Kenyan firm gave fake guarantee for PRR bid?

The Kenya-based company, Astrum International Limited had submitted its bid specifying Equity Banks Kenya as its banker.
Proposed Rs 27,000 cr Peripheral Ring Road for Bengaluru will be retendered for the fourth time shortly
Proposed Rs 27,000 cr Peripheral Ring Road for Bengaluru will be retendered for the fourth time shortly

BENGALURU: The Bangalore Development Authority (BDA) has cancelled the tender for the third time for the Rs 27,000-crore Peripheral Ring Road project and will now have to call for a fourth round of tendering.

The Kenya-based company, Astrum International Limited, which was the sole bidder and had won the tender, has allegedly produced a fake guarantee letter for Rs 300 crore, leading to the cancellation, sources said.

Astrum had submitted its bid specifying Equity Banks Kenya as its banker.

A finance expert explained, “In case the bank guarantee for the Earnest Money Deposit is produced from a foreign bank, it should be confirmed by an Indian bank. The deposit would be 1 percent of the project cost. It needs to be cross checked by the agency in a confidential manner before the tender is allotted.

This is crucial because in case the contractor backs out or has any financial issue, the money can be recovered from the bank within our country.”

Bidder did not meet criteria: BDA chief

The Karnataka Finance Department made this mandatory decades ago after a contractor walked out of a project after bidding for it with fake bank guarantees.

A BDA source told TNIE, “Astrum, which has a branch in Kolkata, has failed the financial round. Initially, they told us ICICI Bank was the confirmation bank vetting it. ICICI told us that they had not received any counter guarantee and could not confirm it. The group then approached other banks but it did not work out.”

Finally, they produced an e-mail allegedly sent by Punjab & Sind Bank as the confirmation bank. “A BDA team visited the Chennai branch of the bank to cross check the credentials of the communication. The bank officials told us clearly that they had never sent such mail.

The ID from which it was sent was not their official mail ID for communication. We believe it to be a fake guarantee document produced for the sake of the contract. We have decided not to go ahead with the contract and will go in for a fresh round of tenders within a month,” the source said.

Without elaborating, BDA Commissioner N Jayaram told TNIE late last week, “The bidder did not meet our eligibility criteria. So, it stands cancelled and we will be retendering the PRR project.”

An official said the BDA is exploring the possibility of splitting the next PRR tender into many packages. The latest tender for the PRR project, which was proposed in 2007, was called for on January 30 this year with February 29 as the deadline. It was later extended to mid-March. The 73-km, eight-lane Public Private Partnership project has a 50-year lease period.

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