The Shunglu Committee, which went into the award of the coverage contract for the recently concluded Commonwealth Games has fixed the ‘fair value’ of the Rs 246 crore contract at just Rs 100 crore.
It has therefore, asked the government to recover “excess amounts” paid to the company or payable to it.
The UK-based firm, SiS Live has got only Rs 148 crore out of the Rs 246 crore promised to it under the coverage contract for the CWG that ended in October 2010. The contract ended up in a controversy after most of the contracts in the Games were subjected to scrutiny due to allegations of ‘gold plating’ and inflation.
“The cost of this contract is estimated at less than Rs 100 crore,” the Committee, headed by former Comptroller & Auditor General V K Shunglu said in page 18 of his report submitted on 29 January this year.
The Committee based its estimate on three different measurement criteria.
First was a 2007 bid submitted by BBC Outside Broadcast (which was acquired by SiS Live). The bid was for covering 12 events at quoted only Rs 52 crore.
“Providing for inflation, exchange rates and balance of work, the value of work could be estimated at Rs 80-85 crore,” the Committee’s first report says.
The second estimate is based on the statement of profit and loss and assets made by Zoom Communications, one of the several sub-contractors hired by SiS to implement the contract.
According to the Shunglu Committee, Zoom made declarations to the Income Tax authorities that it made Rs 65 crore of profits from the contract. “Hence, acknowledged costs are at the most Rs 111 crore,” it said.
The third is based on the cost projections of SiS Live itself.
Shunglu Committee went into the exact estimates of expenditure drawn up by SiS Live prior to the contract and checked how many of those expenses were actually incurred.
It, for example, found that while SiS initially estimated that around 1,300 people will have to be brought in from abroad, it only brought in 858 people during the coverage. Against 62 ‘key persons’ to be deployed according to SiS’s early estimates, only 23 were ultimately needed.
Against 21 countries in which Queen’s baton relay was to be covered, only 16 were ultimately covered. It also found that Prasar Bharti gave many ‘freebies’ to SiS such as food, wires, lights, furniture etc.. Because of all these factors, the Panel concluded that the total ‘fair value’ of the contract was just Rs 100 crore or less.