Subject: Business Ethics & CSR

The Commonwealth Games Scam

T.Y.BMS

Index

Topics 1) Introduction 2) The Projected Cost 3) The Setup 4) The Chief Officials Involved 5) The Present Criminal Proceedings & Happenings Of the Case 6) The Impact & Conclusion 7) Bibliography

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Introduction
The Commonwealth Games is an international, multi-sport event involving athletes from the Commonwealth of Nations. As well as many Olympic sports, the Games also include some sports that are played mainly in Commonwealth countries, such as lawn bowls, rugby sevens and netball. The
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Games are overseen by the Commonwealth Games Federation (CGF), which also controls the sporting programme and selects the host cities. The host city is selected from across the Commonwealth, with eighteen cities in seven countries having hosted it. A total of 6081 athletes from 77 Commonwealth nations and dependencies competed in 21 sports and 272 events. There are currently 54 members of the Commonwealth of Nations, and 71 teams participate in the Games. Till today 19 commonwealth games have been held. The 19th being held in India. The official mascot of the Games was Shera and the official song of the Games, Jiyo Utho Bado Jeeto was composed by celebrated Indian musician A.R. Rehman

Features Of the Event

The Games Village:
The Games Village is an expression of the hospitality being offered by Delhi 2010 to approximately 8,000 athletes and team officials from the 71 nations and territories of the Commonwealth. Spread over an area of 63.5 hectares

Training area:
For the first time in the history of the Commonwealth Games, a Training Area for athletes is located within the confines of the Games Village. Athletes will be able to train for four sports Athletics, Aquatics, Weightlifting/Para-sport Power lifting and Wrestling.

Security:
Security at the Games Village is provided by Delhi Police, with help from the National Security Guards (NSG) and the National Disaster Response Force (NDRF). Security coordination is looked after by the Venue Command and Control Centre of the Village.

Transport:

There are two free transport systems for athletes and team officials the Internal Village Shuttle and the Bus Service. The Internal Village Shuttle is an internal transport system, allowing easy movement around the entire Games Village, 24 hours a day.

Bidding:
The two main bidders for the commonwealth games 2010 were India and Canada. India won the bid with a maximum of 46 to 22 votes.

The Key Stakeholders:

1) Commonwealth games Federation: 2) Indian Olympic association 3) Organizing committee 4) Government of Delhi 5) Government of India 6) Ministry of external affairs 7) Ministry of Home affairs 8) Ministry of youth affairs and sports 9) Ministry of commerce and industry 10) Sports organization of India

The Projected Costs

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The initial total budget estimated by the Indian Olympic Association in 2003 for hosting the Games was 1,620 crores (US $361.26 million). In 2010, however, the official total budget soon escalated to an estimated 11,500 crores (US $2.56 billion), a figure which excluded non-sports-related infrastructure development. Business Today magazine estimated that the Games cost 60,000 crores (US $13.38 billion). The 2010 Commonwealth Games are reportedly the most expensive Commonwealth Games ever. The cost involved is as follows:

Cost Structure:

Sr. No
1) 2) 3) 4) 5) 6) 7) 8) 9) 10) 11)

Various Aspects

Investment

Stadium Facilities CWG Village Parking Facilities Opening & Closing Ceremony Beautification Of Streets Rent For CWG Headquarters Metro Expansion Airport Modernization A Power Plant In Bawana Hospitality Expenses

4,429 crores 1,038 crores 473 crores 800 crores 344 crores 175 crores 16,887 crores 5,400 crores 35,000 crores 2,273 crores

Total:

67,089 Crores
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Revenue Models
1) Sponsorship 2) Broadcasting Rights 3) Licensing 4) Tickets

Investment
450 Crores 299.7 Crores 59.99 Crores 29.97 Crores

Total:

893.66 Crores

The Money Involved:

1) The Central vigilance commission found discrepancies in tenders and alleged misappropriation amounting to Rs 8000 crore. 2) The cost of hiring the overlays etc alone amounted to Rs 600 crore 3) The 2010 commonwealth games is reportedly the most costliest commonwealth games ever.(Beijing being the 1st Rs 84000 crore) 4) The initial cost had shot up to 115 times the original projected budget. 5) Many other irregularities with the accounting amounted to Rs 2730 crore.

The Setup
The List of Scams:
According to the internal investigation report made after inspecting the games, the commission has noted that: 1) Wrong justification of rates while procuring items 2) Poor quality of construction 3) Improper tender process 4) Grant of work to ineligible firms 5) Payment of crores of rupees for non-existing items 6) Use of inferior products

Tampering Of Tender Process:

To ensure the smooth functioning of the scam the officials provided fake & leaked out some of the tenders. A few of the companies involved in the process are as follows 1) AM Cars ( United Kingdom) 450,000 Pounds 2) Sweka Engineering Works (India) Rs 34.53 crores 3) Sports Marketing and Management (Australia)- 11.8 million dollars 4) GL (France)-10 million Euros 5) Peddle Thorpe Architects- 2 milions pounds
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6) Prasar bharti-12 million Pounds

Recruitment Scam:
The CVC initiated an inquiry into alleged recruitment scam in the common wealth games OC following complaints that it showed ghost employees A total of 2100 people were shown having been worked from May 2009 to November 2010 and their different capacities and salaries running into several crores.

Overlay scam:
According to the OC the cost of the following accessories was: 1) Toilet Paper- Rs 3750/Unit 2) Air Conditioners Rs 4 Lakh/Unit 3) Hand Wash Rs 9975/Unit 4) Treadmills- Rs 9.75 Lakh/Unit 5) Washing Machines Rs 1.5 Lakh/Unit 6) Computers 1 lakh/Unit

The Stadium Scam:

The OC stated that the total cost of building the Jawaharlal Nehru Stadium alone cost Rs 961 Crores only, whereas the state of the art stadiums built at Nagpur & Hyderabad cost 84 crores each.

The OCs Defense:

1) Toilet Paper- 100 Rolls

2) Treadmills- Inclusive of the cost of Treadmills, Trainers & Other AddOns 3) The Rent is 1/3rd of the rent charged at other major sporting events 4) We did not order any washing machines and computers. 5) Air Conditioners: The Air conditioners are 11 tones each and the price includes operational cost like grills, cables support & power backup

The Officials:
The central vigilance commission (CVC) has recommended penalty of 92 Official for alleged corrupt practices:

Officials
21 13 10 10 9 8 5 5 5 4

Department
Central board of Excise and customs Minstry of railways Municipal cooperation of delhi Northern coalfield Ltd Bharat Heavy Electricals Ltd State Bank Of India Ministry Of Personnel PG Pensions Bank Of India
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Oriental Bank Of Commerce

The Chief Officials Involved

Suresh Kalmadi (The OC Chief):
Suresh Kalmadi (born May 1, 1944) is an Indian politician and senior sports administrator. He was formerly a member of the Indian National Congress. He is a Member of Parliament from Pune.

Early Life & How he got into politics:

Suresh Kalmadi studied at St. Vincent's High School, Pune in the state of Maharashtra in South West India; and then at Fergusson College, Pune. In 1960, he joined the National Defence Academy, Pune, and in 1964, he joined the Air Force Flying Colleges in Jodhpur and Allahabad. He served the Indian Air Force between 19641972 and was a recipient of eight medals in his career. After a premature discharge from the Air Force, Kalmadi ran a small fast food shop in Pune and was spotted by Sanjay Gandhi and was, along with several other young people, persuaded to join the Congress Party. Kalmadi has served effectively in various capacities with the Congress.

Political Career:
He was the president of the Maharashtra Pradesh Youth Congress from 1978-1980. He was a member of the Rajya Sabha for three terms from 1982 to 1996, and again in 1998. He was also elected to the 11th Lok Sabha in 1996, and to the 14th Lok Sabha in 2004. Presently, he is the sitting MP from Pune. During the tenure of P. V. Narasimha Rao as the Prime Minister of India, Suresh Kalmadi served as the Minister of State for Railways from 1995 to 1996
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He was the President of the Indian Olympic Association and Chairman of the Organizing Committee of recently concluded Commonwealth Games held in Delhi from 3 to 14 October 2010. On October 11, 2008, in Pune, Kalmadi was elected president of the Indian Olympics Association for the fourth time

Other Controversies
Formula One 2007:
Mr Kalmadi, as president of the Indian Olympic Association, signed an agreement to bring the Formula One Grand Prix to India in 2007. Later that year, the UK-based organizers Formula One Administration Limited signed a Rs 1600-crore contract in this regard with India-based JPSK Sports Private Limited. The scheme was later scrapped

List of Other Officials Involved:

1) TS Darbari: Expelled director general of the Commonwealth games OC. He has been arrested in the AM Cars Scam 2) Sanjay Scam 3) M Jeyachandran: Joint Treasurer, OC also arrested in the AM Scam 4) Sangeeta Welinkar: Personal friend & key aide of Suresh Kalmadi, Has been raided By CBI 5) VK Verma: Joint director general of the Commonwealth games OC. He has been arrested by CBI for involvement in the time keeping equipment scam.
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Mohindroo:

Expelled

joint

director

general

of

the

Commonwealth games OC. He also has been arrested in the AM Cars

6) Lalit Bhanot: Secretary General Of the OC of Commonwealth games . He also has been arrested by CBI for involvement in the time keeping equipment scam

Present Criminal Proceedings & happenings

1) CWG OC chairman Suresh Kalmadi's close aide, Bhanot was arrested along with OC director General V K Verma on February 23 for striking a Rs 107 crores deal with a Swiss firm -- Swiss Timing Omega in procuring the Timing, Scoring and Result (TSR) System for the Commonwealth Games held last year. 2) A charge sheet filed on May 20, CBI named Kalmadi, Bhanot, Verma and eight others including two companies.According to the charge sheet, the accused allegedly awarded the Rs 141 crores-contract to the Swiss firm to install a TSR system for the Commonwealth Games at an exorbitant cost, causing a loss of over Rs 90 crores to the exchequer 3) All the accused have been indicted for various offences, including those of criminal conspiracy under Section 120(B), cheating (Section 420), forgery (Section 468 & 471) of Indian Penal Code and the Prevention of Corruption Act. 4) Former OC chairman Suresh Kalmadi and two other officials were also arrested in the same case April 25. They are at present lodged in Tihar Jail.

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5) The CBI questioned Mr Kalmadi three times and raided his homes and offices in Delhi and Pune to gather evidence that he had functioned as the Chairman of the Scam Company that had run the Games. 6) Investigators say they found it easiest to nail Mr Kalmadi for the 141crore contract he gave to Swiss Timing for its timing equipment - the deal was inflated by 95 crores.
7) Income tax department of India has raided 30 locations in and around

Delhi in context of CWG 2010 scam. Amongst the most surprising locations being raided is the home of senior BJP leader Sudhanshu Mittal, whose nephew, Vinay Mittal, won major contracts for the Games through two companies. IT officials have seized documents including invoices and contracts for both the companies.
8) The Central Vigilance Commission of India has issued a 13 day

deadline to all involved agencies for reports on Commonwealth Games 2010. The CVC has shortlisted 22 construction projects of which 6 were allotted to PWD, 3 to MCD, 2 each to NDMC, RITES and CPWD. 9) Congress MP Shashi Tharoor & Ex-Ceo Prasad Bharti are also under the scanner.

The Impacts
Positive Impacts:
The commonwealth games had a huge positive impact on the country they are as follows: 1) Development Of Infrastructure 2) Generation Of Employment 3) Improved Transport & Road Network 4) Volunteering Culture 5) Creation Of Business Opportunities 6) Boost to Tourism Industry
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7) Improved Image Of the Country 8) Generation Of Foreign Capital

Negative Impacts:
The commonwealth games also had many negative impacts on the country due to various scams and scandals. They are as follows: 1) India perceived to be more corrupt after the commonwealth games scam. 2) The political environment changed. 3) The country suffered a huge strain on cost due to excess budget. 4) Increased Pollution, traffic jams & deforestation etc. 5) Unreliability of the country for future sporting events. 6) Displacement of tribals & farmers etc for power plant purpose. 7) Promotion of child labour, prostitution etc during the games.

Conclusion
Though not officially said we are not unknown to the reasons why the cost have been bloated or the scams & scandals grown to a great extent. Officials, Contractors & Politicians big and small have made off with a lot of the publics money by bribes & use of low quality materials etc. But yet the people involved in the scam have not been properly sentenced due to negligence & corruption. Even through all the scams & scandals India has made a name for itself in the world & hence forth it should strive for a better, organized and corruption free outlook for any such events in the future.
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Bibliography Information Collected:

From the Internet:
1) www.google.com 2) www.CWGdelhi2010.com
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3) http://en.wikipedia.org/wiki/Suresh_Kalmadi 4) http://en.wikipedia.org/wiki/Delhi_commonwealth_games_2010 5) www.cwg2010.com

Books Referred:
Business Ethics & CSR Govind Bhatt & Ria Rupali

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