Know and Understand complete Shunglu Report on CWG – Shunglu Committee Submitted First Report to Government of India

Know and Understand complete Shunglu Report on CWG –
Shunglu Committee Submitted First Report to Government of India -

Citizens of India Suffered loss of Rs.135 Crore

The Committee said that based on documents available it has concluded that the actual cost of the contract awarded to SIS LIVE was at best about Rs. 111 crore, thus resulting in a profit of at least Rs. 135 crore for SIS LIVE and Zoom Communications

Prime Minister Manmohan Singh had on October 15 constituted the committee to be headed by Mr. Shunglu, a former Comptroller and Auditor General, to investigate and report within three months its findings.

What was the Purpose or Duty of the Shunglu Committee a 2 member committee?


Answer –
To Look into issues relating to organizing and conduct of common wealth games Delhi 2010 and lessons to be learnt for the future.

The Host City Contract was signed as early as November 2003.
The OC took its own time to communicate formally to the Ministry that Prasar Bharati would be the Host Broadcaster.

The OC communicated the entrustment of Host Broadcasting role to Prasar Bharati in March 2007, over three years after the signing of Host City Contract.

Indian Olympic Association / Organizing Committee together with the Government
of National Capital Territory of Delhi and Government of India entered into Host City Contract with the Commonwealth Games Federation on 13th November, 2003 for holding of XIX Commonwealth Games in Delhi during 03-14 October 2010.

The Host City Contract identifies and binds the five key stakeholders: CGF, IOA, OC, GNCTD and GOI, who are responsible for the successful delivery of the XIX Commonwealth Games 2010.

The major responsibilities of the stakeholders were as follows:

Sports Infrastructure -
Ministry of Youth Affairs & Sports, Govt. of Delhi; Delhi Development Authority (DDA) and New Delhi Municipal Council (NDMC)

City Infrastructure -
City Government ; Municipal Council of Delhi (MCD) and NDMC

Conduct and Delivery of Games - Organizing Committee (OC)

Host Broadcasting and Media Press -
Prasar Bharati and Ministry of Information & Centre Broadcasting

Tourism and Accommodation - Ministry of Tourism Tourists

Security - Ministry of Home Affairs

This report contains the findings and conclusions of the High Level Committee (HLC)
on the management of the responsibility relating to Host Broadcasting.

The Chairman OC, CWG 2010 formally entrusted the responsibility of the Host Broadcaster to Prasar Bharati in March 2007.

The OC and Prasar Bharati entered into a ‘Right Holder Broadcaster Agreement’ in
September, 2010 which granted Television Broadcast Rights and Radio Broadcast Rights for the Games within India to Prasar Bharati

The agreement also provided for revenue sharing between OC & Prasar Bharati of all Television Broadcast Rights.

The net revenue realization arising from International Broadcast Rights sales by the OC from outside India was to be shared in the ratio of 70:30 between OC and Prasar Bharati and in the ratio of 60:40 for net revenue arising out of sale of Television and Radio Broadcast of the Games within India

The total approved expenditure for Host Broadcasting, setting up of International Broadcasting Centre and Media Press Centre was 482.57 crore. This included a loan of 187 crore to Prasar Bharati.

The Ministry constituted an Oversight Committee headed by Minister, I & B to monitor the progress for performing Host Broadcasting functions. The Oversight Committee met on six occasions till September 2010

First Report of HLC on Host Broadcasting – Know and understand the findings of Shunglu Report.

1.
Contracts were awarded by Prasar Bharati for various Host Broadcast activities without ensuring reasonableness of rates, overruling suggestions received.

2.
Prasar Bharati takes major decisions with the approval of Prasar Bharati Board. The Board is vested with the responsibility of general superintendence, direction and management of the affairs of the Prasar Bharati Broadcasting Corporation. Approval of the Board was not taken for many major financial and management issues relating to Host Broadcasting operations.

3.
“Vigilance inquiry found that from the year 2006 to 2009 there was exponential increase in payments made to the legal entities engaged by Prasar Bharati and 78% of these payments were on account of engaging senior private advocates at ad hoc rates.

The panel of regular advocates was reduced so as to create grounds for increased engagement of private advocates.
Unjustifiably high rates were paid to the advocates and in some cases; the payments made were significantly higher than the terms of engagement.
The whole process of engagement of senior private advocates was based on decisions taken by the CEO without the approval of the Prasar Bharati Board.”

4.
It is incumbent upon any agency to satisfy itself about the reasonableness of price of goods and services.
Prasar Bharati did not verify reasonableness of the rates quoted by the successful bidders, with help of various means available to it.
Prasar Bharati failed to do so despite being advised by the Ministry of me & B and its Finance wing. This trend was noticed in all major contracts.

5.
Most of the decisions to support and award the inflated bids were taken by Director General (Doordarshan) and the then Chief Executive Officer despite strong contrary view.That entire work in Doordarshan was being carried out in a highly unprofessional manner with complete lack of transparency.

6.
Decision to Telecast Games in India on HD format was questionable.

7.
Even after spending over 350 crore as Host Broadcaster, Prasar Bharati, today neither possesses adequate number of equipment required for HDTV nor is its technical staff fully trained and experienced to handle similar jobs in future.
If any other major international sports event is organized in the country at a future date, Prasar Bharati may again have to fall back upon foreign consultants, Broadcasting Companies and service providers!

8.
The HLC has come across instances where the HB Project Cell was repeatedly obstructed and overruled by the CEO / DG (DD) on matters of contract performance and additional benefits to the contractor, in particular, SIS LIVE.

9.
The procedures and best practices in the selection of service providers were ignored or bypassed to favor certain entities.

10.
The technical staff of Doordarshan had confirmed their capacity and readiness to cover the production of 10 out of 17 events in Commonwealth Games, Delhi 2010.
Coverage of the remaining 7 events and Opening and Closing ceremony, which required specialization, was proposed to be outsourced.
Despite initiation of preliminary work for covering 10 events in-house in the year 2007 with the assistance of an international consultant hired by OC, this decision was abandoned by Prasar Bharati without any recorded reasons.

11.
In the Commonwealth Youth Games, Pune, 2008, efforts were made to award contract for Host Broadcasting to SIS Outside Broadcast Ltd. UK which was declared as the only technically qualified bid out of 10 responses received in the year 2008.
The tender process was discharged as Central Vigilance Commission had found the eligibility criteria flawed and unduly restrictive.
The CWYG were covered in-house by Doordarshan at a cost of 7.50 core against the bid amount of 42.30 crore of SIS Outside Broadcast. Irregular award of contract at a cost of 1.6 crore to Zoom Communications, Delhi for the hiring of broadcast equipment in CWYG, Pune 2008 was also adversely commented upon by Central Vigilance Commission.

12.
As per the contract signed with SIS LIVE, the entity was to provide a ‘turnkey solution' for the functions related to generation of basic feed, broadcast venue operations and services and training of PB staff.
The functions related to broadcast venue operations and services were not performed by SIS LIVE and were outsourced by Prasar Bharati to other agencies through separate contracts.

13.
Prasar Bharati did not heed the lessons of the CWYG, 2008 where it had glaring evidence of a highly inflated bid by SIS LIVE which was almost six times the actual in-house cost of production and coverage by Prasar Bharati.
It did not put in place systems to address the concerns voiced by the Central Vigilance Commission on the contracts for CWYG, 2008.

14.
Doordarshan possessed the capability to coordinate and broadcast ten of the seventeen games.

15.
The Executive Director of Zoom Communications (Shri Vaseem Ahmed Dehlvi), to whom the SIS LIVE ultimately entrusted the entire production and coverage work ‘back-to-back’ at a price that was 69 crore less than the Prasar Bharati-SIS LIVE contract, attended all meetings in Prasar Bharati along with the representatives of SIS LIVE before the signing of contract. After the contract was signed, he continued to represent SIS LIVE in all meetings, though he was working for Zoom Communications.

16.
These circumstances clearly establish that DG (DD) and CEO Prasar Bharati were aware of the simultaneous assignment of Production and Coverage responsibility by SIS LIVE to Zoom Communication; that they were two faces of the same coin and that their protestations to the contrary, post-survey operations by Income Tax (5th October, 2010), were disingenuous.

17.
A clear nexus between SIS LIVE, Zoom Communications and elements of Prasar Bharati management was apparent from the sequence of events, starting from CWYG, Pune 2008.

18.
It was also gathered that on several occasions the HB Project Cell officers were reprimanded in the presence of the contractors for insisting on compliance to the terms of the contract. The representative of SIS LIVE (effectively Zoom Communications) even asked for transfer of some of the staff members in the HB Cell.

19.
Prasar Bharati informed the Ministry and Oversight Committee (Meeting of 22nd October, 2009) that the bid for Production and Coverage of SIS LIVE (246 crore) was 26 percent lower than the bid quoted for similar components and activities during Request for Information.
This was a misleading, false and factually incorrect statement.
Apart from the fact that the figure of 6.55 million GBP ( 52 crore) quoted by BBC Outside Broadcasts for production and coverage of 12 events was never brought on record or discussed, the offer of $84.93 million ( 336 crore) by HBS-IMG consortium was for 'turnkey' solution which included overall management, IBC, production, venue operations, other operational items and management fee.
The amount quoted for Production and Coverage, as a line item, was only $43.18 million (172 crore).

20.
The contract for Production and Coverage of CWG, Delhi 2010 was awarded to SIS LIVE (partnership firm of SIS OB and SIS UK based firms) at a cost of 246 crore on the basis of a single bid as the other 9 responses were either rejected or entities backed out due to unduly restrictive and stringent conditions.

21.
The contract was assigned by SIS LIVE to Zoom Communications for 177 crore on the same day on which the contract was signed between Prasar Bharati and SIS LIVE.
This was in gross violation of tender conditions. SIS LIVE also issued a Press Release on 8th March, 2010 announcing award of a “key and exclusive contract for Broadcast Services, including technical equipment and diversified Production & Coverage services for the 2010 Commonwealth Games in India, to South East Asia’s largest broadcast services company, ZOOM Communications Ltd. India”.

22.
SIS LIVE had provided a list of 62 foreign based key personnel, in the technical proposal, who were to be deployed in the CWG Delhi, 2010.

23.
about 23 foreign based key personnel may have attended the Games. As per the international practice, if it is established that key staff were included in the technical proposal without confirming their availability, the firm should be disqualified.

24.Similarly SIS LIVE had asserted in the technical proposal that about 1300 personnel would be required to be brought from outside the country for the Games and corresponding cost (travel and accommodation) were booked in the financial bid.
During negotiations with SIS LIVE on these costs, the company had refused to reduce the same. Comparison with the list of persons provided accreditation by OC revealed that SIS LIVE / Zoom Communications had brought only about 858 persons from outside the country and the remaining persons were outsourced locally.

25.
As per the RFP, the selected entity was to provide coverage to Queen’s Baton Relay in 21 countries but SIS LIVE produced news stories from only 16 countries

26.
Under the provisions of the contract and international practice, the entity had to set up a separate site office during games for overseeing the operations at various venues.
No such separate office was set up by SIS LIVE and instead SHAF and Global Television the contractors for setting up International Broadcasting Centre were pressurized to permit SIS LIVE to set up site office in Hall no. 8 and 9 at ITPO which space was meant for IBC operations. Furniture purchased by Prasar Bharati at a cost of 20.71 lakh was provided to SIS LIVE for the office.

27.
The financial bid of SIS LIVE (P & C) and Global and Shaf (IBC) had a provision of 4.72 crore and 0.50 crore in their financial bids for food for its crew and staff.
SIS (Live) stated that amount of 4.72 crore included in the bid was meant for per diem cost during Games period and food cost prior to Games. In the weekly review meeting but Prasar Bharati, however, provided free catering facilities at venues to the employees of SIS LIVE and Global and Shaf (IBC) at a cost of 1.10 crore, which was inadmissible and constituted ‘benefit’ to these entities.

28.
SIS LIVE was required to provide commentary equipment for 70 units proposed to be set-up at various venues in accordance with the provisions of RFP and contract signed with the entity. Equipment for setting up of only 31 units was provided by SIS LIVE but no action for breach of contract was taken.

29.
Ignoring the advice given, Prasar Bharati hired HDTV specific broadcast equipment from SIS LIVE at a cost of 6.50 crore for covering Commonwealth Games within the country.
The hiring was done at exorbitant rates and aggregated to about 50 percent of the cost of purchase of state of art equipment of comparable quality.
It will be worthwhile to note that no other Right Holding Broadcaster, other than DD, hired equipment from SIS LIVE on rate card for the purpose of broadcasting.Based on documents made available, the High Level Committee has concluded that the actual cost of the contract awarded to SIS LIVE was at best about 111 crore; thus resulting in a profit of at least 135 crore for SIS LIVE and Zoom Communications.

30.
SIS LIVE secured the contract for 246 crore; assigned it to Zoom Communications for 177 crore; provided no service and made a profit of the difference

31.
Government overpaid at least 135 crore in a contract of 246 crore.

32.
The responsibility for providing ‘undue benefit’ to SIS LIVE and Zoom Communications is primarily that of the then CEO, Prasar Bharati and Director General (Doordarshan).

33.
The HLC estimates cost of this contract at below 100 crore

34.
Based on the Balance Sheet of Zoom Communications Ltd. and the statements made before Income Tax Authorities, the profit of Zoom Communications from this contract is estimated at 65 crore. Hence, acknowledged costs are at the most 111 crore.

35.
Shri Vaseem Ahmed Dehlvi, Executive Director, Zoom Communications, has emerged as a ‘key’ actor and link in this case. He reportedly had direct access to CEO, Prasar Bharati (Shri B.S.Lalli) and DG (DD). He reportedly could ‘bully’ inconvenient officers in Prasar Bharati and Doordarshan and ensure that ‘inconvenient ‘questions relating to deliverables as per contract were not raised or, if raised, were summarily brushed aside with the active support of the two top functionaries of Prasar Bharati and Doordarshan

36.
Loss to Government of India - Government of India / Prasar Bharati suffered a loss of at least 135 crore by awarding the contract for Production and Coverage of CWG, Delhi 2010 to SIS LIVE (partnership firm of SIS OB and SIS UK based firms) at a cost of 246 crore on the basis of a single bid.

37.
Government may decide on action against the then CEO, Prasar Bharati (Shri B.S.Lalli) and Director General (Doordarshan) (Ms. Aruna Sharma, IAS) and others who acted in concert with them for providing undue gain to SIS LIVE /ZOOM Communications Ltd.

38.
Certain actions seem to attract penal provisions under the Indian Penal Code and Prevention of Corruption Act. This aspect also needs to be separately investigated.

Reality Views by sm –
Wednesday, February 02, 2011