AP govt doled out 'undue benefits' to Satyam: CAG

The Andhra Pradesh government headed by former Chief Minister Y S Rajasekhara Reddy doled out "undue benefits" to the tune of Rs 165.75 crore (Rs 1.66 billion) to erstwhile Satyam Computer in 2008 by allotting 50 acres of prime land at a throwaway price, said the Comptroller and Auditor General.

"This transaction was violative of the constitutional provisions of equality of opportunity and did not meet the requirement of transparency," the CAG said in its report submitted to the Andhra Pradesh Assembly on Tuesday.

The state government allotted 50 acres of land near Visakhapatnam to Satyam Computer in December 2008 at a concessional rate of Rs 10 lakh (Rs 1 million) per acre, though the company was entitled for only 7.5 acres at concessional rate and the rest at market value (Rs 4 crore to Rs 4.55 crore an acre).

"As against Rs 170 crore (Rs 1.7 billion) payable, Satyam paid meager amount of Rs 4.25 crore (Rs 42.5 million). The allotment of land in excess of the limits prescribed in the Information and Communications Technology Policy resulted in an undue benefit of at least Rs 165.75 crore to the company," the report added.

Satyam Computer got into trouble after its founder chairman B Ramalimga Raju admitted to fudging the accounts to the tune of about Rs 10,000 crore (Rs 100 billion) in January 2009.

The IT company was later sold to Tech Mahindra by the government-appointed board which took charge of Satyam following a Company Law Board directive.

The CAG also found fault with the Rajasekhara Reddy administration over awarding the development work of Machilipatnam Port to a consortium led by Maytas (a company promoted by Raju's kin), which caused a financial liability of Rs 335 crore (Rs 3.35 billion) on the state government. Reddy died in a helicopter crash in September 2009.

The port was originally proposed to be developed at Gogileru but later the location was shifted to Gilakaladinne.

"The government failed to insist on financial bids for both the locations. The additional cost of Rs 335 crore claimed by the consortium suffers from a major deficiency of vitiating from the tender process for developing the port on a revenue-sharing basis with zero investment by the government.

"Acceptance of the bid from the firm was objectionable as it did not submit any bid originally for Gilakaladinne," the CAG said, adding, the state government not only agreed to the payment of Rs 335 crore in January 2008 but also handed over 412.57 acres of land to the consortium in September 2008.