SEZs have become real estate ventures linked to money-laundering, says EAS Sarma

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. 




5 years ago

Actually the whole concept of the SEZ is to improve the economic growth and industrial growth of the Nation by attracting the Foreign investments.
It is very unfortune that eminent people like EAS Sarma, IAS in whose tenure the Industrial growth has happend with pace are seeing only the negative side without considering the ground realities.
For any development an industrialist or a politician or any one person cannot do anything alone. One has to have the cooperation of Local people, political and Beurocratic support, collectively only development will happen, parllelly the friction need to be smoothen.

srimanth reddy

5 years ago

It is quite unfortunate that, Mr. EAS Sarma, former secretary of the GoI, has stated that ‘SEZs have become real estate ventures linked to money-laundering’, where in as per the SEZ Act 2005, a developer cannot sell the land and it can leased to Industries after developing the necessary infrastructure in the Special Economic Zones. There would be a Development Commissioner from GoI who will allot the land to Industrialist in SEZs.
Mr. Sarma has completely given his views only and he has not shown any interest to know the facts from other side.



In Reply to srimanth reddy 5 years ago


Obstacles in coal supply hamper power producers

SE Central Railway makes available 90 rakes for coal transportation daily and coal miners should ensure that this opportunity is not wasted so that the much needed fuel is made available to power producers

Recently, it may be recalled, that Coal India had offered to supply 70 million tonnes of coal at the pit heads due to transport logistics. Three power generators had evinced interest to take advantage of this offer. At the same time, there have been protests against the one-sided fuel supply agreements (FSAs) proposed by Coal India which now have been slightly modified to ensure that CIL pay a 5% penalty if the supplies go below the guaranteed 80% level. But, again, this clause is applicable to facilities commissioned after March 2009.
In all fairness to power generators, which depend upon the ‘guaranteed’ supplies from CIL for their requirements committed under FSAs, it would have been realistic if the penalty is actually the ‘replacement’ cost rather than the paltry 5% now proposed. After all, if and when CIL fails to deliver the promised supply under the contract, the power generator will have to obtain the fuel needs from open market which would definitely NOT be cheaper than the contracted price. Right?
As we had mentioned in an earlier coverage on the subject, it is imperative that CIL does all it can to increase indigenous output particularly from captive mines by improved technology and reduce the over dependence on the expensive foreign supplies.
Although the Dedicated Freight Corridor Corporation of India (DFCCIL) was established in 2006 to construct two corridors, totalling some 3,300km, the project is scheduled to be completed by 2016-17 only, provided there are no delays and cost over-runs, both of which are normally associated with projects of such magnitude!
The Eastern Corridor, for example, covers Punjab, Haryana, UP, Bihar and ends up at Dankuni in West Bengal, totalling 1,839km length. This will cover the vital coal producing areas.
As part of the Eastern corridor, the 85km stretch between Bhupdeopur and Khargoda, along with the East-West corridor between Korba and Pendra Road are receiving priority attention from the Chhattisgarh government, Railway Board, CIL and the coal ministry. However, land acquisition remains a big issue in making progress.
The World Bank is funding 67% of the project cost covering around 1,133km while the balance funds will come under the PPP mode.
Meanwhile, reports appearing in the press show that the Bilaspur Division of South Eastern
Railway handles the largest freight loading operation in the country, covering nearly 112 million tonnes of coal, vital for the power development.
Everyday, around 90 rakes are available for coal loading each of which can shift 2,200 tonnes, but Arunendra Kumar, general manager of SE Central Railway claims that coal is actually not available to carry and “coal loading is not connected to many pit heads directly and the rake loading has to be supported by road-bridging, which is the responsibility of the miner” and not the railways. Because of this lacuna, around 25% of the rakes are empty! Miners need to take immediate steps to ensure that empty rakes are not ‘wasted’ but fully utilized, by gearing up the loading operations.
(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce and was associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US. He can be contacted at [email protected].)


‘Dark Money’ political groups target US voters based on their internet habits

Dark money groups are using sophisticated online targeting tactics in the US, but voters may never know they're being targeted

Lauren Berns was browsing Talking Points Memo when he saw an ad with President Obama’s face. “Stop the Reckless Spending,” the ad read, and in smaller print, Paid for by Crossroads GPS. Berns was surprised. Why was Crossroads GPS, a group that powerful Republican strategist Karl Rove helped found, advertising on a liberal-leaning political website? Looking closely at the ad, Berns saw a small blue triangle in the upper-left hand corner. He knew what that meant: this ad wasn’t being shown to every person who read that page. It was being targeted to him in particular. Tax-exempt groups like Crossroads GPS have become among the biggest players in this year’s election.  They’re often called “dark money” groups, because they can raise accept unlimited amounts of money and never have to disclose their donors.


These groups are spending massively on television spots attacking different candidates. These ads are often highly publicized and get plenty of media attention.

But these same dark money groups are also quietly expanding their online advertising efforts, using sophisticated targeting tactics to send their ads to specific kinds of people.

Who they’re targeting, and what data they’re using, is secret.

Online advertising companies have amassed vast quantities of information on what individual people read, watch, and do on the Internet. They collect this data using small files called cookies, which allows them to track Internet users as they move from site to site.

These anonymous profiles of information are used to customize advertisements—like sending casino ads to someone who just bought a plane ticket to Vegas. 

But these profiles are also increasingly used by political groups, which can decide which people to target with a message—and which people to avoid—based on the kinds of articles they read and the kinds of sites they visit.

Many Internet users who see these ads may not be aware they’re being targeted.  

As we’ve detailed, both the Romney and Obama campaigns are using advanced tracking and targeting tactics. Working with our readers, we found two examples of dark money groups using this kind of targeting, as well: one ad from Crossroads GPS and one ad from Americans for Prosperity, a non-profit linked to the politically influential Koch brothers.

How many of these ads are dark money groups sending out? It’s hard to say, because it’s not easy to track exactly how much Crossroads, Americans for Prosperity, and similar groups are spending on different kinds of advertising.  

But these politically influential organizations are moving more of their efforts online.

While Crossroads spokesman Jonathan Collegio said he couldn’t get into the specifics of their budget, “Crossroads will certainly spend more in the online space in 2012 than it did in 2010,” he said.

Americans for Prosperity did not return multiple requests for comment.

Even when Internet users they are sophisticated enough to spot a targeted ad, as Lauren Berns did, it is almost impossible for them to find out why a certain organization is targeting them—or what data about them is being used.

Berns, for instance, is a registered independent from St. Petersburg, Florida—exactly the kind of voter whose opinion campaigns and political groups are trying to sway before November.  He’s a self-described “news junkie,” who reads both liberal and conservative news sites and posts articles to Facebook two to ten times a day. But it wasn’t clear what part of his Internet behavior ad triggered the Crossroads ad—or whether information about his offline life was part of the targeting formula. Had he been shown the Crossroads ad because he had visited Mitt Romney’s site? Because he regularly reads the conservative sites of The Daily Caller and The Weekly Standard? Because he lives in a swing state? Did Berns fit the profile of a potential Crossroads supporter because he’s a 44-year-old who travels regularly? Or because he shares things with his friends, thus making him a potential “social influencer?”

A popup message accompanying the ad offered information about the targeting. But it only explained, “We select ads we believe might be more relevant to your interests.”

The popup in the ad Berns received.

When we sent Crossroad’s Collegio a copy of the ad, he said he could not explain exactly how the ad had been targeted, saying, “it’s a matter of strategy that we would hold close to our chests.”

But he did offer one potential targeting factor. “We are looking for viewers who are more likely to engage their lawmakers in an issue advocacy campaign, and those are generally viewers who visit news and current affairs websites,” Collegio said. If Crossroads GPS was looking to target news junkies, then Berns was the kind of person they were trying to reach—although, of course, that didn’t necessarily mean he was sympathetic to the ad’s message. Berns regularly reads conservative sites and says he is skeptical of both parties, but on policy issues, he says, he lines up more closely with the Democrats.

Because Crossroads wouldn’t disclose their targeting strategy, we can’t know how many other factors may have been involved. Collegio would not say whether the online ad was only sent to viewers in certain states.

Television ads from dark money groups often get significant media scrutiny.  When Crossroads GPS launched a television ad in early June attacking President Obama’s “reckless spending,” the group’s $7 million ad buy made headlines in papers across the country. The Washington Post fact-checked the ad’s claims, and concluded that the ad contained both exaggerations and omissions.

What didn’t get mentioned, by newspapers or by Crossroads’ own press release, was that an online version of the same ad—the ad Berns saw—would appear on the computer screens of select individuals, based on their Internet habits. Collegio said it was “likely an oversight” that the Crossroads press release didn’t include a description of the online part of the ad campaign.   But, he noted, “When we announce online buys, the media rarely report on it.”

By their nature, targeted online ads are harder for news organizations to track, since they are only shown to some users, and will never appear to others.

This makes targeted ads much less transparent than TV ads, and makes it harder to tell if politicians or political groups are using targeting to pander to certain groups of voters, or whether they’re sending out ads that are misleading, hypocritical, or just plain false.

As part of our campaign coverage, we’ve been asking readers to send in screenshots of any targeted political ads they see. Berns was one of the first to send in screenshots of a targeted ad.

Another targeted dark money ad came from a woman in Wisconsin, who asked that her name not be used. She sent screenshots of a targeted ad from the Koch-linked Americans for Prosperity attacking Wisconsin Democratic congresswoman Tammy Baldwin, who is now running for Senate.

The Americans for Prosperity ad on the Washington Post's site.

The ad, which reads, “Tell Tammy Baldwin: Wisconsin can’t afford Washington’s wasteful spending!” asks viewers to “Click here to sign the petition.” The ad appeared on multiple sites the woman visited, including in a prominent place on the home page of the Washington Post. While Americans for Prosperity did not return requests for comment, a Washington Post spokeswoman said a broader Americans for Prosperity ad campaign had been taken down because it had not been approved by the Post’s advertising team. While many critics of targeting have been concerned that political groups might use targeting to send out controversial ads without attracting attention, that wasn’t the case with the two ads our readers spotted. The targeted ads from both groups sent the same message as their spots shown on TV.

Recent surveys suggest many American aren’t enthusiastic about political targeting online.

survey of 1,503 adult Internet users released this week by the Annenberg School for Communications found that 86 percent of the respondents did not want “web sites to show you political ads tailored to your interests.” Most respondents also said they want to know what the campaigns know about them.

In general, Berns said, “I’m fine with targeted advertising. If I’m going to see ads on the Internet, I’d rather they be something I’m interested in.” But, he said, he draws the line at politics.

“I'd much prefer a world where candidates tried to equally hard to reach everyone, present their policies rationally, and let the chips fall where they may,” he wrote in an e-mail. 

“Targeting by political viewpoint is ‘creepy,’” he wrote. “A little too close to propaganda techniques for my comfort.”

Have you seen a targeted political ad? 

Help us find out how politicians are targeting you online.  

  1. If you spot a small blue triangle icon on any online political ad, or the words "Ad Choices," take a screenshot of the ad.
  2. Then click on the blue triangle or the words “Ad Choices” to find out which company showed you the ad. Take a screenshot of that, too.
  3. E-mail the screenshots to us at [email protected]. Please include the full URL of the page where you saw the ad.

If the ad asks you to “learn more,” visit a website, donate, or sign a petition, please send us a screenshot of that site or petition, as well. (The page where the ad sends you may also be targeted to what advertisers know about you.)

Not sure how to take a screenshot? Here are the instructions if you're using a PCusing a Mac, or using a smartphone.

You can also check out our "Message Machine" project, which analyzes how campaigns are targeting voters with different e-mail messages.





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