The purported transfer of around 50,000 square meters of land at the Verna Industrial Estate by Goa Industrial Development Corporation (GIDC) to US based multinational Watson Pharmaceuticals Inc smacks of a major scam that while causing losses in crores of rupees to the GIDC; has apparently benefitted its officials in unquantifiable amounts. GoaChronicle.com reports…
The scam began on 31st May 2006 when one S K Dessai applied for a plot of land at the industrial estate to set up a warehouse and the GIDC at its board meeting held on 3rd August 2006 allotted plot No. U03 admeasuring 35,000 square meters to Dessai. Significantly though as per GIDC norms registration with DITC is mandatory, the same was not sought from Dessai.
The land was allotted to Dessai at revised rate which was Rs. 750 per square meter.
Seven and a half months later, on 24th January 2007, Dessai wrote to the GIDC presumably asking that the land allotted to him be transferred to Mehul Developers Pvt. Ltd. However, as no transfer of land can be undertaken till outstanding dues are paid, on 16th February 2007 GIDC is paid Rs. 42 lakhs as lease premium and Rs. 2.7 lakhs as lease rent vide receipt No. PNJ 1282. What is not clear is whether this amount was paid by Dessai or Mehul Developers.
Significantly, a day prior to the above referred payment, the GIDC at its board meeting allotted the same plot No. U03 to Mehul Developers and what is relevant is the fact that while the agenda note for this meeting mentions Dessai as the party, the minutes of the meeting record the party to which the plot is allotted as Mehul Developers. While the project has changed from warehousing to IT/ITES enables services, the cost remained the same and GIDC officials did not bother to cross check this anomaly.
Subsequently, on 1st March 2007, GIDC issued an allotment letter to Mehul Developers where the lease premium is quoted to be Rs. 600 per square meters even though the new rate of Rs. 750 per square meters had come into effect from 3rd August 2006.
15 days later, on 16th March 2007, Mehul Developers applies to GIDC to split Plot No U03 into eight different plots as it wants to set up eight different units.
GIDC Managing Director A V Palekar vide a letter dated 24th July 2007 approves the splitting of Plot U03 into eight plots – U03C, U03D, U03E, U03F, U03G, U03H, U03I and U03J – without verifying the project reports. More significant is the fact that the constitution of new companies is not checked even though this would attract transfer fees which would be revenue to the GIDC.
On 29th September 2008 Mehul Developers applies for transfer of its plots to BOSCH. The date is very relevant because from the next day onwards a ban on transfer of bare plots – meaning plots that have not been utilized by the allottees comes into effect hence to circumvent this, the application is made one day earlier.
On 19th November 2010, GIDC Deputy General Manager William Borges writes to Mehul Developers transferring its eight plots to Watson Pharm along with additional 15,000 square metres of land allotted to Vrushal Enterprises, subject to some conditions. While the rate of transfer of land is correct, the amount outstanding from Mehul Developers is deliberately down sized. However, the most shocking aspect of this transfer is the fact that it had not been approved by the GIDC board as it is not reflected in any of its minutes. Though in February this year, the Task Force identified Plot No U03 as unutilized plot, as per a reply given to the Goa Legislative Assembly in March this year, it is stated that this plot is transferred.
The question that needs to be asked is how the transfer was affected and who benefitted from this transfer and to what extent?
What is clear is that in this whole scam, the GIDC has suffered heavy losses by way of loss of transfer fees, lease rent and penal interest as its officials have bent backwards to protect either Mehul Developers or Dessai.
Given the GIDC’s procedure, from 3rd August 2006 when the plot was initially allotted to Dessai till 15th February 2007 when it was allotted to Mehul Developers, the lease rent works out to Rs. 2.03 lakhs and the interest on the outstanding lease premium calculated @ 11% works out to Rs. 17.32 lakhs. The penal interest on delayed payment of lease premium installment works out to Rs. 37.13 lakhs, thus making a grand total of Rs. 56.52 lakhs. If one adds to this the 20% transfer charges which works out to Rs. 52.50 lakhs, the loss to GIDC works out to a whopping Rs. 109.04 lakhs.
In case the GIDC had to consider the allotment to Mehul Developers as a fresh allotment, then the mathematics would change. In the first place, GIDC would have to collect Rs. 56.52 lakhs from Dessai for holding the plot for a year and then charge Mehul Developers at the rate of Rs. 5 per square meter as application fee, which was not done.
Besides, the charge applicable would have been Rs. 750 per square meter as it was a fresh allotment and not Rs. 600 per square meter as shown in the GIDC records thus, the GIDC would have earned additional Rs. 52.5 lakhs on this count itself.
The lease installment from Mehul Developers was overdue from 2008 and it works out to Rs. 52.5 lakhs and not Rs. 42 lakhs as mentioned by GIDS, hence there is a loss of Rs. 10.5 lakhs.
What is surprising is that though the total dues from Mehul Developers works out to around Rs. 504 lakhs, the GIDC has claimed on Rs. 18,05,752 and why such a huge amount has been written off has not been explained anywhere.
Even though this issue has been raised at even the Legislative Assembly, the authorities appear to be reluctant to act against those responsible for causing such huge losses to the government undertaking.
A local entrepreneur Blaise Costabir has written to the Chief Executive Officer of Watson Pharm listing out all the illegalities involved in the transfer of land to his company and appealed to his commitment to follow practices of good governance while desisting from being a party to illegal transactions and do a rethink on taking possession of this land, which would by right have to be reverted to the GIDC for fresh allotment.
Besides pointing out that transfer of bare plots of GIDC is barred from 30th August 2008, it has also been brought to the notice of the CEO that the transfer letter written by the official of GIDC does not have the Corporation’s sanction.
Watson Pharmaceuticals Inc. is a leading integrated global pharmaceutical company engaged in the development, manufacturing, marketing, sale and distribution of generic, brand and biologic pharmaceutical products. Watson is among the top five pharmaceutical companies in the United States, based on total prescriptions, and has commercial operations in many of the world’s established and emerging international markets. Their largest commercial market is the United States, followed by our key international markets including Western Europe, Canada, Asia/Pacific, South America and South Africa.