NOIDA & builders: Corruption and complicity; will politicians and IAS officers pay?

NOIDA (New Okhla Industrial Development Authority), the biggest development authority in Asia, has been in the news over the decades for various wrongdoings. Now for the first time a CAG report tabled in the Uttar Pradesh Assembly in December 2021, has uncovered the extent of the malpractices, corruption, loss of revenue to the state and undue benefits allowed to builders.

NOIDA did not prepare annual report of its activities for 20 years (since1999).Naturally, none of the reports therefore could be placed in the UP Assembly. The cash rich organisation did not institute any system of internal audit. Nor did they prepare their annual financial statements properly.

CAG, as per convention, does not question ministerial liability in case of wrong doings. It is the Public Accounts Committee (PAC) which can examine aspects that may not be explicitly mentioned in the Report. It is assumed that extensive wrongdoing in NOIDA was not possible without active support and encouragement of the political bosses. It remains to be seen if questions about the accountability of political masters are raised in due course.

CAG’s Report (1996) on the fodder scam in Bihar, so far this author knows, has not been discussed yet in the PAC of the Bihar legislature. However, alongside CAG’s examination of records, CBI conducted a criminal investigation and used the findings of CAG to build its case.

Based on their investigation of the culpability of government functionaries and the private parties that colluded in the fodder scam frauds, CBI found that political bosses were involved in providing cover to corrupt officers who worked at their bidding and benefited from the loot. They filed cases in the Special CBI courts on that basis and scores of IAS officers and concerned ministers in charge and the chief minister, who was also the finance minister, were sent to jail.

Considering the magnitude of CAG’s findings in NOIDA, the Uttar Pradesh Government is expected to move fast for criminal investigation by an independent agency, if necessary, by taking help from CAG and other specialists so that wrongdoers can be identified and booked for punishment as was done by CBI in case of the fodder scam.

Traditionally, Audit Reports are not discussed on the floor of the House till the PAC submits its reports. This is a long-drawn process. In this background, it is hoped that PAC takes up this Report on priority and finalises its recommendations.

The PAC discussions are in camera and so media cannot follow up on this matter. Public and the legislators will eagerly wait for the outcome of PAC examination and their recommendations. But pending such discussions, options of criminal investigation, in the context of audit findings is still open to the Government as Bihar’s Fodder Scam showed.

CAG’s repeated requests to the Uttar Pradesh Government for entrusting NOIDA’s audit was stonewalled till 2017 except for a brief interlude. Successive UP Governments also ring fenced NOIDA’s operations from public scrutiny. The labyrinth of corruption, fraud, unfair practices and subversion of rules and procedures therefore remained hidden from the public.

With no CAG audit, no internal audit, no annual performance report to the Assembly and no financial statements, NOIDA management and successive UP Governments were rarely held accountable for mismanagement and corrupt practices;and people were deprived of a modern industrial and manufacturing hub that would have generated employment and brought prosperity for UP.

The audit report (Report no 6 of 2021, AG UP) came out in 2021 after three years of work in the Lucknow office of the Principal AG (Audit)II UP. This Performance audit Report of NOIDA by CAG covers eleven years of NOIDA’s work (2006-2017) and runs into more than 460 pages.

While the Government in good faith trusted an autonomous body to deliver policy goals and dispensed with bureaucratic controls associated with government schemes, autonomy became a license for abuse of power. NOIDA did not accord priority to the key policy goal of industrial development but to developing residential projects, commercial complexes and farmhouses.

The Industrial and infrastructure department (IIDD) oversees NOIDA on behalf of the Government of Uttar Pradesh. The Board of NOIDA headed by an IAS officer as Secretary, makes policies, considers the risks and prepares strategies. The Board made major amendments in NOIDA’s Master Plan (MP) that diluted important provisions of Plan Regulations, 2010 by substituting or omitting clauses with undefined activities. Such amendments conferred greater discretionary powers to the Board.

CEOs abused the discretionary power and showered undue benefits on ineligible parties in allotting plots, pricing them, overlooking all deviations from required standards, not monitoring project implementation and repossessing land from under-performing units that was possible due to collusion among the applicants, plot holders and the officials.

The Board looked the other way when NOIDA management did not submit the terms and conditions of the scheme brochures prior to their launch under Group Housing and Commercial categories. In fact, some of the scheme brochures were not even submitted to the Board for post facto approval. NOIDA management did very much what they liked.

Again, NOIDA routinely indicated higher FAR (permissible Floor Area Ratio) and GC (Ground Coverage) for various categories of land use over and above the notified norms in the scheme brochures year after year without approval of Board to give undue favour to the allottees for Commercial and Group Housing categories.

NOIDA’s Planning, Project Property, Finance and System wings did not work like a team. Neither of them monitored progress in completion of projects effectively so that penalty could be levied if projects were delayed. In the process NOIDA lost revenue and the goal of speedy project implementation was the casualty.

Weak and inadequate MIS aggravated the situation as senior management would not get timely reports of performance from inception to the completion of projects and take advantage of the quantitative techniques to learn from mistakes and quickly set them on the right course.

NOIDA management did not provide all the sampled cases to the audit team. In many cases, CAG’s observations and recommendations were responded evasively or not responded. Where the recommendations are accepted, no time line has been given. No one knows when and how NOIDA will take action on such recommendations.

Another urgent action needed is to revamp NOIDA with a suitable organisational structure that facilitates corruption free, transparent and professional delivery of the intended goals. Wherever provisions of Acts and the Master Plan have been diluted, these need to be removed/amended to bring back focus on industrialisation.

Internal controls and risk management have to be suitably redesigned to prevent wrong doing as happened earlier. For this purpose, a composite team of specialists from various fields should be assembled to suggest how the Augean stable can be cleaned and the systems rejigged to give priority to the main objectives of NOIDA. The position of the Financial Advisor in NOIDA should be suitably upgraded to provide adequate safeguard against misuse of power.

(The writer was Director General in the office of CAG)

(This article was first published in National Herald on Sunday.)