The Andhra Pradesh Industrial Infrastructure Corporation (APIIC) and Dubai based Emaar Properties entered into an agreement in August 2003 to develop the Boulder Hills project on 535 acres in Manikonda village opposite the Indian School of Business (ISB). As per this agreement, APIIC’s stake in the integrated township project was 26%. The main charge leveled by APIIC against Emaar Properties is that it surreptitiously entered into another agreement with a subsidiary to develop a residential and commercial complex and a golf course, because of which APIIC's stake was greatly reduced and the state lost a revenue of almost Rs 5,000 crore.

As per the collaboration agreement between Emaar and APIIC, the 26% stake of APIIC had to be maintained at all times. Also, it was specifically agreed upon that the joint venture companies will not enter into any agreement or arrangement with any person or party without the prior written consent of APIIC. Both these conditions were flouted by Emaar. However, Emaar subsequently entered into a secondary agreement with its subsidiary Emaar MGF Land Ltd to develop the Emaar Hills Township Project. As a result of the secondary agreement, APIIC stake in the project got reduced to 4% from the original 26% and with regard to profit sharing, Emaar MGF was to get 95% while the APIIC was left with only 5%.

Of the 535 acres on which the township was to come up on, 285 acers was sold at Rs 29 lakh per acre when the prevailing market value of the prime land in Gachibowli at that time was Rs one crore per acre. Of the remaining area, 235 acres was leased out to Emaar MGF for a period of 66 years for developing a golf course for which APIIC was to get a negligible 2% of the total revenue that the private player would make from the golf course.

Last year, Congress MLAs D L Ravindra Reddy and P Shankar Rao had demanded a CBI enquiry on the grounds that certain politicians and bureaucrats had colluded with the private company and greatly reduced the state's interests in the project. Subsequently, the vigilance and enforcement wing of the AP government then headed by present director general of police Dinesh Reddy took up the matter and reportedly found massive irregularities in allotment of land for private residences. Many of the allottees were found to be benamidars who were proxies for VIPs and VVIPs in the state.

The AP High court on Wednesday came down heavily on the government for not acting tough as was required of it in spite of having clinching proof of robbing public assets and the exchequer, ordered a full-fledged CBI probe into the Emaar-APIIC deal.