eGovINDIA member files Complaint against Mr. Rajiv Chawla IAS., and others in connection with criminal breach of trust and corruption in the processing of centralised e-procurement tender – regarding.
Before the Hon’ble Lokayukta of Karnataka
S. ANANDA S/o Shri. Shankarappa, Post Box No. 8512, Bangalore 560 085 Vs. 1. The Chief Secretary to Government of Karnataka, Bangalore. 2. Shri.Rajiv Chawla IAS., Secretary to Government, e-governance Department, Government of Karnataka Sub : Complaint against Mr. Rajiv Chawla IAS., and others in connection with criminal breach of trust and corruption in the processing of centralised e-procurement tender – regarding. I am filing this application in public interest.
I wish to bring to the attention of the Hon'ble Lokayukta about the irregularity and corruption in the processing of tender for centralized e-procurement project. The said tender is floated by the e-governance department headed by Mr.Rajiv Chawla IAS., (Annexure A)
This is a case where the Secretary to Government, e-governance department Mr.Rajiv Chawla IAS., National Institute of Smart Government (NISG), a private limited company formed under the Indian companies Act, 1956, PriceWaterHouse Coopers (PWC), a multinational consultancy agency and C1 India Limited have colluded and framed the entire tendering process only to enable C1 India Limited, to bag the tender for the Karnataka e-procurement contract.
The tender for Karnataka centralized e-procurement project had already been floated with conditions suiting primarily, the consortium participated by C1 India Limited. The applicant submits that KEONICS, a Government of Karnataka undertaking which has been implementing an e-procurement software at an affordable cost in at least 5 departments of Karnataka Government for the past 3 years had been eliminated from the tender process by imposing unreasonable pre qualification conditions.
The applicant submits that equity and rationality demand that an existing player, that too a Government company that had been implementing a similar software solution should also have been enabled to participate in the tender. This had not been done so. The logic of imposing pre qualification conditions in a tender is to ensure that the bidders who are capable of handling the task alone are short listed. Here is the case where KEONICS which had already proved that it is capable of implementing e-procurement solution in Karnataka had been excluded by imposing unreasonable tender conditions.
The unreasonable tender conditions read as follows:
“Pre-qualification Criteria clause 4.5.2 (iv) of Volume II of the RFP states: "The Bidder (single) should have had an average annual turnover of Rs 25 Crores during the last 3 accounting years in IT related operations, as evidenced by the audited accounts of the company (or companies). In case of consortium bids, one of the partners should have had an average annual turnover of Rs. 15 Crores and the other should have had an average annual turnover of Rs. 10 Crores during the last 3 accounting years in IT related operations, as evidenced by the audited accounts of the company (or companies)."
Clause 4.5.2 (v) states :
“The single bidder and in case of consortiums, one of the bidders should be a SEI – CMM level 3 certified company”
Knowing fully well that these conditions would automatically eliminate the existing team combination, viz., KEONICS and their alliance partner, the same had been framed. PSUs/ government organizations do not feel the need to go for the CMM Level 3 certification. Instead, the ISO 9001:2000 certification is obtained as this gives wider spectrum of on-going activities. The officials cannot argue that they had used the tender conditions used for other IT projects, including Bangalore One project, as the e-procurement project is not a new one to Karnataka Government. The present effort is only a refinement of an ongoing project. It is a well understood normal practice that the existing players are also enabled to take part in such tenders. But this had not been done in the present case. There is fraud and corruption in the above deal. The applicant submits that there are ample evidences to support that the above exclusion of KEONICS was not an accidental or bonafide action but an action intended to benefit C1 India Limited. The applicant submits that he had reliable information that KEONICS had objected to its exclusion from the tender process and the same had not been responded to by Mr.Rajiv Chawla IAS., (Annexure C)
The respondents cannot argue that the solution offered by KEONICS is costly or not acceptable as the departments of Karnataka have already been implementing it without any complaint at a cost of Rs.7500 per tender or even cheaper. (Annexure D)
The Committee formed for this evaluation and implementation process does not include the IT / BT Secretary. This clearly indicates the level of manipulation and rigging that has gone into the tender preparation.
The applicant submits that there is a design to plunder the tax payers’ money of Karnataka through the action of Mr.Rajiv Chawla and others by bringing in C1 India Limited which would charge a hefty sum for the e-procurement process directly from the vendors as compared to the KEONICS rates. The applicant submits that in the name of public private partnership (PPP), Mr.Rajiv Chawla and the other respondents herein have planned to hand over the entire revenue collection from the e-procurement process running into crores of rupees to C1 India Limited. On record, these corrupt officials and others attempt to show as though there was going to be a huge saving to government through the proposed PPP route. The fact is that though the Government would not spend money on the proposed centralized e-tender process, it does not mean that the Government is benefiting. The money lost on account of the private partner collecting it directly from the bidders is expected to be huge and the same is a loss to the Government. The entire revenue accruing to the private partner running into crores of rupees is actually the entitlement of the Government. This is chosen to be glossed over by these corrupt officials. If the Government receives the revenue from the bidders while paying a fixed charge to the PPP partner, then the Government would benefit from such huge revenue collection. This had not been done intentionally only to benefit the PPP partner. In order to facilitate this fraud, Mr.Rajiv Chawla IAS., wanted KEONICS which has been providing a cost effective solution to be out of the picture and that explains the unreasonable tender conditions.
The applicant submits that the Government of Karnataka had engaged NISG (National Institute of Smart Government), a private charitable company formed under Section 25 of the Companies Act to assist it in the tender document preparation. NISG is headed by Mr.J.Satyanarayana IAS., who earlier served as IT Secretary in Andhra Pradesh Government. No tender procedure had been adopted before handing over the consultancy project to NISG, which is a private company, not accountable to any Government audit or CBI or CVC jurisdiction. The respondents cannot argue that NISG had offered their consultancy services free of cost and so there is no loss to Government. Because if they had gone for open tender, there may be other professional agencies which might have offered the same on free of cost terms. NISG has no professional experience or expertise in e-procurement. It is a newly formed private limited company. NISG has to necessarily engage private consultants to carry out such projects because it has no in-house expertise to carry out this type of an assignment. NISG had carried out the current e-procurement consultancy contract by engaging the services of PWC only. There is a direct nexus between NISG and PWC to commit this fraud.
Annexure E is the proceedings of the meeting dated 9th September 2005 which indicates the appointment of NISG as consultant of Karnataka Government for the e-procurement project.
Annexure F is the Consultancy report submitted by PWC to NISG on Karnataka e-procurement project during October 2005.
Annexure G is the copy of Minutes of the meeting of Project Implementation Committee on e-procurement dated 22nd November 2005 wherein participant serial No.21 Subodh had been shown as member of NISG team whereas the said Subodh is an employee of PWC. This goes to prove that NISG has no technical competence and thus depends on PWC to carry out its operations. The partnership between NISG and PWC is shrouded in mystery. The payment made to PWC towards consultancy charges for this project by NISG is not known.
The applicant submits that NISG has been handling public money received from UNDP, an international donor agency. I submit that the taxpayer had paid for the consultancy services indirectly through NISG and hence the claim of free of cost service by NISG is only a ruse bring in PWC and to ward of healthy competition from other professional consultants.
The allegation is that Mr.J.Satyanarayana IAS., who heads NISG now, had illegally favoured the multi national consultant company Price WaterHouse Coopers (PWC) in majority of contracts handled by him. Dataquest, a leading IT magazine had enquired into the allegations against Mr.J.Satyanarayana and found the allegations substantiated in as much as that J.Satyanarayana had illegally favoured PWC during his assignment as IT Secretary in Andhra Pradesh and also as CEO of NISG. I am enclosing a copy of the Dataquest publication as Annexure H.
The applicant submits that NISG, under J.Satyanarayana IAS., had engaged PWC to act as its consultant in the preparation of the tender documents for Karnataka centralized e-procurement project. PWC had already been engaged by NISG to carry out the same task for other governments such as Andhra Pradesh and Chattisgarh. The applicant submits that preparation of such tender document does not require the services of PWC repeatedly as the task is the same for all over India. A tender document prepared earlier would have been sufficient. When matters stand like this, NISG in the name of providing free service to the States has been granting the consultancy work to PWC repeatedly thus offering it lakhs of rupees consultancy fee unnecessarily, if not illegally. The money handled by NISG belongs to Government of India. There is a sinister connection between J.Satyanarayana IAS., and PWC.
The applicant submits that the sinister connection can be understood from the fact that PWC, after acting consultant for AP government had joined the implementing partner C1 India Limited in the implementation of e-procurement project in Andhra Pradesh itself.
Projects such as this one have two components viz., consultancy portion which results in preparation of tender / request for proposal (RFP) document and the second part is actual tendering to choose the vendor for execution of the project. Internationally there is a ban on a project consultant who prepares the RFP from taking part in the implementation. Because, the consultant in such contracts, takes over the Government’s role in preparing the tender/RFP documents. If the very same consultant bids and executes the project, then there is every reason to suspect that the consultant had pre configured the tender documents to illegally favour themselves. This would be a clear breach of trust. The applicant submits that a gross impropriety had been committed by PWC when it joined C1 India Limited in the implementation of e-procurement solution of Andhra Pradesh Government after acting as consultant for preparation of RFP. PWC again committed the same impropriety when it jointly bid for the e-procurement project along with C1 India Limited for the tender floated by National Informatics Centre (NIC), Delhi. The role of PWC in the NIC tender was not consultant but an implementing agency. When they were tender partners for implementation of e-procurement solution for NIC, Delhi, PWC continued to act as consultant for Government of Karnataka and Chattisgarh for the very same e-procurement project. In all these tenders, C1 India Limited had taken part in the tender process based on the tender documents prepared by PWC! This goes against the principles of equity, fairness and logic. The respondents cannot argue that they were not aware of the impropriety committed by PWC because DATAQUEST in its publication dated 2nd September 2005 had published its research findings and openly questioned the modus operandi adopted by PWC and NISG. Moreover the respondents are directly involved in almost all these projects and thus lack of knowledge cannot be a defense at all.
Dataquest report had brought out the nexus between PWC and C1 India as follows:
“While PWC was a consultant for Government of AP e-procurement project that was bagged by C1 India, the two companies joined hands as partners to bid and bag NIC's e-procurement project recently. All this, while PWC is still working as the consultant responsible for preparing the RFP (Request For Proposal) for the GoK (Government of Karnataka) and GOCG (Government of Chattisgarh) e-procurement projects”.
The applicant submits that there is corruption in the Karnataka centralized e-procurement project. The applicant submits that the respondents have to be prosecuted and punished through ordering an impartial enquiry into the tender rigging.
The applicant submits that the very same Mr.J.Satyanarayana IAS., is involved in the Bangalore One Project and chose the company viz., Ram Infotech / CMS consortium that had already implemented a similar project in Hyderabad. The Hon'ble Lokayukta has been investigating a complaint in this regard.
In the present case also, Mr.J.Satyanarayana IAS., acting as CEO of NISG is deeply involved in collaboration with Mr.Rajiv Chawla IAS., Secretary to Government, e-governance department to illegally favour PWC and its partner C1 India Limited. Both these officials wish to bring in PWC and its partner C1 India Limited which had implemented the AP's e-procurement contract through corrupt and illegal means. There appears to be a direct invisible connection between Mr.J.Satyanarayana of NISG, PWC and its partner C1 India Limited in as much as one can presume that they all represent one entity.
The applicant submits that he had received the following analysis from a leading independent researcher about the current e-procurement tender vis a vis C1 India which is allegedly the favoured bidder of Rajiv Chawla IAS., and J.Satyanarayana IAS.,
“The ITI-C1 bid states that C1's turnover in the last 3 financial years is Rs. 4 cr, Rs. 7 cr, and Rs. 21 cr, thus averaging Rs. 10.66 cr and therefore appearing to qualify. However, it is factually known (see http://www.eprocurement.gov.in/news/leaderInepro.asp ) that C1's turnover for 31st March 2005 was approximately Rs. 6 crores.
Furthermore, in the MPLUNL (Madhya Pradesh Laghu Udyog Nigam Limited) tender which C1 won late last year, their declared turnover backed by CA certificates was: 2002-03: Rs. 3.65 cr, 2003-04: Rs. 3.46 cr, and 2004-05: Rs. 6.35 cr. An inquiry to the CMD of MPLUNL will confirm this.
Therefore, we can assume that their declared turnover in GOK correspond to 2003-04 (Rs. 4 cr), 2004-05 (Rs. 7 cr), and 2005-06 (Rs. 21 cr). However, GOK bids were submitted on 28th March 2006, and hence the big question is how could C1 have submitted audited accounts for 2005-06?”
If the allegation contained in the above information is true, then C1 India Limited had submitted fraudulent turnover figures to qualify in the bid. The applicant submits that C1 India Limited/ITI consortium had already been qualified in the Karnataka e-procurement tender. The applicant learns and believes that the information received above is dependable and thus the entire project needs to be probed by an independent agency to safeguard public interest.
- The e-governance department headed by Rajiv Chawla IAS., had chosen National Institute of Smart Government (NISG), a private limited company to carry out the consultancy assignment for the centralized e-procurement project without routing through tender process. There is corruption and fraud in the appointment of NISG without routing through tender process. NISG had been shown such favour only to bring in Pricewaterhouse Coopers, a multinational consultancy company through back door method to carry out a huge corrupt deal. There is a corrupt and illegal understanding among NISG and PWC to promote C1 India Limited, a partner of PWC all over India, including Karnataka. The appointment of PWC as consultant for the current project when its partner has been taking part in tenders based on the documents prepared by PWC itself indicates a gross criminal breach of trust.
- KEONICS, which is a Government owned company has been successfully implementing an e-procurement solution in at least 5 departments of Karnataka Government for the past 3 years. In other words, KEONICS had proved beyond doubt its capability to carry out the e-procurement project. But KEONICS had been denied from participation in the tender illegally through unreasonable pre qualification conditions. There is fraud and corruption in such prescribing unreasonable conditions. An existing Government player had been denied their right to participate in this tender in order to favour C1 India Limited who are partners of PWC which had prepared the tender documents.
- In as much as there is every reason to believe that there is an unholy nexus between Rajiv Chawla IAS., NISG headed by J. Satyanarayana IAS., PWC and C1 India Limited. The unholy nexus is intended to favour C1 India Limited to bag the e-procurement tender without allowing competitors to take part in the tender.
- The intentions of the corrupt officials and others is to cause a huge loss to the Government and ensure that the revenue intended for the Government is cornered by the PPP partner, in this case C1 India Limited. This is sought to be achieved by allowing the PPP partner to directly collect a huge service charge from the bidders who take part in the e-tender. Thus, crores of rupees of money meant for government is sought to be routed to the PPP partner without any public interest.
- PWC, which had acted as consultant in this project through NISG had already been executing e-procurement projects in partnership with C1 India Limited in Andhra Pradesh and Delhi Governments. Thus the entire tender process, using the services of PWC was a ruse to hand over the contract to their partner C1 India Limited. There is apparent cheating, fraud and corruption in the deal.
- The nexus between J.Satyanarayana IAS., and PWC had been clearly brought out by a leading magazine, Dataquest which had been submitted as annexure herewith. The partnership between PWC and C1 India limited is an admitted fact.
- Mr.Rajiv Chawla IAS., has a direct understanding with NISG and PWC to commit this fraud and is fully responsible for all the above misdeeds. Mr.Rajiv Chawla had allowed NISG & PWC to manage this project knowing fully well the criminal breach of trust committed by PWC and C1 India Limited by joining hands in execution of e-procurement projects elsewhere.
- An allegation petition is already pending before the Hon’ble Karnataka Lokayukta against Rajiv Chawla IAS., and J.Satyanarayana IAS., of NISG on allegations of rigging the ‘Bangalore One’ tender to corner the tender in favour of a pre selected bidder M/s Ram Infotech / CMS consortium.
There is fraud, corruption and criminal breach of trust in the Karnataka e-procurement tendering. It is prayed that the Hon’ble Lokayukta may call for the original records pertaining to the Karnataka centralized e-procurement project and cancel the tender process declaring it void ab initio. The guilty should be appropriately proceeded against for the fraud, criminal breach of trust and corruption.
Interim relief, if any, sought for:
Pending the detailed enquiry, the Hon’ble Lokayukta may stay further proceedings of the e-procurement tender processing.