The Opposition has got fresh ammo to target Prime Minister Manmohan Singh on his alleged association with Rajat Gupta, the 62-year old poster boy of Wall Street, who was arrested in New York on Wednesday and charged with six counts of insider trading and later released on bail after posting a bond of $10 million.
According to sources, Gupta was provided land at throwaway or rather no price for his projects across India--be it in Andhra Pradesh, Gujarat, Orissa or Punjab due to patronage received from the highest levels. The Cabinet Committee on Economic Affairs (CCEA) in July 2006 sanctioned a one-time grant of Rs 65 crore to him to launch the Public Health Foundation of India (PHFI). Gupta was later sanctioned another Rs 36.15 crore in the 2007-08 budget without any explanation.
According to sources, Gupta was provided land at throwaway or rather no price for his projects across India--be it in Andhra Pradesh, Gujarat, Orissa or Punjab due to patronage received from the highest levels. The Cabinet Committee on Economic Affairs (CCEA) in July 2006 sanctioned a one-time grant of Rs 65 crore to him to launch the Public Health Foundation of India (PHFI). Gupta was later sanctioned another Rs 36.15 crore in the 2007-08 budget without any explanation.
Then PM's Principal Secretary T Kutty Aiyappan Nair, who is now his adviser, is among four senior bureaucrats appointed on the governing board of PHFI at the time of sanction of the first grant while Planning Commission Deputy Chairman Montek Singh Ahluwalia is on its advisory board. Gupta, former director of Goldman Sachs and Procter and Gamble, is chairman of the foundation.
Another organisation of Gupta promoted by the PM is the Indian School of Business (ISB). The Centre didn’t object to hefty sums of money Gupta has been collecting as fees while claiming it to be one of his philanthropic activities. The PM persuaded the Punjab government to acquire 70 acres of prime land worth Rs 105 crore from farmers in Mohali for leasing it to the school for 99 years at a token rate of Rs 1 per acre. The ISB website says it plans to enroll 280 students at the Mohali branch in 2012.
The $1.4 billion New Silk Route, a firm started by Gupta with Galleon Group chief Raj Rajaratnam--who has been sentenced to 11 years' jail for inside trading—to focus on investments in India, secured a licence for broadband wireless services in Madhya Pradesh in June last year through its subsidiary Augere Mauritius. One of the founding partners of the firm is Pakistan Finance Minister Abdul.
The power Gupta wields in the corridors of power in New Delhi is such that nobody in the Home Ministry raised any questions on the deal despite Augere Mauritius providing broadband Internet services in Islamabad, Rawalpindi, Lahore and Karachi.
It was because of Gupta's proximity to the PM that Sberbank, Russia's largest state-run bank, appointed him to its board as the first and only foreigner at five times the salary of its Russian directors to use his good offices for entering the Indian banking sector. It got the Reserve Bank of India's clearance to open a full service branch in New Delhi in August 2009. Since then, Gupta has been retained as a strategic adviser just, in case, his influence is needed again.
Because of the Centre’s backing, nobody questions Gupta's PHFI, which offers courses that are not approved by any statutory regulator--be it the Medical Council of India or All India Council of Technical Education. On top of it, the state governments have been paying Rs 2.5 lakh each for its employees who enroll for one-year post-graduate diploma courses.
There are no entrance tests for the courses PHFI as admissions are given strictly on letters of recommendation. The PHFI has admitted that it is not an accredited institution and none of its courses are recognised or accredited. The Health Ministry, however, continues to recognise its “role in recasting the healthcare system”.
The foundation, set up under public-private partnership model, asks state governments to help it set up institutes by giving it a minimum of 40 acre of land free of cost and bear 20-50 per cent of the project cost of Rs 140 crore. Among the states that have acceded to the foundation’s request include the Andhra Pradesh government, which has allotted 43 acres and paid Rs 30 crore; Gujarat, which has allotted 50 acre in Gandhinagar and given the grant of Rs 25 crore; and Orissa, which has provided 40 acre near Bhubaneshwar.
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