CSI Bishops Gift 60 Crore worth property to private company

CSI Bishops Gift 60 Crore worth property to private company

Bishop P.J. Lawrence

It is an absolute shocker of a deal, probably without precedent in CSI history. Bishop of Nandyal Diocese P.J. Lawrence has virtually gifted away the CSI-owned St. Werburghs Mission Hospital and 15 acres of land on which it sits in the heart of Nandyal Town in Andhra Pradesh to a private limited company. Nandyal is a bustling trading centre of Kurnool District and is famous for its links to both a former President of India Neelam Sanjeeva Reddy and a former Prime Minister P.V. Narasimha Rao. Locals estimate the market value of the gifted land alone at around Rs 60 crore (USD 14 million). We at the CCC use the word ‘gifted’ advisedly. And here’s why:

1) The company 4B Healthcare Pvt Ltd has been given, under a registered “Deed of Agreement” dated 8th March 2011 and signed personally by the Bishop himself, the exclusive right to operate and manage the Maternity and General Hospital, Pharmacy, Eye Hospital and other residential property within the [hospital] compound for a period of 30 years. Not a single rupee has been paid by 4B to CSI for getting absolute control of this 70-year-old hospital and the vast property around it for this extraordinarily long period.

2) Under the agreement, 4B will get the absolute right to operate and administer the hospital and the 15-acre property on which it sits without any say or oversight whatsoever from the CSI. In return 4B is to give 15% of net surplus or a minimum of Rs 25,000 every year to the CSI. But no payments to the CSI are likely to materialize for two reasons. First the net surplus will be determined by 4B which has secured for itself sole control over accounting and can therefore creatively account both the expense and income to reflect very little surplus if any at all. Second, even the measly assured sum of Rs 25,000 a year is unlikely to materialize as 4B has again secured for itself the right to set this off against any outstanding liabilities (such as staff terminal benefits) of the hospital existing prior to the takeover that the CSI is unable to clear.

3) 4B has secured for itself the right to develop the entire property by modifying, demolishing or putting up new buildings, equipment and facilities. There is nothing in the agreement that specifically prohibits 4B from sub-leasing/contracting out hospital improvement and subsequent operations to any other third party commercial hospital operator. This always remains a strong possibility given the highly attractive 30-year lock in period. Even after the 30 years is over, should the CSI want to get back the property it will have to first pay 4B for all the developments done on it. As the agreement lays down: “The terms and conditions and settlement of respective dues between the parties hereof at the time of termination shall be governed by a separate deed of agreement to be draw up at such times between the parties.” This is going to be a major obstacle for the CSI ever getting the property back. And in 30 years time, the 60 crore gift to 4B could well be worth (if current price trends hold) well over Rs 1000 crore for the private company!

There are a number of other very disturbing aspects of this deal that smack of it not being above board.

First, the primary purpose for which the St. Werburghs Hospital (SWH) was established in 1931 by the Society for Propogation of the Gospel has been abandoned. There is nothing in the agreement which commits 4B to maintaining the charitable nature of the hospital. The deed only says that “4B Healthcare aspires to provide for a certain number of its hospital beds at subsidized rates as per policy formulated by it from time to time. The CSI and/or SWH have reposed full trust upon the judgment and discretion of 4B Healthcare in this respect.” So 4B expects CSI to trust its “aspirations” rather than make any firm commitment as to what subsidy it will offer the poor. There is in fact no safeguard built into the agreement that would prevent 4B from running the erstwhile mission hospital as a full commercial venture. After all 4B is itself not a charitable organization or society but a for profit private limited company.

Second, 4B Healthcare has no track record whatsoever in operating and managing mission hospitals. In fact the company itself was incorporated only in January 2010. How a Bishop could give a one-year old company a 70-year-old hospital to operate for the next 30 years is itself a disturbing question. Had operation and management of the hospital been really the problem, the Bishop could have advertised for competitive bids from other more established non-profit service providers and the CSI may actually have even got a better deal. The Emmanuel Hospital Association, which is a non-profit organization registered under the Societies Act, would have in fact been the ideal candidate to take over SWH. The EHA is the largest Christian non-government provider of healthcare in India with 21 hospitals, 30 community based projects and over four decades of experience serving the medical needs of millions of poor and needy across 14 states. Why was no formal approach made to the EHA?

Third, handing over a CSI property to a third party for 30 years would require the prior permission of the CSI Trust Association (CSITA) which effectively owns all church property. There is no indication that this has been done. The resolution of the Executive Committee of the Nandyal Diocese dated 13/11/2010 attached to the Deed of Agreement is silent on whether CSITA permission has been secured, It merely states: “St Werburghs CSI Hospital Nandyal will be part of 4B Healthcare unit which has taken the hospital on administrative basis for 30 years. It was not sold away and the documents were gone through by Rt Rev Dr P.J. Lawrence bishop to the Executive Committee.” What is curious about the above wording is that it says 4B Healthcare “has taken” the hospital for 30 years when this actually became a legal fact only two weeks later on 1st December 2010 and the same was confirmed retrospectively by the Deed of Agreement that was signed only on 8th March 2011. Curious again is the fact that the bishop while signing the agreement has termed himself “Bishop, CSITA Diocese of Nandyal” (rather than CSI Diocese of Nandyal) and affixed another stamp which reads “Office of the CSITA Diocese of Nandyal.” What the CSITA needs to be asked to confirm through a legal notice is whether it indeed had given any power of attorney to the Bishop to act on its behalf in this specific instance and whether the award of a 30-year management contract that virtually gifts ownership of the property to a private company is consistent with its existing policies.

Fourth, at the time the Deed of Agreement was signed on 8th March 2011, 4B Healthcare had a paid up capital of a mere Rs one lakh! Almost all of it was held by its chief promoter and Chairman Scott Norling, an American pastor who has lived in India for over 25 years and has wide ranging business interests in everything from motorcycle accessories to micro finance and the media. Interestingly the deed of agreement with the Nandyal bishop was not signed by Norling or even by 4B’s “Managing Director” Dr Varghese Philip, but by a 4B employee Mr Challa Madhukar. If the board of 4B was committed to this venture how come none of its directors stepped forward to sign on the dotted line? Interestingly, 4B appears to have roped in some prominent doctors of the highly-regarded Christian Medical College Vellore by promising them big bucks. Dr Philip is not only a director of 4B but also its advisor for which, company records show, he is being paid Rs 1 lakh a month. At least two other existing doctors of CMC have been recently inducted on the 4B board – a development CMC authorities need to investigate and take a call on.

Fifth, on 11th March 2011, a mere three days after the deal between 4B and the Nandyal Diocese was inked, Opportunity International Australia (OIA) became the controlling owner of 4B Healthcare by investing Rs 2 crore in the company in return for ownership of over 99% of its expanded paid up capital. So in effect the ownership of 4B changed within hours of the company snapping up the CSI hospital for 30 years and this vividly demonstrates the ease with which a private company and the assets it manages can change owners. OIA’s main operations in India are through micro-finance operator Dia Vikas Capital Pvt Ltd of which it owns over 92% of the equity. OIA makes a great virtue of it allegedly helping the poor through microfinance. This when the reality is that it is the relatively high rate of interest the poor in India pay for these loans compared to what such funds would earn in Australia that make investment in Dia Vikas and future repatriation of huge profits (something possible only for companies and not for non-profit societies) from it a hugely attractive proposition. Despite its very Indian name, Dia Vikas (meaning “lamp of development”) has only one Indian among its eight directors and that too only because that one Indian is a legal requirement for any locally incorporated company.

CSI watchdog bodies like the newly-formed CSITA Beneficiaries Association need to seriously consider legally challenging the transfer of the Nandyal Hospital to a private company on terms that virtually ensure the hospital and its vast land bank are lost to CSI members for ever. This deal sets a very unhealthy precedent as it can be used to justify similar “virtual sales” of valuable CSI property elsewhere across the four southern states that includes some 2000 schools and several hundred hospitals, colleges, vocational training centers and other institutions. For the many corrupt bishops who dominate the CSI this novel model shown by 4B could just be the answer they are seeking to circumvent the challenges a vigilant laity is throwing at them. Currently many members of the CSI laity have been forced to move courts to stall moves by CSI bishops to misuse their power by undervaluing and selling church properties largely for their own personal gain.

If any CSI member were bold enough to individually raise concerns about such shady deals with their local bishop, the response they get has in many cases been similar to what Karu Ravi Kumar experienced at the hands of Bishop Lawrence of Nandyal. Frustrated by the bishop’s illegal dealings and his lack of transparency on the transfer of the St. Werburghs Hospital to 4B this member of the Diocesan Council and CSI Synod member representing Nandyal sent a legal notice to the bishop. In response Mr Kumar was served a memo sacking him from all offices he holds in the diocese and even canceling his membership of the church. What is strange about the memo itself is not just the summary nature of the “justice” it metes out but that it states no reason for the action being taken (both of which are grounds enough for a successful challenge of the order in a court of law). That a bishop who claims to hold a Ph. D can use fancy latin phrases like ipso facto (meaning: by that very fact) without communicating the fact that puts the phrase in context only underscores the sub-standard quality of the bishops in the CSI and the imperious manner of their functioning.

Bishop Lawrence is of course a good friend of the CSI Moderator and Bishop of the Karnataka Central Diocese, S. Vasanthakumar who is likely to have given him the informal nod for the 4B deal. Both of them were not only batchmates at the United Theological College in Bangalore four decades ago but Lawrence continues to be a frequent visitor to and resident of the guest house attached to the Bishop’s Palace in Bangalore. In fact he spends as little time as possible in Nandyal where he is considered something of an outsider with little support even among office bearers of the Diocese.

Courtesy Christ Centered Campaign (CCC)