Former TN chief secretary Rama Rao now faces Rs 520 crore allegation

The firm is linked to Rao’s son Vivek Papisetty – one of the key partners in the company is also a director in Swan Facilities Pvt Ltd along with Vivek, the organisation alleged.

Former Tamil Nadu chief secretary P Rama Mohana Rao. | File Photo

CHENNAI: Just as he was gradually slipping away from public memory, an anti-corruption movement charged former Tamil Nadu chief secretary Rama Mohana Rao of misusing his powers to award a contract worth a whopping Rs 520 crore to a firm linked to his son.

After filing a complaint with the CBI here on Monday, Arappor Iyakkam, an anti-corruption organisation, released documents showing the award of the tender, and also alleged that the tender conditions were tinkered to ensure the participation of Padmavathi Hospitality and Facility Management Services.

The firm is linked to Rao’s son Vivek Papisetty – one of the key partners in the company is also a director in Swan Facilities Pvt Ltd along with Vivek, the organisation alleged. If that was not all, one of the witnesses who signed on the contract papers was one P Srinivasa Rao, who the activists claimed was the former chief secretary’s brother.

Last January, the Directorate of Medical Education under the Department of Health and Family Welfare gave a requirement for outsourcing of housekeeping and security services to Tamil Nadu Medical Services Corporation, which in turn floated tenders. The contract was for 37 government hospitals and 20 medical colleges. But in the last minute, the former chief secretary, who witnessed a spectacular turn of fortune in the last month, used his influence to amend the conditions framed for allotting the tender which, they alleged, was done so that the firm became eligible to bid.

Initially, it was decided that only public and private limited companies registered under Indian Companies Act, 1956, would be eligible to bid for the contract. This is done to ensure transparency in dealing with public money. Under this condition, Padmavathi Hospitality and Facility Management Services, a partnership firm, was ineligible to compete.

“The day before the bid submission deadline (February 4, 2016) Rao conspired with the TNMSC officials to change basic eligibility criteria, and also extended the deadline so that his benamy company can participate,” alleged Jayaram Venkatesh from Arappor Iyakkam, a splinter of AAP in Tamil Nadu.

Backing the charge of conspiracy and fraud, they showed the list of six companies that were eventually shortlisted, a line-up that had only one partnership firm – Padmavathi.

The contract is for Rs 129.86 crore per year. The agreement is for three years, with a provision to extend for another year on mutual consent. Thus, even without factoring in escalation of costs in the coming years (which the contracts allows), the contract is worth Rs 520 crore, Jayaram added.

Responding to these allegations, Selvi Apoorva, Managing Director of Tamil Nadu Medical Services Corporation said that they were permitted to issue corrigendums 48 hours before the deadline and the changes were made based on what the intending agency (Directorate of Medical Education) suggested.

"Since the number of institutions under DME increased from 37 to 64, there was an increase in volume of work and turnover clause was changed based on this. The Directorate might have missed these lines while writing the tender document initially and added them late," she told Express.

She also said that the TNMSC was just a processing agency and tender was awarded to the lowest bidder as per rules and the Corporation had no idea on who was behind this company. Rejecting claims that TNMSC infleunced the tender process, she said, "It was almost impossible to influence a tender process when the election code of conduct was in place (April 2016) and their files were open for any investigation". When Express tried to contact Ram Rohan Roa, he was unavailable for comment.

It may be recalled that Rao's residence was raided by Income Tax Department and he was dropped from the post following this.