Mumbai: Jet Airways PF scam goes back to 2007, says EPFO insider

Machindra Bamne, the main accused; (right) Sudhir Ganvir, now Regional PF Commissioner, did not respond to mid-day’s queries

The seed of the multi-crore PF scam was sown in 2007-08, as the then Compliance Department of the Employees' Provident Fund Organisation (EPFO) at Kandivli - headed by Sudhir Ganvir who is now the Regional PF Commissioner at the same office - had allegedly covered up the short remittances made for various PF accounts from 2003 and 2006 by the grounded Jet Airways. Above all, the Internal Audit Party had mentioned in 2009 that Jet Airways seems to be in a habit of delaying dues, but no action was taken by the Compliance Department.

The loot was on in connivance with the corrupt EPFO officials and Jet Airways top executives for over a decade. But it was never exposed as the suppression of the scam was a win-win situation for both. But the end beneficiaries were deprived of their PF amounts due to the short remittances," said a source.

First noticed in 2007-08

Short remittances of PF dues, which were over Rs 3.55 crore, were noticed by the accounts department that had written a letter to the Manager of Jet Airways to submit their bank statement within a week; "but the establishment gave no response," a senior EPFO employee told mid-day.

The EPFO letter on December 11, 2007 to Jet Airways reads, ‘The ICICI Bank statement submitted by you for the year 2005-06 and the payments shown in 12A do not match. You are requested to submit the bank statement of only State Bank of India for the year 2003-04, 2004-05 and 2005-06 within a week's time so as to know the actual payment made by the establishment as per the dues for the year 2005-06 only. Also, you are requested to make payment in our jurisdiction in SBI.'

After receiving no response within the stipulated time from Jet Airways, the EPFO accounts department wrote a letter to the Assistant PF Commissioner (Compliance) on February 4, 2008 to depute a squad of Enforcement Officers (EOs) for verification of payments made by Jet Airways for the period 2003-2006.

"Ganvir deployed a squad of two EOs - KS Karkera and JR Gimhanekar, who made visits on April 7, May 14 and May 23 in 2008 in connection with the verification of payment position made by the establishment for the periods 2002-2003 to 2007-2008. But on verification of the Demand Collection Balance Register (DCBR), it was observed that most of the remittances reflected in the said DCBR were erroneously shown," said the source at EPFO.

But when the EO squad visited Jet Airways office, ‘the establishment adopted delay mechanism citing the fact that they need time to collect the heavy files for verification,' said the source, who added, "This was why the EO squad had to visit thrice for the verification." On May 23, 2008, the EO squad wrote a visit note, saying, "We contacted the Deputy General Manager (Finance) Shirsh Limaye and Executive Finance Suchit Bhagwat to produce the relevant PF records before us."

"It is further informed that we have restricted our verification of records/statutory returns in respect of only payment position made by the establishment (Jet Airways) for the period 2002-03 to 2007-08 as per the directions of the Assistant Provident Fund Commissioner (Compliance), SRO Kandivli," reads the visit note undersigned by team of EO squad.

Scam covered up in 2009 too

In July, 2009, the Assistant Director (Audit) MD Padgaonkar from the Internal Audit Party, West Zone, Nagpur had submitted a report to the Account Officer in Kandivli by keeping APFC (Compliance) in the loop. "On verification of the dues and payment position in respect of Jet Airways, it is seen that a number of remittances shown by the establishment in the reconciliation statement as paid, are not reflected in the DCBR. As a result, a huge amount of short remittances has arose," reads the letter (SIC).

"The Accounts section has confirmed that the payment portion is verified on the basis of challans, as DCBR was not given by EDP. Finalisation of Annual accounts of the establishment without verification of remittances from SR/DCBR is highly irregular and against the manual provisions. The office should, therefore, reconcile the huge short remittances of Rs 3.95 crore, by calling confirmatory statements from SBI Link Branch urgently. Confirmation of recovery/reconciliation of the above short remittances may be intimated to the Internal Audit," reads the letter undersigned by Padgaonkar on July 8, 2009.

Next day, Padgaonkar wrote another letter saying, "It is observed that the establishment has remitted the PF and other dues every month belatedly. The establishment seems to be in the habit of remitting the monthly dues belatedly. But no action seems to have been initiated by the office for levy of penal interest under section 7Q and damages under section 14 B of Employees' Provident Funds and Miscellaneous Act, 1952 and recovery thereof."

"The account section has not furnished the information of belated remittances made by the establishment to the compliance/damage cell. The compliance/damage cell have not initiated the action for the levy of penal interest and damages when they are having the DCBRs generated through CCTS on their file," reads the letter (SIC).

The source told mid-day that the verification was never done at Jet Airways and said, "With the passage of time, short remittances rose multifold, plus the penal interest because compliance never took action against the establishment."

Pilots in the dark

"Above all, the international pilots who worked with Jet Airways were kept in the dark about the PF scheme for several years. But the PF amounts were deducted from their salaries. Who siphoned off the money?" asked the source. The international workers, mostly pilots, have cited their angst against the statement of Chief Vigilance Officer (CVO) Jitendra Khare, who last week told mid-day, "there is no scam at all."

"If there is no scam, where is my money? Can the CVO let us know where our money is stuck? We are in desperate need of money to run our houses, it is really painful to read such a baseless claim which the CVO made. Has the CVO verified the allegations made against officials at Kandivli where one official has been booked by Central Bureau of Investigation?" asked an international pilot.

mid-day tried to reach out to RPFC, Kandivli, Sudhir Ganvir, but he did not respond to the queries sent to them. "I am busy in a private function and I can't talk to you," said CVO Khare while abruptly disconnecting the call. The Central Board of Trustee (CBT) members have also raised serious questions over the safety and security of Jet employees PF money on multiple occasions but no internal enquiry was conducted. A year after mid-day's expose, the CBI booked an EPFO employee, Machindra Bamne, his wife and 13 Jet employees under the Prevention of Corruption Act last week.