Fraud Sector Unit

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Complicit ? Minister Soz has failed to act against NPCC
Complicit ? Minister Soz has failed to act against NPCC Photo: Reuters

FOR THE last four months, neither Ramesh Batra* nor any of his colleagues working for the National Project Construction Company (NPCC) in Andhra Pradesh have been paid. Nor have several others across India.

NPCC, a public sector unit responsible for major infrastructure projects like roads, canals and border-fencing, employs 2,100 people in 80 units. NPCC union sources say in at least 18 units, salaries have not been disbursed in months. Contrast this with the glowing balance sheet in NPCC’S Faridabad headquarters. According to documents with TEHELKA, the PSU has been incurring huge losses, (more than Rs 150 crore in the last 10 years) but overstated its profits by Rs 80 crore. NPCC operates under the Water Ministry. Minister Saifuddin Soz admits he is well aware of it, but has taken no action. The advice from his ministry to NPCC in a December 2008 letter: “Greater self restraint in the future”.

In 2006-07, NPCC stated a profit of Rs 4 crore. When a whistleblower brought anomalies to the ministry’s attention, it asked the PSU to file another balance sheet. The second balance sheet acknowledged a loss of Rs 76 crore. Copies of both balance sheets are with TEHELKA.

NPCC has two differing balance sheets for the same year: one shows a profit, the other a loss

When contacted, Soz acknowledged the fraud and almost appeared to justify it. “I told them this fudging is childish and not acceptable,” he told TEHELKA. “But it wasn’t for personal gain. I was contemplating shutting NPCC down. They wanted to convince the ministry not to.” The Comptroller and Auditor General (CAG) does not audit PSU balance sheets, and instead outsources them to private ‘statutory’ chartered accountants: NPCC’s 2006-07 balance sheet was audited by New-Delhi based Agiwal and Associates. Their report said: “NPCC has overstated profit by Rs 75.99 crore. Current and fixed assets have been overstated by Rs 75.18 crore. The accounts do not give a true and fair view of the company.” Agiwal’s office confirmed to TEHELKA that they were not required to send this report to the Water Ministry or CAG. It was sent only to NPCC.

NPCC Chairman Arbind Kumar denies having manipulated balance sheets. “These are all rumours spread by frustrated union workers. They are angry because they have been transferred,” he told TEHELKA. The Union says the workers were transferred in 2007 after they blew the whistle. When asked about the two differing balance sheets, Kumar said: “How can you believe any of this when the annual report has not yet been published?” The 2006-07 financial report should have been in Parliament within nine months of the accounting year end.

MANIPULATION ASIDE, even the actual losses being incurred seem manufactured: projects that NPCC could easily execute are being outsourced to the private sector. Obviously, the outsourcing managers expect personal benefits.

On April 6, 2005, the Uttar Pradesh government had appointed NPCC to construct the Adwa Meza Link Canal. By that month’s end, NPCC had awarded the project to private construction company Unnao, flouting the PSU’S charter which prohibits total outsourcing. Unnao was only registered with NPCC as a legitimate company on April 19, a few days before the award. NPCC issued no tender invitations in the press, as required by law. Unnao did not even have the required qualifications to get a project worth more than Rs 5 crore, yet NPCC passed the project to Unnao valued at Rs 13.82 crore.

Worse, Unnao passed it further on to a smaller Delhi-based company, Sai Earthworks, for Rs 7 crore, making a Rs 6 crore profit without lifting a brick. A CBI report into this is pending, but the Central Vigilance Commission (CVC) indicted NKS Gahlowt, then Deputy General Manager of NPCC, for having passed illegitimate profits to private firms at public cost and recommended he be penalised. Soon after, Gahlowt was promoted. NPCC was also involved in the infamous 2003 Rs 175-crore Taj Corridor scam. On CVC’s recommendation, NPCC charge-sheeted its own joint-general manager JP Saha. At a glitzy NPCC award ceremony in January this year, the Water Minister felicitated him for excellence in performance. Shielding the corrupt, it seems, is a practiced art here.

* Name has been changed
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Special Correspondent

Tusha Mittal has been with Tehelka since March 2008. She was educated at La Martiniere, Kolkata, and has a bachelor’s degree from Depauw University in Indiana. While in the US, she worked as a reporter and a special sections editor for a local newspaper in Boston. She also interned with CNN Internationalin Atlanta and NBC Universal in London. In her final year in college, she studied the idea of peace journalism and the role of the media in covering conflict.

She travelled to Kashmir for her graduation thesis, which dissected the role of the Indian and Pakistani media in shaping public perception of the Kashmir conflict. Her journalism interests include reporting on environment, human rights, and conflict. She has recently won The Press Institute of India award for best articles on humanitarian issues published in the Indian media. AtTehelka, she has written extensively on land rights and displacement struggles. She is based in New Delhi.

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