MDI Scam: How BJP-ruled Centre was an accomplice in turning govt-controlled MDI into a private one

MDI Scam: How BJP-ruled Centre was an accomplice in turning govt-controlled MDI into a private one

It’s a saga of corruption! Blatant and Naked! Over the last 5 years of BJP rule, one of the top prestigious MBA institutions (MDI Gurgaon – Ranked 13th in Management category by NIRF in India Ranking 2019) turned from a government-controlled MBA institute to a private one.

Besides this, in different official communications, the status of NCR-based b-school was changed conveniently to the whims and fancies of MDI management and Government of India (GoI) officials.

Interestingly, all this change happened in the knowledge of the Finance Minister Mr Arun Jaitley.

The MDI is promoted by IFCI where government of India has a controlling stake of 51%. Thus, the finance ministry is also deeply connected to the affairs of the management institute.

Where does Finance Ministry stand on MDI?

While as the finance minister of India, Mr Jaitely took side of the MDI management whenever the institute sought government favour, he remained mute on the red flags raised by key stakeholders on the alleged corruption charges on MDI board and its management.

As the finance minister turned blind eyes to the misconduct of the MDI board, it seems to have encouraged MDI board to audaciously claim the institute as a private one. So much so, that the institute now legally states itself as a private institution. This is well reflected in the affidavits filed by the MDI management in different courts in 2018.

Source: Facebook Post of Dr Mukul Gupta

The institute, however, continued to use national emblem in its official documents which itself contradicts its own claim. Read Here for More on this.

MDI Scam: Ex-Director makes charges of major corruption, misuse of national emblem

Amidst all these happenings, Mr Arun Jaitley was kept apprised about the non-transpart and mysterious decisions of the MDI management. But, his ministry was only a mute spectator despite multiple complaints and representations made by the key stakeholders.

Instead of taking action over the alleged misconduct of the MDI board and illegal administrative activities at the institute, Mr Arun Jaitley, in fact, officially wrote a letter to the then MHRD minister Smt Smriti Irani requesting her to declare MDI Gurgaon as ‘Institute of National Importance’ in line of the Indian Institutes of Management (IIMs) under the IIM Bill.

Source: Facebook Post of Dr Mukul Gupta

A brazen move: MDI Management completely ignoring HC order

By filing a affidavit stating MDI as a private institute, the MDI board did not only misguide the court, it also violated an old HC order of 2014 which had held IFCI publicly accountable for affairs of MDI as the financial institution controlled by the government was providing significant financial support to the institute.

“IFCI has a deep and pervasive control on the functioning of MDI,” the Delhi HC had ruled in its order of a related matter on July 5, 2014.

“A capital grant of Rs. 3.5 crores was received by MDI from IFCI. Annual report of respondent MDI for the year 2001-02 shows that 70.5 % of MDIs total fixed assets have been financed by the grant,” the HC order had stated.

“Government institutions hold the majority share-holding in IFCI… MDI was created with the object of, imparting education in the field of business and management and the entire corpus fund of MDI came from IFCI,” the court order read, adding that “MDI has been approved by the government of India, Department of Personnel and Training as an agency for conducting national management programme for government officers belonging to the Indian Administrative Service and other Group A services as well as executive of public and private sector organization.”

Thus, the affidavit filed by the MDI management was in gross violation to the earlier Delhi HC order which had detailed the “control” of IFCI over the functioning of MDI.

Source: Central Information Commission
Source: Central Information Commission

MDI: A 1973 humble beginning as IFCI promoted institute for training of govt officials

At the time of its establishment in 1973, MDI was promoted by IFCI (where government held 51 per cent stake). As per the official records, the institute was registered at New Delhi as a society under the Societies Registration Act of 1860, primarily to set up an institute for training, consulting & research activities. Dr. Nitish K Sengupta, IAS was the last Executive Chairman serving during 1982-84. Dr. T. N. Kapoor was appointed the first Executive Director of the institute in 1984.

Spread over a 37-acre campus, MDI began on a low key with various training, consulting and research activities, starting its first programme, the National Management Programme for senior executives, only in 1988.

The first post-graduate programme, the PGPM, was launched in 1994, the Post Graduate Programme in Human Resource Management (PGP-HR) in 2004 and the Post Graduate Programme in International Management (PGP-IM) in 2006.

In 2010, MDI set up its Murshidabad Campus and the then Finance Minister Dr Pranab Mukherjee inaugurated the campus on October 31, 2010.

Source: Facebook Post of Dr Mukul Gupta

How the MDI journey unfolded after 2014?

Though under the BJP-ruled government, the institute continued to get privilege as a specialist institute preferred by the Centre for different government projects and assignments, the management of the institute gradually started acting independently on almost all the affairs of the institute.

Source: Facebook Post of Dr Mukul Gupta

Not only this, the institute also started refusing its obligation of responding to RTIs saying it was a private institute and therefore it was not liable for any public scrutiny.

Source: Facebook Post of Dr Mukul Gupta

However, Central Information Commission (CIC) in its hearing on an RTI filed by MDI ex-director Dr Mukul Gupta on April 18, 2016, ordered IFCI to provide MDI related information under RTI. The CIC referred to the court order which suggested that the IFCI and the Central Government has sufficient control on the MDI.”

The CIC also referred to the same Delhi High Court order of 05/07/2014 which detailed the “control” of IFCI over the functioning of MDI.  “Considering the character of MDI and its functions, MDI shoulders public duties and its activities have public character,” HC order read.

Under Rule 20 of MDI Rules, the Board of Governors of MDI is required to submit to IFCI, a report on the working of the institute with the audited statement of accounts, showing the income and expenditure,” it said, adding, “Board also has to submit to IFCI its budget estimates for every financial year.”

Despite its dubious role in court of law, MDI Board got government nod for appointing finance secretary as the board member of the institute in April 2019. This again was approved by the Finance Ministry headed by Mr Arun Jaitely, signaling complete government support to the MDI board.

Source: Facebook Post of Dr Mukul Gupta

Thus, the actions of Finance Minister Arun Jaitley does not only make his role suspicious, but also put him in dock over meddling with the status of MDI.