| NBA Press Release
|| 15 March 2007
Hundreds of affected people protest in Mumbai against the loot of
NARMADA BACHAO ANDOLAN
Jail Road, Mandleshwar
District Khargone, Madhya Pradesh
Nearly 1000 women and men from the Narmada valley arrived at Mumbai today to demonstrate against the Maheshwar dam being built in the Narmada valley. The protest is being carried out under the aegis of the Narmada Bachao Andolan. Even as the affected people sat on a two-days sit-in in Azad Maidan, delegations of representatives met senior officers of the Reserve Bank of India, Securitries and Exchange Board of India, IDBI, LIC and GIC to ask them to stop investment of public money in the destructive Maheshwar Project and to prosecute those guilty of financial irregularities.
*Loot of public money continues *
The Maheshwar Hydel Project has been continuously surrounded for the last many years by financial irregularities. Because of default on a loan taken for the Maheshwar project, the movable and immovable properties of the project were attached from 2002 to 2005. However the properties were restored to the project promoters in 2005 on the basis of a settlement which the SMHPCL has now flagrantly dishonored.
But by ignoring these various issues, without adequate legal documentation, and in contravention of SEBI rules, the CARE rating agency gave an AAA rating to the Maheshwar project. Three weeks ago, the NBA through its Supreme Court counsel Shri Prashant Bhushan filed a complaint with the SEBI, to withdraw the rating and stop the private placement because the Chairman of CARE was also the Chairman of SMHPCL and such a rating was not permitted by the SEBI regulations. The SEBI has responded that it is examining the matter.
Now the Company wants to mobilize more public funds on the basis of this illegal CARE rating. At the same time, instead of returning the loans taken by the Maheshwar project authorities from the LIC, GIC and other financial banks and institutions, in which they are in default, a concerted effort is being made by the Project authorities to compel these institutions to convert these loans into equity, and to re-validate old sanctions. Further, the IDBI is putting pressure on the Madhya Pradesh based financial institution – the MPSIDC to give waiver of Rs. 29 crores on loans taken by the S. Kumars from the MPSIDC for the Maheshwar project, on which they have defaulted on. The NBA is determined that it will not tolerate the squandering and loot of the money of the common people of this country.
*Dark track record of financial irregularities *
(1) The CAG of India has indicted the MPSIDC of irregularly sanctioning crores of rupees as ICDs to the S.Kumars company Induj Eneretch Limited (now Entegra Infrastructures Limited) for the Maheshwar Project in contravention of the rules, and of further giving an OTS which hurt the MPSIDC to the extent of Rs. 25 crores.
(2) The Economic Offences Wing of the GOMP have indicted and filed a FIR against the erstwhile Promoters and Directors of Induj Enertech Limited – including Mukul Kasliwal(currently a Director of SMHPCL), Vikas Kaliwal, and others under Section 407, 420, 467, 468 and 120 B, that is of fraud, cheating and criminal conspiracy.
(3) However the Induj Enertech Limited willfully dishonored this OTS by dishonoring 8 cheques of Rs. 2.3 crores each. The MPSIDC have filed 8 cases of cheating and fraud under Section 138 of the Negotiable Instruments Act & Section 420 of Indian Penal Code.
(4) The Induj Enertech also failed to pledge the security of Rs. 29.37crores of SMHPCL shares that it had agreed to by the terms of the settlement, although it became eligible for further public finance only because the MPSIDC withdrew the willful defaulter status, on the basis of the settlement with the MPSIDC. Instead it pledged the shares to the Power Finance Corporation, who accorded it a default guarantee on this basis, and thus extended its sovereign rating to the SMHPCL. Clearly, this constitutes fraud.
(5) The CAG has also indicted the Power Finance Corporation of irregularly giving Rs. 100 crores to the Shree Maheshwar Hydel Power Project.
(6) The Syndicate Bank has filed a suit against the SMHPCL for defaulting on Rs. 20 crores.
(7) The SMHPCL had transferred Rs. 106.4 crores of project funds to unconnected agencies and sister concerns without their being any project contracts and without their having done any work on the Project. Under RBI rules, this would constitute "diversion" and "siphoning". The erstwhile lead agency for the Project IFCI had stipulated that the entire sum with interest be brought back by the Promoters, and that no further public finance must be given before the same is done. However the same is yet to be complied with.
*No R&R Plan or land for the oustees, nor low cost electricity : Maheshwar another Enron in the making ? *
There is no comprehensive Rehabilitation and Resettlement Plan or identified agricultural land for the thousands of people of 61 villages to be affected by the Maheshwar Project, as per the Union Ministry of Environment and Forests. The electricity slated to be generated by this Project is too little and too high-cost, and because of the suicidal take-or pay power purchase agreement, Maheshwar is likely to be another Enron.
*Stop loot of public money and punish the guilty *
The people of the Narmada valley, under the aegis of the Narmada Bachao Andolan call upon the RBI to intervene in public interest, to ensure that persons responsible for the financial irregularities, whether from the promoter's group or from the FI's should be punished, the defaulted money should be recovered and any private placement / public issue by the Company or its holding company should be stopped in the light of the RBI notification dated 30th May 2002. The NBA also asks the RBI to do a forensic audit of the use of Rs. 106.4 crores that had been illegally transferred out of Project funds, and to censure the IDBI for pressuring the MPSIDC to waive Rs. 29.37 crores of S.Kumars defaults.
The NBA has asked the SEBI to disqualify and withdraw the CARE rating given to the Maheshwar Project and cancel the CARE registration, as well as advise the BSE and NSE to de-list the Induj Enertech Limited. The NBA has also asked the LIC, GIC AND IDBI not to put any further monies into the destructive Maheshwar project. The NBA warns that they will not permit the livelihoods and the Right to Life of 1,00,000 people to be ruptured and will struggle against the destructive Maheshwar Project determinedly, whatever be the cost.
Chittaroopa Palit, Alok Agarwal, Jagdish Patidar, Dinesh Kewat, Kadvijiji, Parvatibai