The CAG Report

We conducted our field work between August and December 2010,held entry and exit conferences with the concerned agencies,and also issued detailed Statements of Facts (SOFs) to the agencies,seeking their responses and comments,which have been appropriately considered in this report. Our main findings are summarised in the following paragraphs. Details are available in the activity- specific chapters.

Governance

In the case of India…,the Games became the property of the nation,rather than merely that of the IOA (Indian Olympic Association). This was,however,inadequately reflected in the subsequent constitution of the Organising Committee (OC).

In view of the Government guarantee for meeting the cost of the Games,it was essential for such stewardship to be fully under Government control. However,this model of management or financial control was not followed for the Games Project.

Despite serious objections from the erstwhile Minister,YAS,late Shri Sunil Dutt,Shri Kalmadi was appointed as the OC Chairman,based on a PMO recommendation of December 2004. This decision facilitated the conversion of the originally envisaged Government-owned OC into a body outside Governmental control,without commensurate accountability to Government and concomitant controls to ensure propriety and transparency (despite full financial guarantee and funding from Government).

In the absence of a single point of authority and accountability and the lack of a clear governance structure,a multiplicity of co-ordination committees were created,disbanded,and reconstituted at different points of time. This approach was not methodical,consistent and effective,and also led to complete diffusion of accountability.

Planning

There was a seven-year window from the award of CWG-2010 to Delhi in November 2003 to its hosting in October 2010,which was not appropriately utilised. The OC itself was registered only in February 2005,while EKS was appointed by the OC as the consultant for preparation of venue briefs and site plans only in July 2006. This led to cascading delays in all subsequent activities….

Finance

Even while approving submission of the IOA bid in May 2003,and providing financial liability and deficit guarantees in September 2003,GoI did not have a clear and realistic assessment of the estimated cost of hosting the Games. The IOA bid of May 2003 estimated an all-inclusive cost of just Rs 1200 crore (after setting off operational expenses against estimated revenues from hosting the Games). By contrast,the overall budget estimate for CWG-2010 for GoI and GNCTD (including MCD,NDMC and other agencies) as of October 2010 was Rs 18,532 crore. The highly conservative and unrealistic size of the original budget envisaged in the May 2003 bid led to revisions of estimates at very short intervals even up to September 2010. We also found numerous instances of delays in grant of budgetary and financial approvals by the GoI.

oc Decision Making

The internal control environment and decision making structures within the OC were highly inadequate. The state of documentation in the OC was so inadequate that we are unable to derive assurance as to either the authenticity or the completeness of records. Contract management by the OC was irregular and deficient. The processing of certain sensitive contracts/ cases was allocated in an arbitrary and ad hoc manner to certain officials who had no linkages with the concerned Functional Area. Such action diluted the process of due diligence and scrutiny. We found numerous instances of single tendering,award on nomination basis,award of contracts to ineligible vendors,inconsistent use of restrictive Pre-Qualification conditions to limit competition to favour particular vendors,inadequate time for bidding,cancellation and re-tendering of contracts,and inexplicable delays in contract finalization,all of which seriously compromised transparency and economy. Further,there were numerous deficiencies in the appointment of external consultants and advisors and management of the multiplicity of contracts thereof.

Revenue

The OCs performance in revenue generation was consistently poor across all major revenue streams. It could generate committed sponsorship revenue of just Rs 375.16 crore (against the target of Rs 960 crore),out of which nearly 67 per cent was from Government agencies/ PSUs. No revenue has been received on account of merchandising and licensing rights. The agreement for national broadcasting rights between OC and Prasar Bharati was signed only on 23 September 2010,resulting in generation of just Rs 24.70 crore of revenues for the OC.

Consultancy

Event Knowledge Services (EKS) was awarded five consultancy contracts relating to venue appraisal/ briefs,project monitoring,games planning and workforce (awarded to an EKS consortium) during 2005-08. Three of these contracts were awarded on nomination basis,facilitated by strong patronage from the CGF (with which EKS had a close link). Tendering conditions for the other two contracts were tailored to suit EKS. We are also unable to verify the need for this multiplicity of contracts,and the possible overlap between the deliverables from different contracts. The overlays contracts were signed at exorbitant rates,causing huge financial loss to the OC (and the GoI).

Ceremonies

We found numerous irregularities in the appointment of contractors/ vendors for various ceremonies. The OC made highly suspect payments of 386,237 to two little known entities AM Films UK Ltd and AM Car and Van Hire Ltd for diverse and unconnected services for the QBR Launch ceremony. The assignment of work and payments therefore were highly questionable; associated approvals and clearances were obtained and payments made with uncommon haste. Large amounts were also paid in cash,perhaps to avoid leaving a transaction trail. The role of Shri TS Darbari and Shri Sanjay Mahindroo,who were unrelated to OCs Ceremony Functional Area,in the QBR Launch Ceremony is also questionable.

Technology

We found that planning for TSR (Timing,Scoring and Results system) was badly delayed and initiated only in January 2009. There were clear and repeated interventions at different stages to steer the TSR contract towards Swiss Timing Omega and eliminate MSL,Spain. OC was left with a single financial bidder,effectively eliminating any opportunity for competitive pricing of TSR. This facilitated award of the TSR contract to Swiss Timing Omega at an exorbitant cost of Rs 135.27 crore (compared to just Rs 39.84 crore equivalent at Melbourne CWG-2006 from the same vendor).

Workforce

We found serious deficiencies in the award of the workforce consultancy contract to a consortium of E&Y and EKS. The tendering process was clearly tailored to favour EKS. We found that the OC managed the work force in an arbitrary and ad hoc manner,leaving ample scope for patronage,favouritism and nepotism in the appointment and promotion of officials. Security and reference checks were not carried out for most employees. Certain employees,whose past records should have rendered them unfit for appointment in the OC,were nevertheless appointed.

Games Village

Except for strengthening of the Akshardam bund,there was no evidence of compliance with the upstream flood mitigation/ abatement measures on the river Yamuna stipulated by the Ministry of Environment and Forests while according conditional environmental clearance. We could also not verify compliance with the orders of the Honble Supreme Court,which had permitted construction on the basis of an assurance regarding monitoring of construction activities by a PM-appointed committee in association with Dr RK Pachauri.

Media Services

Although Doordarshan was indicated as the Host Broadcaster in the May 2003 bid,it was formally notified by the OC only in March 2007. The award of the broadcasting services contract by PB to SIS Live was flawed on several counts. Only one bidder,SIS Live,was qualified on technical grounds,and the contract was awarded on a single financial bid,without any competition.

(Full report,cag.gov.in)