Is BIAL doing a Satyam?

Is BIAL doing a Satyam?
By: B V Shiva Shankar Date: 2009-03-04



Bangalore:
The new airport fudged records to argue that HAL Airport remain closed, and you shell out a steep user development fee, records with MiD DAY suggest

How much did the international airport cost?
BIAL's chameleon figures
>>Rs 2,470 to the high court
>>Rs 1,700 to its investors
So where did Rs 770 crore vanish?

Bangalore International Airport Limited (BIAL) is giving out conflicting investment figures to its investors and the high court.

Observers suspect BIAL inflated its investment figures to justify its demand for the closure of HAL Airport, and charge a high user development fee.

The company that built the Devanahalli airport told the high court it had spent Rs 2,470 crore on the project, while its balance sheet, in possession with MiD DAY, shows an investment of just Rs 1,700 crore.

Closure okayed

BIAL had argued forcefully that HAL Airport be closed so that revenue is not divided between two airports. The government conceded that demand in the face of opposition from prominent Bangaloreans.

"Enormous amount of investment made necessarily implied that there must be exclusivity for the use of the airport for a specified number of years so as to enable the investment be recouped," its affidavit said.

BIAL had claimed the interest on its investments worked out to more than Rs 500 crore a year.

As user development fee, it wanted to levy Rs 675 on outbound domestic passengers and Rs 1,070 on international passengers.

The government said the rates were high, but BIAL had argued, "It is inevitable to levy UDF as we have to recover the investment which is enormous." The airport is now charging Rs 260 and Rs 1,070 from domestic and international passengers as UDF.

Staff petition

Airports Authority of India Employees Union (AAEU) has filed a petition in the high court, accusing the company of filing a false affidavit and falsifying the statement of accounts.

The union had earlier urged the court to order re-opening the old airport.

The union has dug into the airport's records and found what it calls "serious irregularities".

"The amounts shown under heads like miscellaneous expenditure and incidental expenditure is dubious," said Stanley Sampathkumar, branch secretary, AAEU. "If its balance sheet is true, the company has committed perjury by giving a false affidavit to the contrary. If the affidavit is true, it has fudged the balance sheet."

B C Thiruvengadam, advocate for AAEU, said, "The court has allowed us to raise questions about the financial misstatement."

Govt has stake

The government holds a 26 per cent stake in the airport project, and has given it 4,000 acres. "Public money is involved and it is BIAL's duty to place all details before the people," Sampathkumar said.

The company has stated that it had invested Rs 2,470 crore, while concessionaires like hoteliers had invested Rs 2,000 crore, all adding up to Rs 4,470 crore. But this component of Rs 2,000 crore is not shown in the balance sheet.

While the total investment shown on the balance sheet is Rs 1,826 crore, cash and bank balances add up to Rs 122 crore, indicating that the actual investment was around Rs 1,700 crore.

Who's their auditor?

The audit firm that verified and certified the balance sheet is Pricewaterhouse Cooper, accused of helping Satyam pull off a multi-crore scam.

Responding to a petition arguing against the closure of HAL Airport, BIAL had filed an affidavit in April 2008, and the balance sheet for the year ended March 31, 2008 was filed in September 2008.

"It is a clear case of misleading the court and the public," said G R Mohan, who had filed the petition in January 2008. "Only a thorough investigation can throw light on this."

"BIAL is making tall claims from the beginning, but the ground reality is something else," said Devesh Agarwal, civil aviation analyst. "It has to explain the gap in the accounts."