CTS, L&T face DVAC heat over Rs 12cr bribe

CHENNAI: In a major embarrassment to US IT giant Cognizant Tech and construction major L&T, TN’s anti-corruption agency DVAC has registered a case in connection with an alleged Rs 12 crore bribe payment (shown as payment for ‘architectural enrichment’ in accounts) to CMDA official in 2014 to get plan approval for CTS’s KITS campus on near Sholinganallur.

The DVAC FIR named several top officials of Cognizant India and Larson & Toubro along with unnamed CMDA officials.

CTS India Ltd., constructed the largest building facility KITS Campus at Special Economic Zone (SEZ), Sholinganallur, through Larson & Toubro during the period between 2011 and 2016. The planning permit was a statutory approval that was required prior to the commencement of construction of the KITS campus. Despite that requirement, CTS applied for a planning permit on February 7, 2013, after the commencement of the construction of 14 months. The member secretary, CMDA after a lapse of eight months sent the file to the Government for approval on November 1, 2013, a required step in obtaining the planning permit for IT buildings. The file in turn was sent to the office of the Minister for Housing and Urban Development on November 14, 2013.

It was approved by the minister on June 26, 2014, after a lapse of nearly seven months, by that time the construction commenced and 40 per cent of the works were completed.

Mails mentioned bribe as ‘architectural enrichment’

According to the DVAC, the investigations by the US Department of Justice and the Securities and Exchange Commission confirmed that Cognizant’s former top executives directly participated in a criminal bribery scheme to obtain essential permits for critical SEZ facilities and that these executives falsified Cognizant’s SEC filings and sustainability reports to facilitate that scheme.

In its FIR, the agency named R Srimanikandan, former vice president (administration) & real estate officer, Cognizant India; T Sridhar Thiruvengadam, former chief operating officer, Cognizant India; V Ramesh, former construction division head, L&T, Chennai; Kannan, former business unit head of L&T, Chennai; MV Sathish, former executive vice president and head, building and factories, L&T Chennai, and current member of the board & senior executive vice-president, L&T; SN Subramanian, former construction head, L&T, Chennai and current head of L&T, India; along with unnamed CMDA officials.

On March 7, 2014, Cognizant’s former real estate officer Srimanikandan informed CTS former president Gordon J Coburn that Ramesh, L&T’s construction head informed him that Rs 12 crore was required to meet the demand of bribe by the CMDA officials to expedite the approval of planning permit.

The scrutiny of e-mail communications between L&T and CTS showed the active connivance of Kannan, Sathish, and Subramanian in the demand and engagement of third party liaison consultant to handover the bribe amount to the CMDA or Housing and Urban Development Department officials to get the planning permit.

On Jan 13, 2015, Srimanikandan sent an e-mail to Coburn, enclosing an abstract for the payment to be made along with the detailed variation claims in an Excel sheet. The mail contains a break-up for Rs 48.80 crore - Rs 26.20 crore for the actual works executed and Rs 22.60 crore mentioned as statutory approvals.

The final approved amount is Rs.47.3 crore. Later, Rs 12 crore was added by the CTS in the name of “architectural enrichment”. The amount finally arrived at Rs 59.38 crore, including Rs 47.3 crore for changes executed at the site and Rs 12 crore for ‘architectural enrichment’.

CTS was found to have paid Rs 59.38 crore to L&T to reimburse the bribe amount of Rs 12 crore, the amount already paid by L&T to the CMDA and government department officials, said the DVAC.