CAG's CWG Audit Report - Chapter - 10 (2011)

8/6/2019 CAG's CWG Audit Report - Chapter - 10 (2011)

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c : : :wl-e..::I:uCeremonies

The main ceremonial events of CWG-2010 were the Queen's Baton Relay (containing amessage of Queen Elizabeth - /I) which was to be carried through the Commonwealthcountries and different parts of Indial and the opening and closing ceremonies which wereto be signature events showcasing Indian culture and heritage. We note that theceremonies were widely appreciated; in particular the opening ceremony was aspectacular success. Other ceremonial events included the Delhi capsule at the previousCWGI and the ceremonies at CYG-20081Pune.We found significant irregularities in the appointment of both Maxxam International asthe consultant for QBR and Jack Morton Worldwide (JMW) as the event managementagency for the QBR Launch Ceremony in London on 29October 2009. Further, the scope ofwork for JMW was inexplicably reduced in October 2009 (with an increase in cost], and theOCmade highly suspect payments of 3861237 to two little known entities - AM Films UKLtd and AM Car and Van Hire Ltd -for diverse and unconnected services for the QBRLaunchceremony. The assignment of work and payments therefore were highly questionable;associated approvals and clearances were obtained and payments made with uncommonhaste, and large amounts were also paid in cash, perhaps to avoid leaving a transactiontrail. The role of Shri TS Darbari and Shri Sanjay Mahindrool who were unrelated to OC'sCeremony Functional Areal in the QBRLaunch Ceremony is also questionable.Wefound that planning for the opening and closing ceremonies was inordinately delayed.Further, a multiplicity of agencies were engaged - Shri Bharat Bala as Creative Director/Creative Consultant I Spectak Productions (Mr. Ric Birch) as International Consultant,Wizcraft as the Event Management Firm and 17other consultants. There was considerableoverlap between the roles and responsibilities of these multiple agencies. Further, theevent agency charges of Rs. 16.09 crore paid to Wizcraft (in addition to afixed ceremoniesmanagement fee of Rs. 5.40 crore) are, in our opinion not justified. We also found thatSpectak Productions and Wizcraft had tied up with other experts well in advance of theaward of the contracts. The engagement of the additional consultants (at a cost of at leastRs.6.12 crore) by the OCamounted to a clearfinan cial benefit to Wizcraft.There were also major irregularities in procurement of accessories/ special items. Theconsultantfor the band stand, Mr. Mark Fishe~ got his full fee of US$51410001 even thoughthe idea of the band stand was abandoned. Mr. Fisher then presented a design for anaerostat, which was accepted; the fact that Spectak Productions and the aerostat vendor

Performance Audit Report on XIX Commonwealth Games (CWG-2010) 155


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Chapter 10 - Ceremonies

were part of the same group was concealed. There were also serious irregularities in thetechnical evaluation and award of the ligh tin s/ searchlight contract, as well as the awardof the contract for video content.Contracts for Rs. 16.49 crore for art direction and props for the opening and closingceremonies were irregularly awarded to Blue Lotus Productions, even without having anapproved list of props actually required. Huge quantities of props remained unutilised.Some props were not even received. Many of these props were exorbitantly priced.DC went in for multiple forms of ground protection (ground protection tiles, ground cloth,and grass turf replacement) at a cost of Rs. 17.84 crore for the opening and closingceremonies, which, in our opinion, was not adequately justified. There were majortendering irregularities; the quantities required were fixed and reduced arbitrarily I andlarge quantities of ground protection tiles and ground cloth remained unutilised.

156 Performance Audit Report on XIX Commonwealth Games (CWG-2010)


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10.1 OverviewThe main ceremonial events for CWG-2010were: A "capsule" at the Closing Ceremony of

Melbourne CWG-2006, showcasing thenext Games;

The opening and closing ceremonies ofthe Commonwealth Youth Games-2008 (CYG-2008), Pune, which was asub-event of CWG-2010;

The Queen's Baton Relay (QBR) - Thiswas the ceremonial carrying of thebaton (containing a message from theHead of the Commonwealth, QueenElizabeth II) through the participatingCommonwealth countries, and throughdifferent parts of India culminating inthe Opening Ceremony of CWG-2010.

The opening and closing ceremonies -These were to be the signature events


of the Games with large scale world-wide coverage, which would showcaseIndian civilisation, history and culturaldiversity.

Other minor events and launches - e.g."1500 days to go" and "1000 days togo".

Organising such ceremonial events wouldnormally require two players - aconsultant to render advice on thecreative concept, and an eventmanagement firm which delivers theceremony in line with the approvedcreative concept. However, the OCended up appointing a multiplicity ofagencies for these tasks.

The original lOA bid of May 2003 indicatedan amount of Rs.30 crore for ceremonies. Acomparison of the budget and expenditureof the OCfor ceremonies till date is givenbelow:

Table 10.1 - Budget and expenditure on ceremonies

Event

Capsule for Melbourne CWG-2006#

(Rs. in Crore)

30

Expenditure(December 2010)Original budget(March 2006)

Opening and Closing Ceremonies forCYG-2008, Pune

Revised Budget(July 2008)

7

29.78 27.5622.06 21.7651* 26.00106' 240.00

15.04 15.04223.88 330.36

85Queen's Baton RelayOpening and Closing Ceremonies

122OthersTotal

Notes:# Paid for by GNCTD; this was not part of DC's budget* While the overall QBR budget was reduced from Rs.Sl crore to Rs.26 crore through re-appropriation in the DC,

the budgetforthe QBRLaunch ceremony at London was enhancedfrom Rs.2.20 crore to Rs.12.77 croreA This was increased to Rs.300 crore, through additional budget of Rs.193crore sanctioned in September 2010.



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10.2 Capsule for MelbourneCWG-2006We observed that Wizcraft InternationalEntertainment Private Ltd. (Wizcraft) wasappointed in September 2005 as the eventmanagement firm (EMF) for delivering thecapsule of the next host city (Delhi) of CWG-2010 on "nomination" on the basis of pastexperience. For this, the EOI released in July2005 (against which five proposals werereceived) was abandoned. Further, Wizcraftsubmitted a budget for Rs. 15.05 crore forproduction and execution expenses(excluding their commission of 15 per cent),which was approved and paid without anyindependent analysis and scrutiny by OC .Incidentally, Wizcraft was also appointed asthe Event Management Firm for theceremonies for CYG-2008, Pune and themain CWG-2010 ceremonies - the openingand closing ceremonies. Theseappointments involved deficient tenderingand award. Wizcraft was also the eventmanager for the ceremonies of other IOA-associated sporting events - the Afro-AsianGames -2009 (Hyderabad); the SAFWinterGames - 2010 (Dehradun); and the NationalGames - 2011 {Ranchi}.

10.3 Opening and ClosingCeremonies for CYG-200S,PuneWizcraft was appointed in August 2008 asthe event management firm for the openingand closing ceremonies for CYG-2008, Pune,after a deficient tendering process. Afterfloating an RFPin March 2008, to which tworesponses were received, Wizcraft' wasThe other technical ly qual if ied bidder was AlternateBrands Solut ion Ltd.

declared T-l in technical evaluation andonly a single commercial bid was openedand selected.Interestingly, the contract with Wizcraft forRs. 12.77 crore was signed on 1 August2008, well before: submission of rates by Wizcraft on 5

August 2008, and submission of a note on 25 August 2008

by the evaluation committee for EMC'sapproval;

In our view, the evaluation committee'sreport appears to have been just aformality to legitimise a decisionalready taken informally.

Further, the contract required approval bythe EB,which was not obtained.We also found excess payment of Rs.0.22crore to Wizcraft on account of artists,whose names were indicated in theresponse to the original RFPbut excludedfrom the final contract; demonstrating clearfavouritism.

10.4 Queen's Baton Relay (QBR)The QBR represented an opportunity for theOCto generate significant internationalpublicity and promotion in advance of theGames. The QBR involved differentsegments: the formal QBR launch at London by

Queen Elizabeth lion 29 October 2009; the international leg of the QBR from 29October 2009 to 25 June 2010 through

the Commonwealth countries; and



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the domestic leg of the QBR through 35StatesjUTs before arriving at JLNStadium for the Opening Ceremony on 3October 2010.

10.4.1 Consultancy Services for QBRWe found that Maxxam International wasirregularly awarded the contract forconsultancy services for QBR in February2008, as summarised below: The process from issue of EOI (May

2007) to award of the contract (February2008) took an unduly long period ofeight months;

There was no global tendering, andadequate time was not provided forpotential bidders. Maxxam Internationalwas also allowed to submit its bid on 25September 2007 after the due date forsubmission;

E-mails seeking presentations fromtechnically qualified bidders were sent toMaxxam on 27 September 2007 but tothe other two bidders only on 29September 2007, providing them just 5days for preparation;

Maxxam was the highest cost bidder atRs.8.01 crore, but was awarded thecontract on the basis of a newly evolvedcriteria - cost per manday (rather thantotal cost), which was not mentioned


earlier. Further, DC did not possessinformation on the actual mandays ofconsultancy services provided byMaxxam and made full payments,evidently without considering thisaspect; and

Contrary to the RFPprovisions, DCagreed to bear the service tax liability ofUS$ 0.242 million (Rs. 1.08 crore),irregularly benefiting Maxxam to thatextent.

We found that payments of $ 25,850(Rs. 1.16 lakh) were made to Maxxamfor November-December 2007, evenbefore the issue of the Lol to Maxxamin January 2008.It appears that OC had alreadyinformally decided to award thecontract to Maxxam, and theevaluation process was just a charade.

10.4.2 Design and manufacture of batonsfor QBR

As per the Host City Contract, the DC wasrequired to supply two batons for the QBR -a route baton (which was to be carriedthroughout the route) and a ceremonialbaton (into which Queen Elizabeth II'smessage was to be transferred for theopening ceremony). We found that therewas a delay of 15 months in obtaining CGFapproval for the baton design, due to theGC's failures.

2 @ 1US $= R s. 4 5



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10.5 QBRLaunch CeremonyThe QBRwas to be launched in London byQueen Elizabeth-II and the President ofIndia on 29 October 2009. In May 2009, theOC increased the budget for the QBR launchceremony from Rs. 2.20 crore to Rs.12.77crore, purportedly on account of the visit ofthe President.10.5.1 Event Management Agency for

QBR Launch at LondonFor the QBR launch ceremony at Londonon 29 October 2009, OCappointed JackMorton Worldwide (JMW) on 24September 2009 at a cost of Rs.1.50 crore( 1, 99,982lWe found the integrity of the process ofaward of the QBR event managementagency contract to JMW was suspect: Global tendering was not followed, nor

was sufficient time provided to potentialbidders;

Technical evaluation was flawed, sinceweightage was given to bidders whosubmitted themes, drawings and plans,which was contrary to the RFP(whichindicated such themes and concepts asa deliverable of the firm, in liaison withthe OC). Thus, bidders who potentiallyhad advance knowledge of thisrequirement were at an advantage;

One technically qualified bidderwithdrew from the process, questioningthe evaluation criteria adopted and alsoindicating that no time was available forproper execution. Interestingly, thisbidder questioned the evaluationcriteria a day after the purported date

3 1= RS.75

of the meeting of the technicalevaluation committee which decidedthese criteria. In fact, these evaluationcriteria were not even communicated tothe bidders; it is thus not clear on whatbasis these criteria were questioned.

Inexplicable reduction inscope of work of JMWLessthan 20 days after award (andwith less than 20 days to the QBRlaunch), OC revised the work order toJMW on 10 October 2009, removingwork relating to outdoor video displayscreens, transport and logistics (whichwere later awarded to AM Films andAM Cars & Van Hire Ltd) andsimultaneously increasing (rather thandecreasing) the cost to Rs. 1.87 crore( 2, 49,739). This reduction in scopeand increase in cost is inexplicable.

In addition, excess payments, amounting to 30531 (Rs. 22.90 lakh) were made to JMWat the instance of Chairman and SG,OCasdetailed below:

Increased Scope of Work due to visit ofPresident -In October 2009, DG-OCandChairman OCapproved an additionalpayment of 10350 (Rs.7.76 lakh) toJMW proposed by Shri SanjayMahindroo, DDG, purportedly due toincreased scope of work on account ofthe visit of the President of India. In fact,this visit was known to the OC in May2009 itself, well before the award of thecontract to JMW. Neither Chairman norDG, while approving the payment,



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questioned Shri Mahindroo regardingthe reasons for change of scope of work.Further, during execution of the work,OC hired certain extra items from JMW,for which 2370 (Rs. 1.78 lakh) waspurportedly paid in cash by ShriMahindroo to JMW.

Trafalgar Square Function - OCscheduled a function at Trafalgar Square,London, which was later cancelled andJMW intimated about this cancellation.Subsequently, JMW raised a bill of 31000 (Rs. 23.25 lakh) for this event,claiming that they had already incurredthese expenses. Curiously, this issuewas dealt with directly by the Chairmanand SG.The instruction to work on thisfunction was given from the Chairman'sSecretariat, and the SGagreed to payhalf this amount; ultimately 17811(Rs. 13.36 lakh) was paid to JMW.

Role of Shri Darbari and ShriMahindroo in QBR LaunchInterestingly, the expenses for the QBRLondon launch were not approved bythe QBR functional head. Theseexpenses were handled by Shri TSOarbari, JOG (Revenue Marketing &Chairman Secretariat) (who wasappointed by Chairman, OC, althoughwithout a formal office order, as in-charge of the London launch) and ShriSanjay Mahindroo, DOG (Technologyand Marketing) (who was closelyinvolved without a formal role).


10.5.2 52 member delegation forQBR Launch Ceremony

On 21 October 2009, Chairman, OCapproved a 52 member delegation for theQBR Launch Ceremony, which was atvariance to the 36 member delegationapproved by MYASon 19 October 20094;reasons for non-adherence to the MYASapproval, and the criteria for selection ofdelegates, were not documented.Consequently, the OC booked 56 rooms,and incurred excess expenditure of 22,910(Rs. 17.18 lakh) for the persons in excess ofthe MYAS-approved delegation. We alsonoticed: Extra expenditure of Rs.14 lakh on

account of travel booking of extramembers (including Smt. MeeraKalrnadi" and Smt. Ranjan Mukherjee")and relatives of baton bearers, whowere not in the approved list;

OCfailing to deduct TDSamounting 18898 (Rs.14.17 lakh), while making twopart payments to the hotel;

Excess payments totalling 2084(Rs. 1.56 lakh) on account of doublecharging for two rooms, and a superiorroom beyond entitlement; and

Excessadvance payment of 3399(Rs.2.55 lakh) by the OC to the hotel.

Based on a proposal from the DCfor a 37-memberdelegationShri Kalmadi (ex-Chairman, DC) stated that Smt. MeeraKalmadi bore her own travel expenses, without howeverproviding support ing documents. However, DC conf irmedthat the ticket in the name of Smt. Meera Kalmadi wasbooked by DC.Wife of DSD to LG Delhi



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10.5.3 Hiring of AM Films UK Ltd andAM Cars & Van Hire Ltd forvarious services

We found that the OC made paymentsof 386,237 (Rs.2.90 crore) duringOctober 2009 to two little knownentities, AM Films UK Ltd. and AM Carand Van Hire Ltd, for diverse andunconnected services for the QBRLaunch Ceremony: 146,869 for hiring of large outdoorvideo display screens and 1275 forpostage, photocopy, paper,cartridges etc;

238,093 for transport facilities,branded cars & buses, driverservices, power generation facilities,mobile toilets, telephone chargesetc.; this included a payment of 100,625 due to AM Cars and VanHire Ltd but actually made to AMFilms UK Ltd.

These services were originally to beprovided by the QBR EventManagement Agency, JMW, but weretaken away from JMW's scope of workjust 20 days before the QBR Launchceremony for unexplained reasons.In our view, the assignment of work toAM Films UK Ltd/ AM Cars and VanHire Ltd and payments therefore werehighly questionable; associatedapprovals and clearances wereobtained and payments made withuncommon haste, and large amountswere also paid in cash, perhaps toavoid leaving a transaction trail.

10.5.3.1 Hiring of AM Films UK Ltd. forlarge outdoor video displayscreens

We observed the following: Three bids were purportedly obtained

by Shri Mahindroo without anyadvertisements being issued; it is notknown how these bids were obtained;

One of the bidders (3 Dots Vision Ltd.)was not registered with the UK Registrarof Companies; we also verified that theagency did not exist at its statedaddress;

The credentials of AM Films UK Ltd.appear suspect, since the companyregistration and VAT registrationnumbers indicated in its advance invoicewere false;

The committee, consisting of ShriJeychandran, JOG (F&A), ShriMahindroo, DDG (TM) and Shri SudhirVerma, DDG (Communications) whichevaluated the quotes and selected AMFilms UK Ltd at a total cost of 146,869(Rs. 1.10 crore) and recommended 100per cent payment in advance, wasdifferent from the originally formedcommittee. The minutes of thecommittee meeting purportedly held atLondon on 23-24 October 2009 weresigned by Shri Jeychandran, who wasactually in Delhi on these dates andprocessed the payment to AM Films Ltd.

AM Films Ltd. submitted an advanceinvoice for 146869 (Rs. 1.10 crore) on23 October 2009. Approval wasobtained by Shri Mahindroo from theChairman and communicated to ShriJeychandran bye-mail/fax andprocessed, the OCCA's certification ofpayment of foreign currency obtained,



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and funds transferred to AM Films Ltd -all on 24 October 2009 with undue hasteby the oc.In a separate response, Shri Kalmadiindicated that he gave his in-principleclearance, on account of urgency andthe threat of cancellation of the QBRlaunch (as informed by Shri Mahindroo),and also expressed his dissatisfaction onthe manner in which this issue had beenhandled. He also indicated that many ofthese aspects were approved/processed by other officials - ShriBhanot, Shri AK Mattoo and ShriJeyachandran. In our view, thePresidential visit was known well inadvance, and there should have been nooccasion for such "emergent" action.

Payment of 1275(Rs. 0.96 lakh) wasalso purportedly made in cash by ShriMahindroo to AM Films for unrelatedpostage/ stationery services, whichappears unusual.

10.5.3.2 Hiring of Services of AM Carsand Van Hire Ltd.

AM Car and Van Hire Ltd. was hired fordiverse and unconnected services, includingpower generation and video equipment(including LED), mobile toilets, barriers andfirst aid provision. We found that thisagency was hired on the basis of a proposalby Shri Mahindroo on 20 October 2009,who stated that he had learnt about thefirm during his visit to London in September2009 through the High Commission of Indiaand the Mayor's Office. Shri Mahindroo'sclaim was false, as he had earlier utilisedthe services of the agency in August 2009.Further, the selection of a transportsolutions company for various eventmanagement services lacks credibility.


Payments of 238,093 (Rs.1.79 crore) weremade for these services as follows: Even before the agency submitted three

invoices' for 100,625 (Rs.75.47 lakh)on 21st October 2009, the paymentswere processed and DGand Chairman'sapproval was obtained on 20 October2009 itself; the payment was transferredto the account of AM Films UK Ltd. (andnot AM Cars and Van Hire Ltd.) on 22October 20098 This payment included 49,803 (Rs. 37.35 lakh) for powergeneration purportedly required by SISLive", but no correspondence with SIS-Live was documented.

A subsequent payment of 36,612(Rs. 27.46 lakh) was made on 26October 2009, on a proposal by ShriMahindroo which was processed forpayment by Shri Jeychandran after a"talk with the Chairman".

A cash payment of 100,856 (Rs.75.64lakh) was made by Shri Mahindroo,purportedly for various services andworks. There seems to be no reason forsuch large cash payments, except toavoid a transaction trail.

10.5.4 Gift Plaques for QBR LaunchCeremony

OC placed an order on 23 October 2009 for91 silver and gold plated plaques at a cost ofRs. 14 lakh as gift items for the QBR Launch

For branded buses and taxis, transport services andother services (barriers, toi lets etc.)DC informed the Westminster City Council that AM Films(and not AM Cars and Van Hire Ltd.) had been hired forproviding these services. This was either misinformationor indicated that the two entities were identical or thesame.The contractor of Prasar Bharati , the Host Broadcasterfor CWG-2010.



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Ceremony. 72 small plaques were to besupplied, but only 52 plaques had beentaken to stock; there are no records ofactual distribution of these plaques.Further, only a payment of Rs.5 lakh hadbeen paid till December 2010. Incidentally, Shri Jeychandran and Shri

Mahindroo drew advances of 65,000(Rs.48.75 lakh) each from the oc. Althoughthey had submitted their adjustment bills inDecember 2009 and February 2010respectively, these had not yet been settled.

28,301 (Rs. 21.23 lakh ) on miscellaneousitems, including food bills, alcohol charges,Chairman's party, phone charges, tips tohotel staff etc. and also expenditure withoutdocumented justification and/or reasons.

10.5.5 Other Miscellaneous Expenditureincurred by Shri Mahindroo

Besides the above payments, ShriMahindroo also incurred expenditure of

10.6 Opening and Closing Ceremonies

We note that the ceremonies were widely appreciated; in particular, the openingceremony was a spectacular success. Our concerns, as described below, focus on delayedplanning, lack of assurance that funds were expended economically, and numerousinstances of non-compliance with procedures to ensure due diligence and transparency.



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10.6.1 Delays in planningThere were huge delays in planning for theopening and closing ceremonies. The manning of the Ceremonies

Functional Area commenced only inJanuary 2008 (against the originaldeadline" of October 2006), and nopersonnel from the Ceremonies FAformed part of the delegation toMelbourne CWG-2006.

The process for engagement of theinternational consultant and the eventmanagement firm was suspended bythe OC in December 2008 on the ordersof MYAS(since the GoM had startedexamining this issue), and restarted onlyin May 2009 (after the appointment of aCreative Director in line with the GoM'sdirections).

The first creative concepts for theopening and closing ceremonies werepresented only in September andDecember 2009 respectively, against thestipulated timeline of October 2008.


10.6.2 Overlapping roles of agenciesFor handling the opening and closingceremonies, multiple sets of agencies wereappointed: Shri Bharat Bala Ganapathy was engaged

in February 2009 as the CreativeDirector on the recommendation of apanel of experts" (including Shri BharatBala himself) constituted by the GoM.From November 2009, he wasappointed as "Creative Consultant";

Spectak Productions (headed by Mr. RicBirch) was engaged in September 2009as the international consultant forceremonies;

Wizcraft was appointed in December2009 as the Event Management Firm;and

17 consultants (one Indian and 16international) were appointed for theperiod between February and December2010 for various services.

There was considerable overlap betweenthe roles and responsibilities of thesemultiple agencies, as summarized below:

Table 10.2 - O verlapping roles of different agenciesRole of Shri Bharat Bala Role of Spectak Productions (Shri Ric Birch)

Adequate support for planning of creativestory/ boards/ scripts and designs, logisticsand production plans/schedules (includingaudio-visual, sound/music, lighting, props,decor, aerial rigging, pyrotechnics etc.)along with timely and high qualityimplementation of all creative andproduction aspects of the ceremonies.Help to access the most appropriate talent,technology and specialist consultants andcontractors from across the world.

(Phase I - Creative DirectorFebruary - October 2009)Ideation and development ofcreative concept for openingand closing ceremonies

(Phase II - CreativeConsultant - November 2009- October 2010)Advice and work for overalldevelopment of concepttheme Provide timely advice to ensure that thepreparations and delivery of ceremonies

are meticulously planned.

10 As indicated in the General Organisation Plan of the oc.11 The other members were Shri Javed Akhtar, Shri Prasoon Joshi and Shri Shyam 8enegal.

Role of WizcraftRendering the service ofcreatively enhancing,coordinating, organizing,producing, directing,managing, executing andsuccessfully delivering theopening and closingceremonies.Sourcing ceremoniesprocurement for technicalarrangements, performersand other creativeelements.



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Consultant WorkMark Fisher

Show Caller

Production DesignerPiers ShepperdDurham Marenghi Lighting Designer

Technical DirectorLaurence Estrin Communications DesignerAndrew Garrod Associate Technical DirectorJames LeeIan Baldwin

Production RiggingScott Willsallen Audio Designer

Technical Systems ManagerSarah Grubb Master Scheduler

Technical Directorla MelzigStage Safe

CAD ManagerHealth & Safety Consultant

Aaron FelkerRichard Hartman Scenic Engineering and Scenic Rigging ManagerKnut Stockhusen Roof Loading StudyLinus topez" Power Consultant

Rigging consultanttage OneLaura Thatcher

The need for a multiplicity of agencieswith roles, which are prima facieoverlapping, is not clear; we foundinstances of Shri Bharat Bala renderingadvice on areas within the remit ofWizcraft. At best, two agencies - one asa consultant/ advisor, and another forexecution (on a turnkey basis) could bejustified.

We also noticed that the workingrelationship between Shri Bharat Bala (whowas appointed on the directions of GoM)and the other agencies - Wizcraft, SpectakProductions and other consultants wereoften discordant. OC's documentationreveals complaints by Mr. Ric Birch aboutthe lack of live stage experience of ShriBharat Bala. We are unable to comment onthe differing perceptions of Mr. Ric Birchand Shri Bharat Bala as to theirperformance/ experience on the basis ofavailable records.

12 Only Indian Consultant

10.6.3 Engagement and Performanceof Shri Bharat Bala

We found that no contract, specifying hisscope of work and terms of remuneration,was signed with Shri Bharat Bala fromFebruary 2009 till February 2010. ShriBharat Bala unilaterally decided his ownscope of work for the first phase. ShriBharat Bala also unilaterally determined hisown remuneration: Initially in June 2009 at Rs.40 lakhs per

month from May to August 2009 and Rs.10 lakh per month thereafter; and Revised in July 2009 to Rs.50 lakhs per

month from May to August 2009 and Rs.12.50 lakh per month thereafter.

He was paid a total of Rs.3.09 crore tillOctober 2010 (including an advancepayment of Rs. 0.25 crore).As against the original timeline of August2009, Shri Bharat Bala presented thecreative concepts for the opening and



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closing ceremonies only in September 2009and December 2009 respectively. Further,the creative concept for the openingceremony was largely a rearrangement ofideas presented by Wizcraft in August 2009(as part of the technical evaluation for theevent management firm").We are not clear about Shri Bharat Bala'srole in Phase-II as Creative Consultant-"advice and work for overall developmentof concept and theme", when the creativeconcepts had already been presented andan event management firm (Wizcraft)appointed to deliver the ceremonies.10.6.4 Engagement of Spectak

Productions (Mr. Ric Birch")We found that: Global tendering procedures were not

followed for engagement of theinternational consultant;

The tendering process commenced withan EOI in September 2008, wassuspended in December 2008 (on thedirections of MYAS), and restarted inMay 2009. After evaluation in July 2009,an Lol was issued in September 2009 toSpectak Productions for Rs.10.33 croreand the agreement signed in December2009.

The performance guarantee obtainedfrom Spectak Productions was faulty, asit could be invoked only with its priorapproval. Consequently, OCwasunsuccessful, when in December 2010(after a review), it tried to invoke theperformance guarantee.

13 Shri Bharat Bala was present during the technicalevaluation.

14 CEO, Spectak Productions


OCfavoured Spectak Productions byagreeing to take on the service taxliability of Rs. 1.06 crore (when the RFPclearly indicated that the consultant wasto indicate costs inclusive of all taxes).

10.6.5 Engagement of Wizcraft asEvent Management Firm

We found that: The tendering process was initiated in

September 2008, suspended inDecember 2008, and restarted in May2009. After evaluation in August 2009,the contract with Wizcraft was signedonly in December 2009.

The scope of work of Wizcraft was notadequately clear, as OCalso appointedother consultants and contractors,whose scope of work fell within thesame areas as indicated in Wizcraft'sscope of work.

No milestones were indicated in thescope of work, and the schedule ofpayments was not linked to deliverables.

In the EOI, the contract was to be givenon a turnkey basis on the lines ofMelbourne CWG-2006; this waschanged through a corrigendum issuedon 30 September 2008. In the RFP,theEvent Management Firm was not to getagency commission on procurementdone by OC directly. However, in thecontract, OC agreed to pay a fixedceremonies management fee of Rs. 5.40crore and event agency charges on asliding scale depending on theprocurement amount, (even on GC'sdirect procurements) which eventuallyamounted to Rs. 16.09 crore. Thispattern of remuneration was on the



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lines of Melbourne CWG-2006.However, OC did not follow the turnkeybusiness model followed at Melbourne,and appointed staff/ consultants andmade procurements on their own.

In our view, the event agency chargesof Rs. 16.09 crore to Wizcraft were notjustified. OC's response that Wizcraftwas providing BOQs, drawing up scopeof work, and sourcing vendors/ artistsetc. is not tenable, since theseactivities were undertaken by ShriBharat Bala, Spectak Productions andthe other 17 consultants engaged bythe OC.

10.6.6 Inappropriate Engagement ofOther Consultants

OC appointed 17 other consultants forvarious ceremony-related activities for theperiod February to December 2010; Rs. 6.12crore had been paid till February 201115 tothese consultants. 16 out of these 17consultants were appointed on nominationbasis (largely on the advice of Mr. Ric Birchand Event Management Firm), with oneconsultant appointed through limitedtender.Our review of the EOIdocuments submittedby Wizcraft revealed that five of theseconsultants (Mr. Piers Shepperd, Mr.Durham Marenghi, Mr. Mark Fisher,Mr. Laurence Estrin and Mr. RichardHartman) had addressed consent lettersdated 1 June 2008 to Mr. Ric Birch, whereinthey indicated that: They would provide their services on an

exclusive basis to Spectak Productions15 Final payments were yet to be made to two consultants.

for submitting a creative proposal forthe CWG-2010 ceremonies;

It was understood that Spectak wasproviding their consulting services toWizcraft; and

Should Wizcraft be appointed as theproducer for the ceremonies, theyconfirmed their availability andwillingness to participate in the creativeproduction group.

Further, the website of Spectak Productionsalso indicates that Mr. Ric Birch and 10Spectak contractors provided services forCWG-2010.

Nexus between Mr. Ric Birch(Spectak Productions),Wizcraft and otherconsultantsThis correspondence involving Mr. RicBirch (Spectak Productions) and theadditional consultants (with referencesto Wizcraft's role) took place on 1 June2008, while the EOls resulting inappointment of Spectak Productionsand Wizcraft were issued only inSeptember 2008. We conclude that: Mr. Ric Birch and Wizcraft had ahigh level of confidence of being

awarded the contracts for theCWG-2010 ceremonies, and hadtied up with other experts well inadvance. Incidentally, the otherrespondents to the EOI did notindicate evidence of such tie-ups.



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These consultants, whoexpressed their willingness inJune 2008 to work for Wizcraft,were appointed by the OC in2010. Evidently, the cost ofengaging these consultants wasto be paid by Wizcraft, and not bythe OC. OC should not haveappointed these additionalconsultants, and theirengagement at a cost of at leastRs. 6.12 crore amounted to aclear financial benefit to Wizcraft.

Further, the terms and conditions of thecontracts with the 16 foreign consultantsdid not safeguard GC's interests: The mandays to be spent on-site in India

were not provided in 10 cases, and therewas no formal system of periodicmonitoring and reporting in all cases.

We found three specific instances ofoverlapping scope of work - showcaller/ stage manager, rigging manager,and master scheduler - between theconsultants and Spectak Productions,Wizcraft and another consultant.

No performance related provisions wereincorporated in any of the contracts(despite OCFC'srecommendations),which prevented OC from takingadequate action in June 2010 againstMr. Shepperd and Mr. Marenghi.Further, no clauses regarding refund ofadvances (for breach of contract or non-delivery of services) were incorporated;consequently, OC could not take actionagainst four consultants, who resignedmid-way.


12 out of 17 contracts did not specifythe liability for service tax; OC finallybore the liability for service tax of Rs.0.52 crore. In the case of Mr. MarkFisher, OC failed to deduct service tax ofRs. 1.23 lakh.

We also found overpayments of Rs.0.43crore to Mr. Shepperd and Mr. Marenghi, aswell as an unexplained reduction in thescope of work of Mr. Andrew Garrod" on 4October 2010.

10.6.7 Theme songShri AR Rehman was engaged for composingand performing the theme song for theOpening Ceremony. The theme song waslaunched on 28 August 2010 and the videoshoot completed only on 11 September2010, as against the contractual date of 15August 2010 for release at a pressconference. This delay resulted in lack ofadequate exposure and publicity for thetheme song. No action could be taken forthe delay, due to absence of penalprovisions in the contract.10.6.8 Music Composer and DirectorOC engaged Shri Ranjit Barot as musiccomposer and director for a turnkeysolution for the opening and closingceremonies at a total cost of Rs. 1.75 croreplus taxes. Contrary to the Fast TrackCommittee's direction, OC did not obtainthe cost break-up for each sequence, nordid it constitute a negotiation committee.Further, we noticed overpayment of Rs.0.18 crore to Shri Barot; OC also incurredexpenditure of Rs.0.73 crore for royalty andlicense fees for music (which should havebeen borne by Shri Barot).16 Who was paid $ 102,700 (Rs. 0.46 crare)



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10.6.9 Procurement of accessories/special items

In order to present spectacular opening andclosing ceremonies, DC entered into variouscontracts for accessories/ special items. Wefound that the tendering/ award process inmost of these contracts were deficient;details are summarized below.

Consultant for Band StandWith the approval of GaM, OC engagedMark Fisher Studio, London in October2009 at a fee of USD 514,000 excludingtaxes (Rs. 2.31 crore) for providingarchitectural designs and drawings fora centre stage pavilion (band stand) inthe JLN Stadium for the openingceremony.We found that Mark Fisher Studio" wasengaged directly by the EMC (withoutOCFC'sapproval").Subsequently, Mr. Mark Fishermanaged to get his scope of work revised to cover

only "preliminary" designs anddrawings", rather than completedesigns and drawings, and

revised terms for 100 per centpayment in advance.

When the GoM decided in December2009 to dispense with the bandstand,full payment had already been made;the CEO's efforts to subsequentlyreview the work done by Mr. MarkFisher were unfruitful.

17 Mr. Mark Fisher had attended two creative workshopshosted by Shri Bharat Bala; he was also one of theconsultants, who submitted a consent letter to Mr. RicBirch to work with Wizcraftfor CWG-2010.

18 The proposal was, post-GaM approval, remitted to theOCFC,who refused to comment on it at that stage.

10.6.9.1 Hiring of AerostatAfter the idea of the band stand wasdropped, Mr. Mark Fisher presented adesign for an aerostat in January 2010. Aturnkey contract for the aerostat wasawarded to K-Events at a cost of 5.87million (Rs. 35.81 crore). We found thatMr. Ric Birch had claimed that after havingsurveyed 51 agencies for different aspectsof the aerostat", K-Events was the onlyrespondent. Further, Mr. Ric Birch falselyclaimed that he had no corporate orcommercial relationship with K-Events; infact, Spectak Productions and K-Events werepart of the same group, the FilmmasterGroup.Further, DC showered other undue favourson K-Events: It hired two consultants and equipment

for this work and paid Rs.2.23 crore; andadditionally spent Rs. 0.23 crore forexpenses on customs duty and electricgenerator, as well as necessaryapprovals; these were within the remitof the turnkey contract awarded to K-Events;

D C also provided undue benefits worthRs.1.13 crore on account of travel,accommodation and other charges.

Further, one out of the five parts (sausages)of the aerostat was not utilized for theceremony.10.6.9.2 Pyrotechnic supplierDC hired Howard & Sons in June 2010 as thepyrotechnic supplier at a cost of US$ 0.75million (Rs. 3.38 crore). We found that thesupplier was selected through a limited19 No evidence of such communications with these 51

agencies was available on record.



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tender issued to firms recommended by Mr.Ric Birch, contrary to the Fast TrackCommittee's direction for an open tender":Also, we found excess payment of Rs.0.23crore on account of non-adjustment offreight charges.10.6.9.3 Lighting and SearchlightDC awarded a contract for lighting andsearchlight to PRG,Belgium at a cost of US$3.5 million (Rs. 15.75 crore). We found thatthe tendering/ award process was irregular: Limited tendering was adopted, contraryto the recommendations of the Fast

Track Committee for open tendering.Further, the firms for the RFPwererecommended by the Technical Director(Mr. Piers Shepperd) and not the lightingdesigner (Mr. Durham Marenghi).


The last date for submission of the bidwas extended on PRG's request, as theyhad not prepared the bank drafts forprocessing fee and EMD.

The contract was originally envisaged astwo separate RFPsfor lighting andsearchlight, but a single contract wasawarded on the basis of a post-bidproposal by PRGfor a compositecontract. However PRGdid not providethe details of the equipment, they weregoing to supply.

The technical evaluation was faulty, asanother bidder, BeiAo Events, Chinawith relevant experience was technicallydisqualified through incorrectevaluation.

Dub ious Technical E valu atio n o f L ightin g andS earchligh t RFP sto favou r PRG

20 Later in March 2010 OCFCagreed for limited tender.

Our review of the papers relating to termination of the services of Mr. DurhamMarenghi indicated an e-mail from Mr. Durham Marenghi to a PRGofficial, who thencomplained to the OC against Mr. Marenghi's attempt to "frighten" them.In his e-mall. Mr, Marenghi alleged: vigorous efforts by Wizcraft to rate PRGas top of the list, and mark down another

bidder (Agora) for the lighting RFP, PRGfailing to meet the bid requirements for the searchlight RFP.Mr. Marenghi then indicated that he and PRGcould then "play our collaboration card ...so that OChas their preferred one stop shop" and Wizcraft "had their obviouslypreferred company in place". Mr. Marenghi also offered to "assure everyone of theabsolute integrity of PRG's actions in Delhi" if PRGsub-hired a part of the contract fromthe other bidder, Agora, "which would keep them from feeling aggrieved".Mr. Marenghi also drew reference to the need to be "especially squeaky clean as wehead towards the infinitely politically correct procurement process that we will find inthe UK (2012 Olympic) Games opportunities coming up soon."On the basis of PRG's complaint (enclosing Mr. Marenghi's e-mail), the OC terminatedMr. Marenghi's contract.



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Subsequently, OC re-evaluated the selection of PRG. However, the re-evaluationcommittee, consisting of Shri Sanjiv Mittal, JOG (Procurement), Shri KUK Reddy, DOG(F&A), Shri Jeyachandran, JOG (F&A), Shri Ram Mohan, DOG (Legal), Ms Indu AnandDirector (Ceremonies) and representative of Wizcraft found the selection of PRGto becorrect. Interestingly, the committee re-evaluated the contract for lighting (which wasthe main focus of Mr. Marenghi's e-mail) and not the searchlight contract.

We also found other instances of unduefavour by the OCto PRG: Irregular payment of 225,000 (Rs. 1.37

crore) to PRGon account of damage toequipment, although risk insurance forsuch eventualities was contractuallyPRG's liability;

Short-deduction of TDSof US$ 1.13million (Rs. 5.09 crore), contrary to theadvice of OC's CA; and

Provision of 136 air flights free of cost,instead of 60 (as contractuallystipulated).

10.6.9.4 Video Content"We found the OC irregularly awarded acontract of Rs.3.8 crore for video content toPrime Focus (the L-3 bidder), afternegotiations with them, on the basis of ShriBharat Bala's "strong belief in hiscapabilities", to reduce their rates to the L-lrates. Incidentally, no tenders were floated,and only proposals given by Wizcraft wereevaluated.

10.6.9.5 Audio SystemsOC awarded the contract for audio systemsat a cost of US$ 1.15 million (Rs. 5.17 crore)to Norwest Production and Sound.Com. Wefound the award process to be irregular: Although an open RFPwas stated to

have been issued in June 2010, thesuccessful PQ bid was not available onrecord;

Norwest submitted two options in itsbid, one as per OC's criteria and theother on alternative criteria. Duringevaluation, OC revised its criteria andopted for the alternate option given byNorwest, thus selecting Norwest andnot PRG22who was Ll as per OC's RFPcriteria; and

While the work was awarded to Norwestthrough tendering, the contract wassigned with Norwest and Sound.comand payments were equally dividedbetween them.

21 Tobe projected on the aerostat22 Who had just been awarded a composite contract for lighting and searchlight.



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Appointment of Shri Omung Kumar (Blue Lotus Productions)as supplier of props for ceremoniesOC engaged Shri Omung Kumar (Blue Lotus Productions) as Art Director for the openingand closing ceremonies and manufacturing of props. The proposal for appointment ofShri Omung Kumar was initiated on the recommendation of Wizcraft, Mr. Ric Birch andShri Bharat Bala; a separate tender process for manufacturing of props was scrapped atthe commercial evaluation stage. The scope of work was finalized in April 2010 withShri Omung Kumar, bypassing the Fast Track Committee, which was considering thisissue. Initially, OC signed a turnkey contract for Rs. 11 crore plus taxes (for props and artdirection for the opening ceremony) in July 2010. Subsequently, Shri Kumar was givenadditional work and props for Rs. 1.45 crore plus taxes, contrary to the principle of a"turnkey contract". This was further expanded on 10 October 2010 to cover props ofRs. 4.04 crore plus taxes for the closing ceremony (which was just four days away). Allthese works were awarded without an approved list of props required. The need forsuch high volumes of expenditure on props is, thus, questionable.The props included vehicles of different categories, ownership for which was nottransferred in OC's name. Further, props worth Rs. 3.09 crore for the closing ceremonyand Rs.0.36 crore for the opening ceremony remained unutilized. In addition, propsworth Rs. 2.38 crore were not received at all.We also noticed that the props procured from Blue Lotus Productions were exorbitantlypriced, as is illustrated below:

DESCRIPTION OF PROPS AND PRICES CHARGEDPolo Circles (not used) - just a ply piececovered with cloth (Rs.13425/- per piece)odium (Rs.50000/- per piece)



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DESCRIPTION OF PROPS AND PRICES CHARGED

Ashok Chakra painted on cloth(4 metres diameter) (Rs. 150000/-) Placard for each CGA(Rs.3521/- per piece)



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Mobile flag holder - Used to hold the flagsfor all CGAs (Rs.2254/- per piece) Garland with stand used as a show piece(Rs. 46833/- per piece)



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Small truck (lata 407-1996 model) Rs.4.47 lakh

Though the EBasked DC to dispose off these props by selling them in order to earn revenue,Chairman DC approved the proposal for handing over the props and costumes to artist andschoolchildren.



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10.6.10 Ground Protection and restoration FOP


Ground Cloth Closing ceremony Lyingin JLN Stadium (Picture Taken 1 March 2011)

OC incurred a total expenditure of Rs. 17.84crore on various forms of protectivecoverage for the ground at JLNStadium forthe opening and closing ceremonies. Thisincluded: Rs.7.87 crore on procurement of

ground protection (temporary flooringtiles to take heavy loads);

Rs.2.71 crore on ground cloth (thickcarpets) for the opening and closingceremonies; and

Rs.7.26 crore for rolling out grass turfreplacement for the Field of Play in thestadium (where grass had initially beenlaid by CPWD at a cost of Rs.0.40 crore).

We found that the need for multiple formsof ground protection was not adequatelyjustified. In addition: The area to be covered was fixed after

the RFPwere issued; this area wassubsequently reduced and even thereduced supply (of ground protectiontiles and ground cloth) was utilised onlypartially" {leaving 4500 tiles worth

Ground cloth Opening ceremony Lyingin JLN Stadium (Picture Taken 1 March 2011)

Rs.2.02 crore as well as 16 rolls ofground cloth worth Rs.0.20 crore,unutilised).

Ground cloth for the closing ceremonywas merely optional, but the OC stillwent ahead with procurement.

Further, the procurement of all these itemswas irregular: Procurements were done without

following global tendering and also notproviding adequate time for bidders torespond.

The ground protection contract wasinitially floated on hiring basis in March2010. Out of three qualified bids, the L-1bidder (Signature Fencing and FlooringSystems) and L-2 bidder (SignatureFencing jointly with Jubilee SportsTechnology Ltd.) were essentially thesame. After the L-1 bidder withdrew itsoffer for Rs.7.87 crore {purportedly

23 The original requirement of ground tiles of 23,000 sq.meter was reduced to 16,900 sq. meter, but only an areaof 11,970 sq. meter was covered.



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because it refused to bear thewithholding tax), the scope of work wasreduced (from 23,000 sq. meter to16,900 sq. meter) and awarded in June2010 to L-2 (since Jubilee Sports agreedto bear the tax). Then, Jubilee Sportsrefused to bear the tax, and the contractwas awarded on procurement basis toRs.7.87 crore to Signature Fencing.Incidentally, Signature Fencing suppliedonly one layer of ground protection(against the contracted three layers ofprotection)

The ground cloth contracts for theopening and closing ceremonies wereawarded on the basis of singleresponses to GeoFabrics, UK and LalitArt Studio at costs of US$ 387,695

(Rs. 1.74 crore) and Rs.0.97 crore.Further, Lalit Art Studio supplied groundcloth of the wrong colour (white againstblack and sand colour), but DC acceptedthe cloth.

D C awarded the contract for rolled grassturf replacement in June 2010 at Rs.7.26 crore to Hortus Consultants Ltd,after re-tendering. In addition, DC alsoawarded a service agreement for Rs.0.48 crore in September 2010 to supplywater proof membrane for levelling ofground and filling of sand for the Fieldof Play, which was actually theresponsibility of CPWD. There was noevidence that CPWD refused toundertake this work.

Unused Ground Protection Tiles (March 2011)

Documents

CAG's CWG Audit Report - Chapter - 10 (2011)