The Hindu : National : Court orders probe into HUDCO scam

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Tuesday, Aug 30, 2005

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National

Court orders probe into HUDCO scam

J. Venkatesan

Allegation of misuse of funds against former Minister Anantha Kumar Three part-time Directors of HUDCO sanctioned loans amounting to Rs. 5,000 crores to 50 corporate houses in a day

NEW DELHI: The Supreme Court on Monday ordered a probe by the Central Vigilance Commission (CVC) on the alleged sanctioning of over Rs. 14,500 crore loans by the Housing and Urban Development Corporation during the tenure of Anantha Kumar as Urban Development Minister in the previous National Democratic Alliance regime.

A Bench comprising Justice S.N. Variava and Justice H.K. Sema while directing the CVC to complete the probe in four months also asked the CVC to inquire into the specific allegation of misuse of funds of the HUDCO by Mr. Kumar.

Passing interim directions on a petition filed by the Centre for Public Interest Litigation, the Bench directed the HUDCO Managing Director to supply to the CVC all documents and materials pertaining to the matter. The Bench directed the authorities concerned to appoint a Chief Vigilance Officer in HUDCO within six weeks since the proposal was pending consideration before the Department of Personnel and Training.

Counsel for the petitioner, Prashant Bhushan, alleged mala fide and arbitrary use of power in the sanction of loans. He said that the CVC had probed some cases and found irregularities in them. He pointed out that three part-time Directors of HUDCO sanctioned loans amounting to Rs. 5,000 crores to 50 corporate houses in a day in the absence of a single permanent Director.

The petitioner submitted that it wanted to bring to the notice of the court the mala fide and arbitrary use of power and sanctioning of loans by HUDCO to the tune of Rs. 14,500 crores and release of Rs. 8,500 crores subscription in privately placed debentures of Rs. 1,250 crores and writing off of Rs. 550 crores in 2002-2003 resulting in grave loss to the exchequer and further accumulation of non-performing assets in the country which had already crossed Rs. 1,00,000 crores.

CPIL had alleged that the then Urban Development Minister misused the funds for paying his mobile bills and other private affairs. The actions of Mr. Anantha Kumar and Mr. Biswas, former Chairman and Managing Director of HUDCO, had caused huge loss to the public exchequer.

The petitioner pointed out that since there was reckless lending without following appraisal norms, the National Housing Board and various other high-level officers of the Central government had issued warning to the HUDCO from time to time. Despite these warnings, HUDCO continued to sanction loans by ignoring all the advice.

It said that Mr. Anantha Kumar and others had blatantly violated the code of ethics for public sector undertakings and entered into a conspiracy to divert public funds for extraneous considerations.

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