Emaar Scam

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EMAAR-MGF

SCAM

SIDHARTH

GUPTA

50-MBA-13



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).



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.



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.



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



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.



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.



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.



Effect Of Scam

Final Stakes

EMAAR

APIIC

Emaar-

MGF

74%

26%

Original Stakes

EMAAR

APIIC

24.7%

69%

6.3%



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…



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



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



Sunil Kumar Reddy • Arrested on 24th January 2012 by CBI



“Money Can’t Buy Happiness”

Emaar Scam

Documents

Transcript of Emaar Scam