In a blistering attack on Tuesday, Congress leader Rahul Gandhi accused Prime Minister Narendra of bending the rules to help the Adani Group. The Gujarat-based conglomerate, which has seen a meteoric rise in its fortunes since Modi became prime minister in 2014, has been facing intense scrutiny after a report by American investment firm Hindenburg Research released last month alleged that it had engaged in stock manipulation and accounting fraud to pull off the “largest con in corporate history”.
When Gandhi launched his offensive in Parliament, one of his main allegations was that the Modi government tweaked norms to help Adani take control of six Indian airports.
“There was a rule that anybody who does not have prior experience in airports cannot be involved in the development of airports,” said Gandhi. “The government changed this rule..,and Adani was given six airports.”
In addition, Gandhi claimed that the “Mumbai Airport was hijacked” from the GVK Group using agencies like the Central Bureau of Investigation, the Enforcement Directorate. “This was facilitated by the prime minister of this country,” alleged Gandhi.
What was this rule that Gandhi claimed had been altered to make way for Adani’s entry into the airport business? And what were the circumstances preceding the transfer of the Mumbai airport from the GVK Group to the Adani Group?
The six airports: Red flags ignored
In November 2018, the Union government approved a proposal to privatise six airports then operated by the Airport Authority of India: Ahmedabad, Lucknow, Mangalore, Jaipur, Guwahati, and Thiruvananthapuram.
The next month, bids were invited. Adani Enterprises Limited emerged as the winner to develop and run all six airports for a period of 50 years.
However, it would later turn out that a government panel for public-private partnerships overseeing the bidding ignored several guidelines of the finance ministry and the Niti Aayog – which, if adhered to, would have meant that the Adani group would not have control over all six airports.
In an appraisal note examining the privatisation process, the finance ministry’s department of economic affairs had suggested the incorporation of a clause that “not more than two airports will be awarded to the same bidder” since “these six airports projects are highly capital-intensive projects”. The note added: “Awarding them to different companies would also facilitate yardstick competition.”
It pointed out that when bids were invited earlier for the privatisation of the Delhi and Mumbai airports, GMR Group was the only “qualified bidder”. Yet, the company was not awarded both contracts. Another example the note referred to was the privatisation of Delhi’s electricity distribution companies: the city was divided into zones and two separate companies were awarded contracts.
In its note, the department of economic affairs reportedly flagged other concerns too. It said that the Airport Authority of India and the ministry of civil aviation in the bid document had not provided key details that were crucial to compare the technical proposals submitted by bidders. “Critical” details such as the “total project cost” were missing, it pointed out.
The Niti Aayog had concerns of its own. In a memo, the government think tank’s private-public-partnership section questioned the rationale of prior technical experience not being mandatory. “A bidder lacking sufficient technical capacity can well jeopardise the project and compromise the quality of services that the government is committed to provide,” the think tank warned.
It added, “While it is important to enlarge the spectrum of bidders through the inclusion of players from other sectors, it is also important to ensure that the quality of experience is suitable to the technical capabilities required for undertaking (the) proposed projects.”
However, the Centre’s private-public-partnership appraisal committee, steering the process, brushed aside all of these suggestions leading to the Adani Group sweeping the bids.
The capitulation of GVK
Even as Adani Enterprises was still in the process of signing formal agreements with the Airport Authority of India to take over these six airports, the company in August 2020 wrested control of the Mumbai airport from the GVK Group.
The events leading up to the takeover raised many eyebrows.
Adani had been known to be eyeing the Mumbai airport for a while – but the GVK group was unwilling to sell.
In March 2019, as Adani Enterprises moved to acquire the South African firm Bidvest’s 13.5% share in the airport (GVK with 50% had controlling stakes), GVK blocked the deal.
Later that year, the group struck a deal with three investors, including the government-backed sovereign National Investment and Infrastructure Fund to raise capital to settle debt obligations and fund the purchase of the shares of the airport’s minority stakeholders. This was seen as an attempt to stave off the Adani Group.
In August 2020, though, GVK released a statement calling off the deal, saying it had instead “agreed to cooperate” with the Adani Group. In other words, it agreed to sell the airport to Adani Airports Holdings, a fully owned subsidiary of Adani Enterprises Limited.
Many connected this dramatic and sudden backdown to a string of complaints and raids by central agencies that the company had been subjected to in the previous months.
In June 2020, the Central Bureau of Investigation had booked the company’s chairman Gunupati Venkata Krishna Reddy, his son Venkata Sanjay Reddy and the Mumbai airport’s managing director GV Sanjay Reddy for alleged irregularities in the running of the airport. Soon after, in July, the Enforcement Directorate filed money laundering charges against the group’s top brass, carrying out raids at its offices across the country.
On Tuesday, shortly after Gandhi’s speech, GV Sanjay Reddy appeared on television to say that “there was absolutely no pressure from the Adani group or anyone else to sell Mumbai airport”. He gave the interview to NDTV, a news channel of which Adani has recently acquired control, after much resistance from the original owners, incidentally, also facing heat from the agencies.