The Central Bureau of Investigation began searches at the residences and offices of former Union Railways Minister Lalu Prasad Yadav, his family members and several others in Delhi, Gurugram, Patna, Ranchi and Puri on Friday morning in connection with a scam involving Indian Railway Catering and Tourism Corporation.

A First Information Report was lodged against Lalu Prasad Yadav, his wife and former Bihar Chief Minister Rabri Devi and son Tejashwi Prasad Yadav, who is currently the deputy chief minister of Bihar. PK Goel, former managing director of the IRCTC, has also been included as an accused.

The charges involve suspicious land deals that caused huge loss to the exchequer and transfer of two railway hotels through a rigged tender process to a company that sold the land to the Yadav family.

The charges

According to the FIR filed on July 5, the IRCTC was created in 1999. In 2001, the Railway Board, under the then Congress-led National Democratic Alliance government, decided to transfer the management of catering services, including hotel properties, to the IRCTC. These transfers were facilitated through several memoranda of understanding.

These properties included two BNR Hotels in Ranchi and Puri.

The CBI said that in 2004, after Lalu Prasad Yadav became the union railways minister, a conspiracy was hatched to rig this process of awarding these hotels to benami or front entities and earn huge illegal monetary benefits. The prime actors in this conspiracy included Rashtriya Janata Dal MP PC Gupta and his wife Sarla Gupta.

The FIR said in March 2004, just two months before the United Progressive Alliance captured power at the Centre, the Indian Railways executed a memorandum of understanding to transfer the management and development of the two BNR Hotels to the IRCTC.

Having come to know about this process, Lalu Prasad decided to take advantage, the FIR said.

On February 25, 2005, Vijay Kochar and Vinay Kochar, the proprietors of Sujata Hotels Private Limited, sold a 3 acre plot in Patna through 10 sale deeds to Delight Marketing Company Private Limited, in which Sarla Gupta, the wife of PC Gupta, was a director. The land was allegedly sold for a consideration of Rs 1.47 crores, which the CBI claims was less than the circle price of Rs 1.93 crore. The plot was also shown as agricultural land, which cost the state exchequer losses as agricultural lands are exempt from certain taxes. The payment for the land was made through investments in Delight Marketing Company Private Limited by another entity called the Ahluwalia Contracts India Private Limited. The BNR Hotels were transferred to the IRCTC on the same day as the execution of the sale deed of the land.

While the land deed was completed in 2005, the CBI alleged that the quid pro quo or the payback for the deal happened in September 2006, when the tender process for developing and operating the two BNR Hotels was advertised along with the tender advertisements for many other hotels under the Indian Railways.

The FIR alleged that the entire tender process was rigged and several conditions were modified in such a way that Sujata Hotels Private Limited became the only viable bidder. Official communication between Lalu Prasad Yadav and the Railway Board between 2004-2006 revealed that Union railways minister was well aware of what was happening.

After Lalu Prasad Yadav demitted office in 2009, the shares of Delight Marketing Comapny Private Limited was transferred to Rabri Devi and Tejashwi Yadav. The company’s name was also changed to Lara Projects, in which members of the Lalu Prasad family became partners. By 2014, the shares of this company was entirely in the hands of the Lalu Prasad clan.

The CBI alleged that the 3-acre plot sold by Vinay and Vijay Kochar in 2005 was valued at a market rate of Rs 94 crore in 2014. The shares of the company which held this land was transferred to the Lalu Prasad family for an amount of just Rs 64 lakh. Which means, the family gained a pecuniary benefit of over Rs 93 crore through the deals, the CBI alleged.