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India's Commonwealth Games bills still not paid
13 October 2011
Many foreign companies see entry into India's booming market as one way of riding out the global financial storm, but Mark Dummett in Delhi says doing business there is not for the faint-hearted.
Ric Birch has worked all over the world. He is an impresario who organises the opening ceremonies of major international sporting events.
He has done six Olympics including Beijing, Sydney and Barcelona. He has helped design public extravaganzas in Mexico, Singapore and his native Australia.
He has also worked in India, where he produced the curtain-raiser for Delhi's Commonwealth Games, one year ago.
It was not easy. The biggest sporting event in India's history was supposed to be its chance to show off, much as China had done with the Beijing Games. But to those of us watching from the sidelines, the plan seemed to backfire appallingly.
Indeed, the weeks leading up to the games only seemed to reveal problems.
Parts of Delhi were flooded by the heaviest monsoon in years, work on the venues was not finished even though the whole thing had run massively over budget, a bridge collapsed, there was an outbreak of dengue fever and some athletes' bedrooms were slept in by stray dogs.
Payment outstanding
However, as one government minister had correctly predicted, everything came together at the last minute, just like at an Indian wedding.
Ric Birch does not want to work in India again
Ric's team worked like heroes.
Their opening ceremony was a grand success and, as a giant helium balloon was launched into the Delhi night sky, 60,000 proud spectators bellowed out the national anthem.
So does Ric ever want to work here again? "No, absolutely not." "India," he says, "stands for I'll-Not-Do-It-Again."
The final straw for Ric is the fact that he still has not been paid. He says he is owed $350,000 (£225,000) and the Indian government has not told him why he has not received his money.
"They don't answer correspondence, they've changed their phone numbers, they've changed their email address," he told me. "It's a rogue action."
Ric is not the only one in this situation.
According to a list compiled by foreign governments, of the 32 international contractors employed to help run the games, only two have been paid in full.
The total debt amounts to more than $80m (£50m) and some of the companies are now in danger of folding.
Their experience seems to support a recent World Bank survey which found that India was one of the hardest places in the world in which to do business, coming a lowly 134th out of 183 countries.
More damningly still, when it comes to enforcing contracts, the World Bank says that India is actually the second worst, coming only higher than East Timor.
Investigation
The Commonwealth Games companies I have spoken to said the Indian government had still not given them any indication as to why they were not being paid.
But the reason is hardly a secret, and it has to do with the biggest scandal of the games - corruption.
Games chairman Suresh Kalmadi resigned from his post in India's Congress party in November 2010
The man at the centre of things is Suresh Kalmadi, a veteran ruling-party politician, who sat on Parliament's ethics committee, and was appointed to run the Delhi games.
He is now behind bars, facing charges of taking bribes from contractors - allegations which he denies.
The government has made it clear that, until all the contracts that Kalmadi issued are fully investigated, the remaining money will not be released. And two independent committees claimed that some of the contracts issued to foreign firms were indeed suspicious.
One of the British companies they named was SIS Live, which televised the games, and is owed more than $20 million (£13m).
A spokesman for SIS Live angrily rejected the allegations it had done anything dodgy. Terence Fane Saunders described to me the committees' reports as grotesquely wrong and inaccurate - full, he said, of easily provable errors.
He claimed that no-one from either committee had contacted SIS Live to check their facts.
The UK High Commission in Delhi agrees with SIS Live and has written to the Indian government asking it to reconsider its treatment of the company.
That letter was followed up by a second one, regarding the fate of all the firms, signed jointly by the embassies of Germany, Australia, Italy, Switzerland, France, Belgium, the Netherlands and Britain.
Neither letter received an official reply and nobody seems to know if and when the money will ever be paid.
'Too risky'
Legal action could take years.
One frustrated Western diplomat admitted to me that it was possible that a few of the companies might indeed have paid bribes but it was inconceivable that all of them had.
"The whole thing," he says, "sends out a terrible message that doing business in India is just too risky."
The global economic crisis is now forcing foreign firms to look at India like never before. BP is the latest major firm to invest, recently announcing a joint venture worth more than $7 billion (£4.5bn).
But Ric Birch, whose company has not been accused of wrongdoing, will not be coming back.
"I'll be very happy to ignore India," he tells me. "There are plenty of other places where they pay their bills."
BBC News - India's Commonwealth Games bills still not paid
