emaar scam
TRANSCRIPT
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EMAAR-MGF
SCAM
SIDHARTH
GUPTA
50-MBA-13
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Overview….
Emaar Scam came to light in 2011 when petition was filed by Congress
MLA P Shankar Rao against B P Acharya, Emaar Properties, Emaar-MGF
Land Pvt. Ltd. , Directors of Stylish Homes Real Estate Pvt. Ltd. and
charged them with criminal conspiracy, cheating, criminal breach of
trust, showing forged documents as genuine under the Prevention of
Corruption Act.
APIIC ,an andhra pradesh govt. undertaking, was cheated and total loss
incurred because of emaar scam is about 2500 crore ($380 Million).
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Emaar Properties
A Public Joint Stock Company(PJSC) Incorporated in June 23 ,1997.
Emaar went International in the year 2004 ,and same year entered the
Indian market .
World's leading real estate company by developing approximately 89
million square feet of real estate across all segments and with operations in
14 countries spanning the Middle East, North Africa, Asia and Europe.
Emaar is well known for Burj Khalifa , Dubai Mall etc.
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Emaar-MGF
MGF Ltd. Are well known Mall Builders of India, incepted with Emaar in
2005 and has many ongoing residential projects in Delhi (particularly
Gurgaon), Mohali, Chennai, Hyderabad, and other key Indian State
Capitals/Cities
India is one of the key international markets of Emaar Properties, thus it’s
joint venture with MGF Developments Limited of India is rolling out the
Country’s largest foreign direct investment in the real estate sector.
Emaar MGF came to spotlight for Indian masses and critics by completing
the famous Common Wealth Games Village before schedule and meeting
international standards.
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APIIC
Andhra Pradesh Industrial Infrastructure Corporation Ltd . (APIIC) was
incorporated on 26th September, 1973 for providing infrastructure
through development of industrial areas
APIIC is a fully owned Undertaking of Government of Andhra Pradesh and
any land / area earmarked for development by the govt. goes to APIIC.
The Corporation has most of its active projects in the Public-Private
Partnership Mode
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The Deal…
In 2003, Dubai-based real estate giant Emaar Properties formed a joint venture
with the Andhra Pradesh Industrial Infrastructure Corporation (APIIC) which came
to be known as EHTPL( Emaar Hills Township Private Limited ).
The plan was to build a high-end township on 535 acres in Gachibowli in which
partnership granted 76% equity to Emaar and 24% to APIIC.
In addition to a number of luxury villas, plan also included a golf course and a
hotel.
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WHAT HAPPENED
PHASE I :
In 2006, EMAAR brought Emaar-MGF as a
co-developer in the deal without
knowledge or concent of APIIC.
PHASE II :
EMAAR went into agency agreementwith Stylish Homes Pvt. Ltd. to sell villas
on behalf of EHTPL, entitled for 4% of
sale value (commission) ,still it was not
consulted with APIIC.
PROBLEM
As per norms and agreement between
APIIC and Emaar Properties, EMAAR was
solely given the development project and
no other company can enter as co-developer.
As APIIC was the owner of the land, it isillegal for EMAAR to entitle Stylish
Homes Pvt. Ltd. with selling of villas
without consent of APIIC.
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WHAT HAPPENED
PHASE III :
Stylish Homes Pvt. Ltd. sold villas at
undervalued price of 5,000 per sq. yard
on papers but in reality , they sold at
25,000 to 50,000 per sq. yard.
PROBLEM
The actual market price was 50,000 per
sq. yard and they showed the
documented price as 5,000 per sq. yard.
So they sold the villas at very cheap price,legally.
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Effect Of Scam
Final Stakes
EMAAR
APIIC
Emaar-
MGF
74%
26%
Original Stakes
EMAAR
APIIC
24.7%
69%
6.3%
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As the documented rate at which villas are sold by Stylish Homes Pvt. Ltd.
were already low , only 10 % of actual market value, the Phase I further
reduced the stakes from 26 to mere 6.3 % .
With this, the APIIC is deprived of its due share in the revenue generated
by the sale of villa plots.
Thus total loss incurred by APIIC and Andhra Pradesh Govt. is about $380
Million.
Continue…
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People Arrested
B P ACHARYA
• Senior IAS Officer
• Former Managing Director, APIIC • Fired from his earlier post and
arrested on 30th January 2012
but then released due to medical
sickness and admitted to hospital
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Koneru Rajendra Prasad
• Chairman, Timex Group
•
Prasad is alleged to have spirited away hugesums of money from India to bank accounts
abroad.
• Arrested by the CBI on November 3 2012 in
Hyderabad
Tummala Ranga Rao
•
Director, Stylish Homes Pvt. Ltd.• Arrested but given anticipatory bail for
cooperation with the CBI in the investigation
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Sunil Kumar Reddy • Arrested on 24th January 2012 by CBI