EAS Sarma, former secretary of the GoI, alleged that SEZs in general have not come out gloriously in terms of what was expected and most of them have become real estate ventures linked to money-laundering
EAS Sarma, former secretary to the Government of India (GoI) has alleged that most of the special economic zones (SEZs) in the country have become real estate ventures lined to money laundering.
Mr Sarma, in a letter to the commerce secretary, GoI, said, “Those who promote SEZs have gained the impression that they can violate any law of the land with the blessings of the politicians and the local authorities. The nexus among the SEZ promoters, the politicians and the officials has generated large amounts of black money, a subject that has attracted the attention of the highest court of the country.”
“Several of them (SEZs) have bypassed the environment laws of the country and have turned out to be sources of toxic pollution. Many are carrying on illegitimate activities surreptitiously and ironically, their crimes seem to get exposed, not by our regulators but the regulatory authorities abroad, as was the case with Visakhapatnam SEZ,” the former secretary alleged.
SEZs have dealt a serious blow to agriculture and have become a threat to food security, Mr Sarma said, adding that almost all the SEZs have resulted in dispossessing small farmers and fishing communities of their precious lands and their legitimate access to the sea. “By their very nature, SEZs represent ‘no democracy’ islands. Even before the setting up of an SEZ, no genuine public consultation ever takes place. Once set up, some SEZ promoters have denied access to the regulators,” he said.
Mr Sarma, requesting an independent investigation and outright cancellation of approval, especially for the Kakinada SEZ (KSEZ), said, “I have been hearing serious allegations about the irregular deals that have taken place in the case of KSEZ. Apparently, a few individuals and promoters are hand in glove with the state authorities and the local revenue and other officials.”
Here are the observations noted by Mr Sarma about the KSEZ...
1. In the list of approved SEZs of the commerce ministry’s website, there are two KSEZs, one approved in 2007 (SO 635 dated 23 April 2007) and another approved recently at 50th meeting of the Board of Approvals (BoA) held on 24 January 2012, both multi-product SEZs. The first one is for 1035.7 hectares in Ramannakkapeta and AV Nagaram Mandals. The second one is for 1013.6 hectares in Ponnada, Mulapeta and Ramannakkapeta Mandals. Strangely, the approval for the latter was based on such a sketchy basis that the Board never cared to find out whether an earlier KSEZ already stood approved and whether the latest one was its extension. The Board never bothered to question the state on its version that that the land at issue was in the ‘possession’ of the promoter. As will be presently shown, such possession accrued on the basis of a series of illegalities punishable under the relevant Acts and rules. The Board’s secretariat has much to answer!
2. As per the information available, the total extent of this SEZ is 8,321 acres. According to some reports, the area is more than 10,000 acres. On the other hand, BoA has imposed a ceiling of 5,000 acres on an individual SEZ. Has BoA cleverly bypassed its own policy by approving two different KSEZs to circumvent the limit? Also, the extent of area of KSEZ de facto is much more than what BoA has approved. There is a vigilance angle in this.
3. The promoters have been trying to grab more and more land illegally with help of the local authorities and the blessings of the politicians. For example, the rehabilitation colony itself is outside the notified SEZ area, though the promoters have been claiming it!
4. KSEZ has had a chequered track record. It was originally conceived as an ONGC venture to be located in the uplands of East Godavari district. On the basis of misreporting of the facts by the district authorities and the clandestine land transactions carried by one, KV Rao, its location shifted to the fertile agricultural lands of Ramannakkapeta and AV Nagaram Mandals, a decision contrary to commerce ministry’s policy of not diverting agricultural land for SEZs. The successive district collectors were willing parties to this jugglery. Apparently, they colluded with the promoters and the politicians.
5. A spot inspection will reveal the nature of the lands in question. They are fertile agricultural lands, mostly, two-crop lands.
6. KV Rao has purchased agricultural lands on his own name from the farmers and the total extent purchased by him far exceeded the ceiling set under the AP Land Reforms (Ceiling on Agricultural Holdings) Act, 1973. The purchase documents do not carry the signatures of all the stakeholders of each piece of land and are therefore prima facie void. There is no clearance obtained by anyone so far for converting the land-use of these lands for non-agricultural purposes. This in itself constitutes an illegality. The state government has issued questionable GOs exempting the transactions from stamp and registration fees. Apparently, money changed hands in all these deals.
7. Neither of these KSEZs has any statutory clearance from the ministry of environment and forests (MoEF) under Environment (Protection) Act, 1986 or under Coastal Regulation Zone (CRZ). Several stretches of the land have coastal mangroves and forests. There are several water bodies and water courses. There is a rich biodiversity. The promoters have no consent for establishment (CFE) from the Andhra Pradesh Pollution Control Board (APPCB). Still, without any prior clearances, the promoters have entered the lands illegally for preparatory works. The local revenue officials and police officers acted as though they were on the promoter’s pay roll. On this basis alone, this SEZ should be dropped as the promoters have no respect for the law of the land.
8. In the normal course, as per the conditions precedent to approval, the first KSEZ approved in 2007 should have been cancelled by now as the promoter had failed to start the work. Still, under pressure, the Board has granted repeated extensions. This calls for an investigation.
9. There is all round public opposition to this SEZ. The district collector has never cared to get the project proposal discussed at the Gram Sabhas. The opposition to KSEZ is similar to the opposition to Raigarh SEZ in Maharashtra where the SEZ had to be dropped.
10. On a writ filed before AP High Court, the court ordered that “possession of the land in question shall not be taken except in accordance with the law by the state”. The state has not apparently complied with this order.
11. The district collector had notified under section 4(1) around 8,120 acres of land under Land Acquisition Act (LAA). Once the lands are so notified, no private land transactions are permitted. Still, in full public glare, in the name of KV Rao, such private deals took place and the sale transactions allowed to be registered, circumventing the LAA provisions and the AP Land Reforms (Ceiling on Agricultural Holdings) Act, 1973. Apparently, the initial LAA notification is irregular as there was no “public purpose” involved, since the transaction was carried out in the name of an individual. Later, the LAA notification itself was allowed to be infringed. Subsequently, even the AP Land Reforms (Ceiling on Agricultural Holdings) Act, 1973 was allowed to be violated. The land transactions should not have been registered in the first instance as the lands were covered under Section 4 notification under LAA.
12. The LAA notification in itself has prevented the farmers from leading their normal lives and deprived them of their right to take loans, etc. It constituted a human rights violation. The intent of the SEZ scheme was that lands would be leased, not acquired from the owners. Neither the ministry of commerce nor the state respected this requirement.
13. The large time gap between Section 4 notification (LAA) and payment of compensation and handing over the possession of the land mandated the district authorities to revoke LAA notification and return the land to the owners. This requirement has been violated.
14. GMR company has recently acquired the majority share in KSEZ. The names of the original promoters did not figure anywhere in BOA’s proceedings. Who were they? What was the source of their funding? Who is KV Rao and what was his locus standi before GMR entered the picture? These are issues that should be looked into by the Department of Revenue, Enforcement Directorate, SFIO and Revenue Intelligence.
15. What have been the land transactions between GMR group companies (GMR Energy) and KSEZ? Is BOA aware of the same?
The former secretary asked the commerce secretary that since many statutory violations have taken place in the case of KSEZ, would his ministry and BoA be willing abettors of it? The fact that several land deals in AP have come under judicial scrutiny and the CBI has undertaken a detailed investigation and the fact that some politicians and senior officials have already been sent to jail corroborate the allegations that have surfaced time and again about KSEZ.
“... (Commerce) ministry should get this case investigated by an independent agency like CBI. In any case, I am requesting Central Vigilance Commission to get this investigated by CBI as the public interest involved in this case is far too important to be glossed over. I am requesting CVC to look into the role of not only your ministry but also the role played by the state government including its politicians, senior officers and the local officials so that a comprehensive picture of the goings on in KSEZ may emerge," Mr Sarma said.