This Article is From Oct 20, 2010

CWG scam: EMAAR to be penalised Rs 183 crores for athletes village

New Delhi: Real estate developer EMAAR-MGF may have to forfeit Rs 183 crores it deposited with the government of India as a bank guarantee for the Commonwealth Games Village that it built. The government says it has frozen this account.  

EMAAR is being penalised for structural defects, and inadequate amenities including insufficient power and waste supply for the apartments that housed the delegates from 71 countries that participated in the Games.

However, the Delhi Development Authority (DDA) also finds itself in a considerably awkward position: it gave EMAAR a giant bailout package to help the developer to construct the Village.

In 2009, EMAAR said that due to the global recession, it had run out of capital and could not proceed with the construction of the Village. The DDA stepped in with a 700-crore bailout. It bought 300 apartments. An expert panel said the DDA had paid nearly 90 crores more than it should have. The DDA retorted that the experts hadn't factored in parking costs and "the developer's margin".

NDTV has accessed documents that chronicle complaints about the Games Village filed by the representatives of the participating countries. From poor plumbing to water leaks and concerns about structural safety, the catalogue of grievances is extensive and indicting.  On September 23, one country's chef de mission complains of  "cracks in the buildings, shattered glasses in residential area. Difficult to believe it's been certified as fit." England, just five days later, officially complains of water leaks in Tower 4, says "25% of our accommodation is unusable." (Read: Foreign complaints about CWG Village)

Delhi Chief Minister Sheila Dikshit was asked to get the Village in shape just days before the Games began.  She has, in recent interviews, blamed EMAAR, the DDA and the Organising Committee (OC) for the shabby workmanship at the Village.  Documents prove that at the last minute, the government had to hire special water pumps to clear out flooded basements.

The DDA, which is headed by Delhi's Lieutenant Governor, Tejender Khanna,  is already being investigated by  the Central Vigilance Commission for possible corruption and for its poor execution of Games-related projects.


Yesterday, the DDA submitted a report to Urban Development Minister Jaipal Reddy in which it said EMAAR was guilty of "major irregularities" in the construction of the Village.

However, this report contradicts the positive review of the same Village submitted by the Lieutenant Governor, who heads the DDA, barely two weeks ago.

In a letter to the Prime Minister on October 7, Tejender Khanna said "great appreciation has been given for facilities and the overall pleasant ambience" of the Village. Khanna said the criticism of the Village, widely reported in international and Indian media, was "highly exaggerated." He also describes the Rs. 700-crore bailout for EMAAR as "an out-of-the-box decision" taken in consultation with the Urban Development Ministry. Khanna stresses that flats had to be bought by the DDA because there were no private party takers.

Khanna writes that while the apartments in the Village were handed over to Suresh Kalmadi's Organising Committee in August, the OC deployed its housekeeping staff as late as September 15.

Sources also say that on September 27, a week before the Games began, the Lieutenant Governor wrote to the DDA asking for  a complete technical and quality audit of the Village. In that same letter, Khanna reportedly asked for EMAAR's 183-crore deposit to be held.  The audit that Khanna requested will begin shortly, DDA sources say the agency was waiting to take over the Village from Kalmadi's Organising Committee.

Lieutenant Governor's Letter to PM


In a press statement, real estate developer EMAAR-MGF has contested the landscape of charges being leveled at it by the government. (Read: EMAAR's response to charges of poor construction)

For one, EMAAR says its Rs. 183-crore deposit to the government has not been confiscated or frozen by the government as penalty for sub-standard construction of the Athletes Village. Instead, it says this bank guarantee was extended earlier by it till the end of December this year at the DDA's request.

EMAAR states that its Village "has been built to the highest standards of quality and design".

The company also addresses accusations that as a bailout in 2009, the DDA paid nearly 13% more than it should have for 300 apartments in the Village. The money was used to help EMAAR which had run out of capital to complete the construction of the Village. EMAAR says the price paid by the DDA was, in fact, below market rates, that it has not yet received the entire amount due for the apartments, and that the company had offered to buy back the flats from the DDA. (Read: The CWG Village - EMAAR vs Govt)

NDTV has also accessed a letter written by EMAAR to the DDA on September 3 - exactly a month before the Games began. The company warns the DDA that "the Village is not in presentable condition, due to the negligence of other agencies." EMAAR is particularly scathing of ITDC or India Tourism Development Corporation, which was hired to furnish the flats for the athletes. "ITDC staff  create unhealthy and filthy conditions, urinate in clean areas," states EMAAR, "ITDC staff are damaging lifts, breaking glass and locks." (Read: EMAAR's letter to DDA on September 3)