Lagadapati Rajgopal alias Lanco Rajgopal is a 45 year old industrialist turned politician known for his rabid hatred towards Telangana statehood movement. There is some background behind his hatred towards Telangana. The following expose proves the dark side of this self-appointed champion of anti-Telangana movement.
- His 7200 Crore illegal Lanco Hills Real Estate Project on the brink of collapse
- Cheated AP Public to the tune of 1000 Crores through Lanco Kondapalli Power
- Involved in illegal Hawala transfers. Lanco MD arrested recently with Hawala money
- His company in a mega insurance scam running into several Crores
- Siphoned 1.53 Crores fraudulently from Basara IIT project and also from TTD Vedic University project.
- Filed false affidavit regarding number of children during election
- Lanco is involved in litigations with almost all the state governments where it has projects. It was thrown out of some projects for fraud.
The Lanco Scandal
Lagadapati bought 108 acres of land at Manikonda in Hyderabad from government of AP to develop an IT SEZ. Once the government allotted him the land, he has limited the IT SEZ, to less than 1/4th of the total land and converted this land into a real-estate venture named Lanco Hills. Estimated at Rs. 7,200 Crores, Lanco Hills is touted as the one of the largest real estate ventures in India. Rajgopal is claiming all kinds of exemptions from government under the SEZ act for his real-estate business. He is duping the state and central governments by conducting his business under the “LANCO Hills Technology Park Pvt. Ltd” name. The state and central governments have already lost crores of rupees by waiving stamp duty and other taxes for this real-estate venture.
Lanco also kept changing its company names to perpetuate this real-estate fraud. When it began, the company was called Lanco Technologies Private Limited”, it was subsequently changed to “Lanco Technology Park Private Limited” on June 7, 2005, to “Lanco Mantri Technology Park Private Limited” on November 24,2005 and further to “Lanco Hills Technology Park Private Limited” on July 6, 2006. As soon as construction started at Lanco Hills, news broke out that this land belonged to Hussain Shah Wali Dargha under Wakf Board.
Wakf Board is equivalent to the Endowments department which takes care of Hindu Temple lands. This Muslim minority institution has thousands of acres of lands around Hyderabad. The Joint Parliamentary Committee appointed on Wakf land had last year found that of 1,600 acre prime Wakf land in Manikonda, 829.35 acres were encroached by the government, which sold the same to several companies including Lanco Hills. Following a writ petition, the Andhra Pradesh State high court had issued a stay in 2007 on construction at Lanco Hills. As Rajgopal is an MP and had several connections in the right places, he managed to get the stay evicted. He also managed to stop the Wakf Board from approaching the Supreme Court. Meanwhile, the real-estate bubble in Hyderabad burst and buyers started dropping off Lanco Hills apartments like hot potatoes. When Lanco went for public issue, it promised to build 18.5 million sq ft in Lanco Hills. As soon as booking began, Lanco Hills had reported bookings of 4 million sq ft. In December 2008, it admitted that bookings were down to 2 million sq ft. Industry insiders say that the current bookings are much less than even that.
Already reeling under a severe recession, the Telangana state announcement from Chidambaram rattled Lanco Raj Gopal severely. It is almost certain that his real-estate empire will collapse like a pack of cards if Telangana state is formed. Apart from financial losses, Rajgopal fears that the newly formed Telangana government will initiate action against him for severe irregularities in the Lanco Hills project which include evading taxes under the SEZ act. And to stop that from happening Lagadapati is fuelling the United Andhra Pradesh agitation by engineering resignations of MLAs and MPs and also providing monetary support to the agitations in Coastal Andhra.
Richest Politician in Andhra Pradesh
Lagadapati is the richest politician in Andhra Pradesh. He declared assets worth Rs. 299 Crores in the 2009 election leaving behind Ex chief ministers Chandra Babu Naidu and Late Y S Rajasekhar Reddy. This perhaps explains why he could engineer such mass resignations in Andhra region.
In March 2007, the then Managing Director of Lanco Infratech, G Venkatesh Babu was caught at the Hyderabad Airport with unaccounted money of about Rs. 34 Lakhs. During interrogation, Babu confessed that the money belonged to Lanco. And immediately Lagadapati Rajgopal swung into action and pulled all the ‘right’ strings to get his man and his company out of this tangle. So powerful were Rajgopal’s contacts that the income tax department, while reporting this cash seizure, did not even release the name of the company to which Venkatesh Babu belonged to. The IT department’s official statement read “managing director of a power development and infrastructure company” was caught. Babu later changed his version and said that this money does not belong to Lanco but is his personal money. Media reported that this money is hawala money belonging to Lanco and is being used to pay kickbacks.
False Affidavit in Elections
A writ petition is filed in the Andhra Pradesh High Court challenging Rajgopal’s election to the Lok Sabha from Vijayawada. The petition said that Lagadapati did not give information about his third son, which was mentioned in the affidavit submitted by him at the time of filing nomination. According to the petition Lagadapati had claimed he has two sons during 2004 elections and three sons during the 2009 elections. However, there was no mention of this third son in Lagadapati’s election affidavit and hence his election in invalid, the petition said.
Rajgopal’s Lanco Infratech is under probe for reworking insurance deals to claim crores of rupees as reimbursement from state government corporations. The company, which handles mega construction projects for the state government, including the AP Health and Medical Housing and Infrastructure Development Corporation (APHMHIDC), renegotiated premium amounts with insurance companies and pocketed huge refunds. Even Lord Balaji was not spared as one of the Lanco projects now under the scanner relates to the construction of the Vedic University of the Tirumala-Tirupati Devasthanam, sources said.
The premium reimbursements related to the CAR (contractor all-risk) policies that Lanco Infratech had to take for each project as per the tender rules. Under the CAR norms, the contractor company, Lanco Infratech in this instance, would have to insure the entire project and claim reimbursement of premium from the principals, mostly government companies and TTD in one case.
Lanco Infratech would first negotiate the policy with an insurer and pay up the premium. It would get the premium refunded from the contracting principal. Thereafter it would go back to the insurer to renegotiate the premium, saying it had got a lower quote from a competitor company. The insurer agreed to lower the premium and refunded the balance, which Lanco Infratech would not report to the principal and simply pocketed.
The government companies have suffered huge losses by paying up higher premiums and this has been going on at least from 2007. The construction of an integrated educational complex for the Indian Institute of Information Technology (IIIT) at Basar in Adilabad district is a classic case. Lanco had bought insurance cover with the New India Assurance, Basheerbagh, for payment of Rs 1,89,60,000 as premium. After getting it refunded by the principal, APHMHIDC, Lanco Infratech went back to the insurer to renegotiate a steep drop in the premium. That deal through policy no: 610200/44/08/03/600 00027 yielded Lanco Infratech a refund of Rs 1.53 crore and the government corporation was in the dark.
The projects for medical colleges in Ongole and Srikakulam had yielded premium refunds of Rs 17 lakh and Rs 11 lakh respectively. “Our vigilance officials are probing irregularities,” said the chairman and managing director G. Srinivasan of the United India Insurance Co. Ltd, acknowledging the Lanco scam. UIIC investigators are now busy checking whether some of their own executives had colluded with Lanco Infratech. A few other insurance majors figure in the list of insurers that Lanco had used in its fruitful project deals.
Lanco Sasan Controversy
In July 2007, the Empowered Group of Ministers (EGoM) cancelled the bid of Lanco consortium for the 4,000 MW ultra mega power project in Sasan, Madhya Pradesh. The Lanco Group is alleged to have violated norms by quoting the financial and technical strength of its foreign partner’s parent company at the time of bidding.
Vizhinjam International Transhipment Terminal Port Controversy
Lagadapati Rajgopal’s Lanco was awarded the Rs.5,300-crore project on build-operate-transfer basis in May 2008 through global tender. Zoom Developers, the only other bidder other than Lanco was disqualified on technical grounds. Zoom went to court challenging its disqualification during the appraisal of its technical bid. The case moved from the Kerala High Court to the Supreme Court. After much litigation, Lanco decided to pull out from this project.
Lanco is perhaps the number one company when it comes to litigations and controversies. Almost all its power projects are mired in controversies. Let us examine some of these cases state-by-state
The then Chandra Babu Naidu government entered into faulty Power Purchase Agreements (PPAs) with Lanco Kondapalli Power, owned by Rajgopal, which resulted in excessive payments to the tune of 586 Crores between 2001 and 2006. Andhra Pradesh Transmission Corporation has levied liquidated damages of Rs 95.16 Crores for delay in achieving commercial production. According to conservative estimates, Lanco Kondaplli Power Project benefitted to the tune of Rs. 1000 Crores from the faulty Power Purchase Agreements of AP state government.
Lanco bidded for 1320 MW Rajpura thermal plant in Punjab, but the PSEB Engineers Association had said that the bid is very high and should be re-invited. The PSEB Engineers Association in its letter to Punjab Chief Minister had pointed out the poor track record of Lanco in executing projects. Lanco had quoted Rs.1.829 per unit as fixed charges where as Sterlite had quoted Rs.1.20 per unit for Talwandi Sabo project in Punjab.
The former Finance Minister of Haryana, Sampat Sing said in 2008 February that the Lanco Amarkantak Thermal Project project was full of loopholes and allegedly smacked of corruption and favouritism. He said the state government would purchase electricity at the landed cost of Rs 2.75 per unit under this deal, whereas from the Sasan project of MP, it would get electricity at the rate of Rs 1.19 per unit. This big difference showed that there was corruption in the deal, he alleged.