Commonwealth Games scandal has proven to be a turning point of how India is addressing issues of systemic corruption and can be summed up in complete failure of administrative, legal and constitutional mechanisms put in place to safeguard the use of its people’s resources and hold the government accountable. The final importance of the Commonwealth Games scandal is that it was able to prove that democratic institutions can self-correct when faced with systematic corruption as long as legal systems, the independence of judiciary and bodies of civil society are functional and dedicated to the rule of law. The case is symbolic to the extent that it is the failure of governance, but it is also an opportunity to renew democracy by institutional reform, and to have enhanced mechanisms of accountability.
FAQs
Which particular sections of the law were breached at the Commonwealth Games scam?
A: The most common offences were Section 409 of Indian Penal Code (criminal breach of trust by public servants), Section 420 (cheating and dishonestly inducing delivery of property), Section 120B (criminal conspiracy) and various provisions of Prevention of Corruption Act which include Section 13(1)(d) (criminal misconduct by public servants) as well. Other infractions involved the provisions of the Prevention of Money Laundering Act and other administrative rules on procurement of the people.
What was the way of the legal system to resolve the dilemma of prosecuting several offenders in various jurisdictions?
A: The Supreme Court moved its supervisory juicy exercise and brought in related cases and brought into place the mechanism of coordinated investigation. Separate courts were specifically meant to deal with matters connected with Commonwealth Games and the Central Bureau of Investigation was supposed to be bestowed with the overall investigative power. This was a systematic way of interpretation of the law, which avoided contradicting decisions between the jurisdictions.
What do the cases of Commonwealth Games determine as precedents in the matter of administrative accountability?
A: The cases held that there exists no immunity in investigating officials in cases where there are allegedly credible claims of corruption against them irrespective of the administrative position held by the officials. They also strengthened the idea that the administrative discretion should be accomplished within the frames allowed by the law and that systematic failure to follow the standard operating procedures can be revealed as the administrative misconduct on the part of those who fail to act in accordance with it and which proves actionable and subject to the criminal and civil penalties.
What was the efficiency of recovering mechanisms of assets concerning the misappropriated funds?
A: Recovery of assets posed great difficulty because of complicated transactions of financial plans, movement of funds to offshore accounts, and time consuming legal process. Though few thousand crores of worth were attached; some money was returned, the total recovery rate was lower than what it was expected before. This was a reminder of the need to employ preventive means and real-time surveillance as opposed to the tendency of depending on post-facto recovery systems.
How did audit institutions contribute to the revealing of the scandal?
A: The main trigger of legal action was the full performance audit conducted by the Comptroller and Auditor General that offered a detailed insight into financial malpractices and procedures abuses. The audit technique introduced significant polices that determined how mega-project spending could regulate auditing and served as an example of future audit of major public infrastructure development.
