Missing or pocketed

 

 

Nearly Rs 40 crore is reported to be missing from the coffers of the Gorakhpur-based North Eastern Railways Multi State Cooperative Bank. The bank, once famed for showing hundred per cent loan returns, is now in the picture for widespread recruitment irregularities.

The irregularities committed between 2002 and 2005 have attracted continuous criticism from local MPs and journalists. But it crossed all the limits when people got to know that on December 3 and December 5, 2007 almost 80 more employees were recruited, which was a clear violation of the established provision. Indeed one MP, Hari Kewal Prasad from Salempur, was so upset that he met Sharad Pawar personally. The Union Agriculture Ministry is responsible for overseeing the bank’s development. When TSI spoke to Hari Kewal Prasad he sounded very angry over the recruitments and started speaking about the way things have been handled in the bank. He said, “This is the highest order of fraud. All the rules and regulations have been put aside and the secretary and the board members are exploiting the resources of the bank.”

It is being termed as a big fraud because the vacancies were not advertised in any of the national dailies, which is the laid down provision. Further more, Kamla Prasad Rawat, the sitting BSP MP from Barabanki, has accused the bank secretary, Prahlad Singh, of filling in over 80 vacant posts with relatives of board members. Significantly, the bank’s February 2000 general body meeting had decided to freeze all appointments for 10 years. The scam has been mentioned in the state railways audit report. According to the Railway’s Audit Report, 2003-04 “The balance Sheet of 31-03-04 showed a loan of Rs. 31,21,47,407.92 whereas the amount deposited—Rs 9,82,65,360.00—was not verified with any supporting documents”. The issues casting shadow over the functioning of the bank has been since long.

The Special Audit report done in 2001-02 clearly mentions the improper contracts by the management. It says, “The contract with Habibullah & Co Chartered Accounts has been made without following the prescribed norms for the same. The chartered accountancy firm has not charged any service tax on its billings, though the provisions of Service tax are applicable uniformly all over India. The work performed by the Company was far below the required standards.”

The Auditor had clearly recommended the penalty for defaulters. The recommendation read something like this: “The management should penalise the concerned officers who have made default in compliance with the Provisions of Secretary nature of MSCS Act.”

In 2005, then Uttar Pradesh Cooperative Minister had asked the state’s Registrar of Cooperative Societies to file an FIR against the bank president and Singh. But no action was taken against them. However, politicians have been mounting pressure on the government for action. In his letter to Union Agriculture Minister Sharad Pawar and Uttar Pradesh Chief Minister Mayawati – which is in the TSI’s possession –Rawat says: “Recruitment was done without advertising the vacant posts in national or local dailies. Only board members, secretary of the bank and director Sukhdev Indoria in the agricultural department were informed about the recruitment.”

Senior journalist Harshvardhan Shahi told TSI: “It seems both, the state and the central governments do not deem it an important issue. The government has just sat around doing nothing. When I tried taking up the issue I started getting threatening calls.”

But Prahlad Singh rubbishes the allegations, saying these are the handiwork of people having vested interests. And he went on to claim: “This is rubbish. I am doing a good job and this is the only bank in the region that is earning profits. Those complaining against me do not want the good work to continue.”

When reminded about the audit report, he called it bogus. “It must have been prepared by the people who want me out.” Letters have been sent informing higher authorities about financial bungling as well. Letter no 1107/20/98/ 17.05.99 was written by the Agriculture Department. It carried an order to recover an amount of Rs 62 lakh from the secretary for the irregularities committed in 1998. But it has been suppressed with use of money and influence. There are reports that the Gorakhpur administration is involved and in shielding him.

All the recruitments were done clandestinely and in haste. Rawat explained the reason for the entire secrecy by saying, “The recruitments were done secretly and in a hurry as the director of the bank Kamruddin was to retire in the month end. Hastily all the recruitments were done on the December 3rd and 5th. No written exam or interview was conducted.”

Fearing reprisals, no doubt, bank employees remain reluctant to talk on record. But they do privately admit that the recruitments in the Grade III posts were not confined to the children, relatives and friends of the recruiters. The latter are also alleged to have disbursed them to anyone willing to pay up Rs 3 lakh. The bank’s provision for reservation for the Schedule Castes, Schedule Tribes and Other Backward Classes was brazenly passed over. Mayawati was all along in the know of the goings on. Kamla Prasad wrote an elaborate letter to the Uttar Pradesh Chief Minister.

The interesting fact is that the bank in question has more than 260 employees. The capital of the bank is Rs 55 crore. Whereas, Poorvanchal Gramin Bank, Gorakhpur has 305 branches spread in seven districts of the state and the total number of employees, including the officers, is 1594. The total number of accounts operated from the Gramin bank is 22,79,610. The fact which surprises is that even after being such a big bank, Poorvanchal Gramin bank has an average of just five employees but the Railways Cooperative Bank has a hoard of employees draining away the government and shareholders' money.

Once investigation starts it is going to reveal a lot of other illegal and inappropriate things happening. This will include a scam of false certificates used by the candidates with the support of the board members. The fake certificates were submitted in the complete knowledge of the members of board of the bank.

Though the bank does a monthly business of Rs 2.5 to 3 crore, there has been a continuous decline in its profit levels over the past five years. While the bank’s administrative expenditure hovers in the region of 12 per cent, the RBI’s directive says this must not exceed 3 per cent. The bank runs around 70,000 accounts of mostly low salaried people.