With another arrest, Andhra Fibregrid scam is back in focus. What is it all about?

CID last year launched a probe into alleged irregularities in tenders floated by APSFL that benefitted blacklisted firm Tera Software.

BySNV Sudhir

Published Oct 14, 2022 | 2:17 PMUpdatedOct 14, 2022 | 2:17 PM


Sleuths of the Andhra Pradesh CID have arrested Kanumuri Koteswara Rao, one of the accused in the multi-crore AP Fibregrid scam.

He is accused No 23 in the FIR registered by the APCID in its investigation into the alleged irregularities in awarding of tenders for the AP Fibregrid project by AP State FiberNet Ltd (APSFL) to benefit a company called Tera Software.

Koteswara Rao was detained Hyderabad airport by officials of the Bureau of Immigration when he was returning from the US earlier this week as there was a Lookout Circular issued against him.

On receiving information about his detention, CID officers went to Hyderabad and arrested Koteswara Rao. He was produced before a magistrate on Thursday, 13 October. He has been remanded in custody till 21 October and sent to the district jail in Vijayawada.

The fourth arrest

This is the fourth arrest in the ongoing probe into what has come to the called the ₹321 crore Fibregrid scam that is alleged to have taken place during the previous TDP government.

Earlier, in the course of the investigation into the scam, three others were arrested: Former Managing Director of the Infrastructure Corporation of Andhra Pradesh (INCAP) K Sambasiva Rao, and the directors of two private firms, VLS Viplav Kumar and Vijaykumar Rammurthy.

The  Andhra Pradesh High Court has granted anticipatory bail to the main accused in the scam — Vemuru Hari Krishna Prasad and Gopichand Tummala.

What is the case all about?

The APCID, which last year launched its probe into the alleged irregularities in the tenders floated by APSFL between 2014 and 2019, found that the then TDP government had gone out of its way to allow a blacklisted company, Tera Software Pvt Ltd, to lead a consortium and bid for tenders to the tune of around ₹320 crore.

The probe by the state’s premier investigation agency came after the YSRCP government, in July 2021, ordered it to investigate irregularities in the APFSL tender process.

APCID found that the company’s name was removed from the “Black List” just a day before the bids were to close. And when the bids were opened, the company emerged as the lowest bidder and won the contract.

Under the rules, the IDs of blacklisted companies are to blocked so as to prevent them from logging into any government website and bidding for tenders. However, APCID found that the company was given access to submit its bids even while it was blacklisted.

The APCID named the then member of the Governing Council, e-Governance Authority, Electronics & IT Agency and Innovation Society, and member of Technical Evaluation Committee, Vemuru Hari Krishna Prasad, Tera Software and its Board of Directors, government officials, and others, in the FIR in registered in September 2021.

Hari Krishna Prasad is said to be close to then IT minister and TDP general secretary Nara Lokesh.

More importantly, Hari Krishna Prasad was also a director in Tera Cloud Media Ltd, a company floated by the promoters of Tera Software.

Gopichand Tummala, the other main accused, was managing director of Tera Software.

Koteswara Rao’s role

CID found that  Koteswara Rao was a business partner of Hari Krishna Prasad in two companies — Koffee Media Pvt Ltd and Future Space India Pvt Ltd.

“During the course of the investigation, an audit of the work executed by Tera Software was done through an independent agency, IBI Group India, and it was found that the deviations committed at the time of execution of AP Fibregrid Phase-I contract caused a loss of ₹114.53 crore to the government exchequer,” a top APCID source told South First.

“A firm, Gemini Communication Ltd (GCL), received an amount of around ₹5 crore from APSFL with regard to the execution of Project Monitoring Agency (PMA) work. Out of this ₹5 crore, M/s Netops, owned by Koteswara Rao, received ₹3.95 crore from GCL. Koteshwara Rao, in turn, diverted funds to the family members of Vemuru Hari Krishna Prasad and other companies,” the source added.

APSFL under scrutiny

The activities of APSFL came under intense scrutiny when the YSRCP was in Opposition. YSRCP leaders accused TDP scion Nara Lokesh’s close associates of being involved in influencing contracts awarded by APSFL.

Immediately after YSRCP came to power in September 2019, the government constituted an expert committee to examine the tenders floated by APSFL.

The committee was mandated to examine the tenders of the AP Fibregrid project, procurement of Customer Premises Equipment Boxes and work involving Bharat Net Phase II.

When in Opposition, YSRCP had alleged that the government had granted tenders of the AP Fibregrid project to a Hyderabad-based software firm without following norms.

What is the Fibregrid project?

Under the Fibregrid project, APSFL was to create infrastructure to connect every household in the 13 districts of the state with optic fibre cables, to provide internet, telephone and cable TV at an affordable price.

In the first phase, which cost around ₹321 crore, the government used electric poles to run the fibre optic cables.  These cables were connected to the substations from where the local cable operators and MSOs connected every household.

In the next phase, underground cabling was to be done and it is at this juncture that the state will need the Centre’s financial assistance.