How holy city lost Rs 100 crore

GS Paul in amritsar

• In the Provident Fund (PF) account of Amritsar Municipal Corporation (AMC), Rs 1.21 crore was misappropriated through 26 transactions in 2015-17. Call it a clerical lapse or administrative lacunae, the cheques issued on behalf of the MC Commissioner got cleared in the names of other persons. A government inquiry later revealed that payments were made to fictitious persons. For instance, PF account No 8262 of Asha Rani, wife of Sham Lal, was tampered with and shown in the name of Thana, son of Inder, who retired in 2002. 

The probe further revealed that Rs 58.15 crore was deposited between Dec 6, 2013, and May 16, 2017, in an HDFC bank account no. 501100028499581, opened illegally in the name of Amritsar Improvement Trust (AIT). From this account, cheques amounting to Rs 15.16 crore were issued. Separate pay orders were issued to Satnam Singh, a clerk, and another to Narinder Nath, father of Daman Bhalla, Deputy Controller Finance and Accounts (DCFA). Similarly, 53 “self” cheques from this account were also issued and another Rs 19.25 crore was withdrawn illegally.

• The property tax department had issued nearly 65,000 receipts (1,311 G8 books signifying deposits) out of which cash collected against 8,096 receipts between September 2013 and March 2017 was never deposited with the government treasury. The loss is estimated to be Rs 2.42 crore in property tax alone. 
• The ‘advance payment register’ speaks volumes about misappropriation of public money. On March 31, 2017, Rs 7.41 crore was advanced to various departments/employees. Some cases pertain to a period before the year 1970. Not a paisa has so far been recovered. 

These are the highlights of an interim report of Independent Review and Forensic Audit (IFRA) of two urban local bodies: the AMC and the Amritsar Improvement Trust (AIT) in April 2007-March ‘17. Officials of the Indian arm of the international auditing firm, Grant Thornton India LLP, are being assisted by the department’s Chief Vigilance Officer (CVO) Sudeep Manak. 

The initiative for the investigation came from local bodies minister Navjot Singh Sidhu months after he took charge last year. Sidhu surmised embezzlement of over Rs 100 crore in his own department in Amritsar. His revelation can lay bare the rot in other local bodies if a third-party audit is conducted.

Sidhu has also said that at least 5 lakh-acre government land has been illegally occupied by the land mafia in Punjab. “Imagine, if encroachment is removed, it can rejuvenate Punjab’s economy,” he said (see interview). 

Fleece machine

The accused would deposit money in different bank accounts in the name of the AMC/AIT, and then would withdraw the amount under various fictitious works such as disbursal of salaries, miscellaneous daily expenses or ‘public friendly’ works. The preliminary inquiry revealed that drafts were made in the names of relatives who got them cashed. For a decade, no audit was done and no accountability fixed, resulting in AMC and AIT embezzlement spiralling into crores going unchecked.

The tendering process of AMC and AIT was opaque. To evade identification of a work and its time-frame, verifiable detailed notice inviting tender (DNIT) was not prepared, nor were ward maps kept ready. The files, correspondence, contractor agreements, site inspection, material testing reports and bidding documents were missing. In AIT, the data related to e-tendering has been deleted from Punjab Infotech site on account of a new portal of nic.in and was not available for review. 

Blind spot: Cash books

From 2013 to 2017, the cash book, a holy grail for an accounts department, remained unsigned by a designated officer. Since March 2013, the instructions from the local bodies department were clear: maintain ‘double entry accounting system.” Yet in ULBs of Amritsar, ‘single entry accounting system’ was followed. This makes a transaction difficult to detect. The double entry accounting system is a globally accepted system of accounting for transparent and fair transaction with multiple hands involved in it. 

The CVO in its probe concluded that in AMC, the cash books did not reconcile with bank statements from 2008 onwards. A similar situation has prevailed in AIT since 2017. This has meant cheques and notings on vouchers were assigned to only one official without any oversight. 

In AMC and AIT, multiple accounts -- 71 in AIT and 52 in AMC — were kept. The CVO says 23 bank statements are yet to be received from the AMC. The money was withdrawn in a fraudulent manner from around 70 accounts by issuing 49 cheques, DDs, pay orders since 2013. The money was transferred by the accused in their family members’ accounts. Many bank accounts were not entered in the cash book of the department.

Fictitious contracts

The AMC’s advertisement wing earns revenue from the ad tax and user tax from unipoles, elevated road pillars and gantries where hoardings are installed. An amount of Rs 6.50 crore is still pending to be recovered in the last two-and-a-half years. In case of unipoles, e-tendering was done for 250 pieces divided into five categories (A, B, C, D and E) comprising 50 unipoles each. The probe revealed that two companies are yet to pay up to Rs 1.5 crore. The MC had sanctioned 217 unipoles for putting up ads. While 200 could be mapped on physical verification, the rest were awarded to ‘unknown’ persons.

Fixing accountability

Last year, the vigilance department registered cases against AIT’s three estate officers — Arvind Sharma, DC Garg and Paramjit Singh — besides DCFA Daman Bhalla, CA Sanjay Kapoor, accountant Tina Vohra and bill clerk Satnam Singh. The common charges against them are related to misappropriation of public money amounting to nearly Rs 80 crore. While Bhalla is behind bars, others have secured interim bail from the High Court. The investigation continues. 

In March 2018, the Vigilance Bureau (VB) had arrested Harjinder Singh Walia, a clerk and president of Karamchari Talmel Dal Union of the AMC for corruption and disproportionate assets. The probe was ordered following a complaint lodged by a local rights activist, Ricky Bhalla, who alleged that during Walia’s posting in the octroi department in 2006-07, he allowed vehicles loaded with clothes and yarn to pass without charging octroi causing loss of “crores of rupees.” 

What officials say 

MC commissioner Sonali Giri: Two FIRs are already lodged in PF and G8 receipt scam, in December and March, respectively. It was unfortunate that this forensic audit report has not been shared with us. I presume that the records are not updated when this report was made. An advisory has been issued to all departments to update their records. 

AIT Estate Officer Ripan Kakkar: We cannot make any recovery till we get results of the investigation which is still underway. Let the investigation reach a conclusion. We will demand action against the accused through a procedure.