Finally, state confirms welfare scam; IAS officers under the scanner

Nine months after mid-day exposed the welfare scam in which government officials and contractors siphoned off crores meant to help the needy, a preliminary government report has confirmed the scam and also hinted at involvement of officials from various departments, including those from the Indian Administra-tive Services (IAS).

mid-day's expose on the scam on March 31, 2014

The report, submitted to the state Home department last month, points out that the welfare scam was aided by officials from industries, women and child, rural development departments, district officials and officials from the Central Stores Purchase Organisation (CSPO).

It recommends appointment of a Special Investigating Panel of the government or the Anti-Corruption Bureau to probe the scam in detail. "These irregularities are grave in nature and involve officials from multiple departments, including those belonging to the IAS. A special probe is needed in this," it says, calling it a "fraud of the highest order."

The scam
This newspaper had, on March 31, 2014, unearthed the scam involving money meant for welfare schemes for the poor, under the women and child, tribal, and social welfare departments.

Substandard goods were delivered to the poor in Maharashtra, and, in some cases, no goods at all. At the centre of the Rs 450-crore scam is the Central Stores Purchase Organisation (CSPO), a state-run subsidised kirana shop, which procures welfare goods for central and state social schemes.

Bending rules, government officials awarded contracts worth Rs 451.88 crore to second-rate contractors, who produced bogus documents from fictitious foundries in Ahmednagar and Rajkot, and fake test reports from Mumbai laboratories between 2010 and 2013.

Documents accessed by mid-day under the RTI Act showed that Rs 271.88 crore in contracts was routed through hawala operators, and payments for them released by the government to traders. This money was later taken out of several bank accounts and handed back to the traders.

"These irregularities couldn't have been possible without the connivance of officials from various departments and their district officials. An even more serious fact is that four contractors, assigned the task of procuring welfare goods, did not do so, and instead ordered them through hawala operators," said V B Latke, undersecretary of the industries department and investigating officer, in his report, adding further, "Action should be taken on officials who released the money to these contractors knowing that they may not have capacity to produce goods for the poor, forget delivering them."

A report of the Directorate General of Income Tax (Investigations), Pune, also highlighted this, but the government chose to keep under wraps until mid-day published it. The government report also says the director of the Maharashtra Small Scale Industries Development Corporation (MSSIDC) at that time didn't take adequate steps to prevent further damage.

"The responsibility of blacklisting the contractors and punishing the officials was of the then director of the MSSIDC, but he/she did not do so and instead choose to forward the case to the government. It seems this allowed unscrupulous contractors to obtain orders from other departments as well," reads the report.

Rs 451.88 cr
The value of contracts awarded by government officials to second-rate contractors