Former Municipal Administration Minister SP Velumani of the AIADMK has been accused of “large-scale favouritism” by “abusing his official position” in the award of tenders in the Chennai and Coimbatore Corporations. The FIR registered on August 9 by the Directorate of Vigilance and Anti-Corruption (DVAC) against Velumani, an important AIADMK leader and their strongman in Coimbatore, shows how the turnover of 10 companies saw massive growth in a span of few years when he was a minister.
The ten companies named are- Senthil and Co, Maha Ganapathi Jewellry, Vardhan Infrastructure, KCP Engineers pvt Ltd, CR Constructions, ACE Tech, Aalayam Foundation, Hosur builders, Constronics India, Constromoll goods and Aalam Gold.
According to the DVAC, CR Constructions saw a growth of a whopping 11363% between FY 2012-13 and 2018-19. Constronics India, which started in 2014, went from a turnover of Rs 0.86 crore in 2015-16 to Rs 42.11 crore in 2017-18 - a growth of over 4700%. Vardhan Infrastructure went from registering a turnover of Rs. 2.02 crore in 2012-13 to Rs 66.72 crore in 2018-19 - growing more than 3200% in a span of six years.
The DVAC investigation started after Arappor Iyakkam, an anti corruption NGO based out of Chennai had filed a complaint on September 12, 2018 that a few companies had won 53 contracts worth Rs 130 crore floated by the Chennai and Coimbatore Corporations. Two days before that, DMK leader RS Bharathi too had filed a similar complaint. The DVAC has filed the FIR not just against Velumani, but against his brother P Anbarasan and his business partner K Chandraprakash. The DVAC says that projects worth Rs 462 crore in the Chennai Corporation and worth Rs 346 crores in the Coimbatore Corporation were awarded to companies linked to Velumani.
Velumani was Municipal Administration Minister of Tamil Nadu from 2014 to 2021. The FIR says that he allegedly misused this position to award contracts to companies run by his family, benamis or friends and thereby violated Rule 23 of the Tamil Nadu government business rules which prohibits any conflict of interest for ministers.
Velumani was a registered contractor from 1991 to 2001 with the Coimbatore Municipal Corporation and has intricate knowledge of how the system works. His family started Senthil & Co, named after Velumani’s brother, in 1999. As he contested elections in 2001, Velumani resigned from this firm. However, in the later years, many companies were formed and they bid for public projects.
According to the DVAC, there were violations in three stages of the tender process- bidding, negotiation and execution of work. At the bidding stage, DVAC’s preliminary investigation found that the accused companies allegedly colluded with one another and submitted their online bids using the same standard internet protocol (IP-IV) address on the same date, one after the other. The DVAC alleges that this implies that the accused firms operated from the same computer, thereby establishing their collusion and violating the tender bidding rules. The FIR states that collusive bidding is “anti-competitive in nature” and in violation of rule 31 of the TN Transparency in Tender Rules, 2012. “These large scale malpractices in tenders happened with the inducement of the former minister on the senior officials of the Municipal Corporations (sic).”
The FIR also details alleged malpractices in the tender negotiation and execution of works process, citing the 2016 and 2020 Comptroller and Auditor General of India (CAG) reports.
The DVAC alleges, “From the above material circumstances, it is revealed that A-1 SP Velumani...had dishonestly and fraudulently misappropriated the funds involved in the tenders. Further he violated conduct Rule 23 of the Tamilnadu Government Business Rules and Secretariat Instructions, which specifically prohibits the Minister in charge of a Department from acting in any manner in which he has a conflict of interest. Further he had transpired and induced the officials of Municipal corporations to perform improperly and dishonestly a public duty in anticipation of or in consequence of accepting an undue advantage from their abettor contactors and their associated entities…”
It also alleges that there is prima facie material that A-1 (Velumani to A-17 (unknown others and unknown officials of the Chennai and Coimbatore Corporations) entered into a criminal conspiracy between 2014 and 2018 in “ injudiciously awarding tenders” in bus routes, storm water drains, and contracts pertaining to outsourcing of staff for the Health Department and other works.