Leaving the greater scam unaddressed

The 2012-13 CAG audit reports on public sector units (PSUs), general and social sector, as well as economic and revenue sector tabled in Odisha Assembly expose a massive case of fraudulence that unfolded under the nose of the Odisha government-owned Industrial Infrastructure Development Corporation Ltd (IDCO). The report pulls the lid off a huge Rs 52,000 crore loan scam in which private promoters mortgaged and leased out government-owned land sub-leased to them in order to raise the humongous amount of money from financial institutions, chiefly public sector banks. Showing both utter callousness and perhaps even complicity with the private players, IDCO issued no-objection certificates to 26 MoU-based industries for mortgaging 13,846.238 acres of land allotted in order to raise loans. Spanning several other small and medium industrial units which were similarly issued NOCs during the 2001-12 period, IDCO pretty much sat on a scam worth Rs 52,000 crore that festered under its umbrella, either knowingly or unknowingly. Either way, it is a travesty of bureaucracy and a reminder of how government bodies have been functioning in this country for years now, allowing a nefarious nexus of shoddy corporate and profit sharks to benefit from their entente with officials within the state apparatus. IDCO, despite being a PSU, not only authorised the NOCs enabling the dubious industries to sublet land allotted to them at extremely subsidised rates, but also did so without ensuring adequate safeguards that the capital would be used for legal industrial projects in the state.

The CAG report therefore exposes a double whammy. One, illegal practices are rampant in state-owned organisations, financial and otherwise. And two, and this is even more dangerous, the money that was lavished on promoters is what the tax-payer has paid from his/her own pocket to contribute to the government coffer. That the capital was mostly raised from public sector banks and would not be retrieved despite the scam coming to the fore is the biggest problem that would go unaddressed in the ensuing brouhaha over breach of technicalities and illegal issuing of NOCs. Bad loans (or money lent out by public sector banks to private corporations for infrastructure development but never paid back) is the biggest challenge that is staring in the face of PSU banks. The biggest defaulters are also the best known names in the industry, such as United Breweries chief Vijay Mallya, whose now grounded Kingfisher Airlines owes hundreds of crores in loans to banks and as salaries to its staff. Recovering bad loans has become a nightmare for not just the PSU banks but also the government, which is now bearing the brunt of indulging in toxic levels of crony capitalism. Moreover, the renewed push towards corporate debt restructuring, basically a covert way legally waiving off staggering amounts of public money lent out to the private corporations, would only add to the sea of problems facing the country now.