the lead stroy

At a time when public honours are under the scanner, Bureaucracy Today unveils a shady deal with the active collusion of tainted public servants and their political masters. What you read here may just be a tip of the iceberg. Is the malaise of favours, fudges and frivolities in bagging national awards endemic to Indian civic and corporate culture?

It's Bureaucracy Today IMPACT! The Department of Public Enterprises (DPE) is reconsidering the Award of Excellence given to the National Projects Construction Corporation (NPCC) after this magazine sought answers from the Ministry of Water Resources, the Department of Public Enterprises and the Prime Minister's Office (PMO) as to how the NPCC, a PSU, whose balance-sheets for fiscal year 2006-07, wereallegedly fudged to the tune of Rs. 76.55 crore, was given the prestigious MoU Excellence Award for 2006-07.

After the failure of the authorities to explain the glitch, the Department is now having second thoughts on its decision of the prestigious honour conferred on the NPCC by none other than Prime Minister Dr. Manmohan Singh himself on October 15, 2009. The NPCC may now be stripped of the honour that it did not deserve in the first place.

DPE Joint Secretary (MoU) Rakesh Sarwal has confirmed that the Excellence Award 2006-07 bagged by the NPCC is being reconsidered. He says, "The Task Force Syndicate Group does not take vigilance clearance as one of the criteria; they are only concerned with the performance figures. The award to the NPCC was given on the basis of its provisional accounts. By the time the final audited accounts were received, the award had already been given to the NPCC.The DPE was not aware of the alleged fudging and manipulation in the company's balance-sheets for 2006-07. The issue was brought to our notice by your magazine very recently, and the decision is now under review. If the management is found guilty, the NPCC will definitely be stripped of its award."

The genesis of the rot is traced to the sordid acceptance by the DPE's Task Force Syndicate Group of NPCC's provisional accounts rather than its final audited accounts for the financial year 2006-07 for consideration of the MoU Excellence Award.

According to the evaluation procedure based on the NK Sinha Committee report, it is mandatory to consider only the final audited results for preparing the composite score if the Excellence Award is to be given to any Public Sector Unit.


In January 2007, the DPE constituted the Sinha Committee to finalise the evaluation procedure for MoU performance of Central PSUs. It is on the basis of this Performance Evaluation Report that MoU Excellence awards are decided. It is pertinent to remind the DPE that according to the Committee's report the Central PSUs which do not submit a self-evaluation score based on the final audited data to the DPE by August 31 are not be eligible for the Excellence Award. Once the MoUs are signed between CPSUs and Ministries, no revision of targets is permitted. It should not be a loss-making enterprise and the profit should be higher compared to the previous year. The NPCC revised its balance-sheet, not once but thrice.This magazine has access to three different balance-sheets for fiscal 2006-07. The NPCC management, in the absence of a functional Director (Finance) on its Board, got the external accountants firm, Aigwal and Associates, for independent verification of accounts.

Thus, the NPCC had submitted its Performance Evaluation Report, showing a profit of Rs 3 crore on a turnover of Rs 740 crore, to the DPE on August 31 without it being tabled before the Board of Directors.
As reported by Bureaucracy Today in June 2009, the NPCC Chairman-cum-Managing Director (CMD) in December 2007 had declared a profit of Rs 4.40 crore and thus came up with another balance-sheet, the records of which were once again not presented to the Board of Directors nor placed at the Annual General Meeting (AGM).

Aigwal and Associates in their December 6, 2007 audit report observed, "NPCC account for the year 2006-07 does not give a true and fair view". The financial accounts for year 2006-07 and 2007-08 were not finalized till December 31, 2007 and December 31, 2008, respectively. The norms were flouted in spite of the DPE guidelines that the financial estimates of PSUs should be laid before Parliament within nine months of the closing of the financial year.

After vigilance complaints and the re-auditing of the balance-sheets for the third time by Aigwal and Associates on October 4, 2008, it was found that the company estimates were blown out of proportion and the PSU had actually suffered a loss of Rs 76.55 crore, bringing to the fore major fudging in the company's annual accounts. The so-called targets that were considered for the Award were allegedly created and were not real.

The awards by the Department of Public Enterprises, Ministry of Heavy Industries and Public Enterprises, were given for fiscal 2006-07, the same period for which the NPCC management reportedly fudged its accounts. Was it that the DPE was not aware of the alleged bungling by the NPCC or had it chosen to shut its eyes to the questionable ways adopted by the Task Force Syndicate Group in selection of PSUs for MoU Excellence Awards?

Interestingly, the Task Force Syndicate Group constituted for recommending the nominees for these awards has not bothered to check the status of the inquiry in progress with the CVC. Isn't a vigilance blot on the Performance Evaluation report reason enough to reject a PSU's nomination?

Will stripping the company of the award stem the rot? The Task Force Syndicate Group that decides on the prestigious MoU Excellence Awards has a lot of explaining to do. What is the credibility of the selection committee for MoU Awards? Should not there be a standard infallible process in place as to who actually deserves, and qualifies for, the highest honour conferred on a Public Sector Enterprise? The selection of the NPCC for the award is a snub to the MoU Excellence Awards. The award, given by no less a person than the Prime Minister himself, was received by the NPCC CMD Arbind Kumar who has 19 vigilance complaints pending against him in the Central Vigilance Commission (CVC). Some of the cases allegedly fall in the category of serious criminal acts of fraud. Hasn't the NPCC management under Arbind Kumar flagrantly violated all norms laid down by the Sinha Committee? The DPE, to say the least, has defied it own regulations. Was the Prime Minister kept in the dark before he gave away the award? In their January 20, 2009 letter to the PMO, much before the award was given, former Lok Sabha member Chandramani Tripathi, Minister of State for Labour and Employment Harish Rawat and Rajya Sabha member Brij Bhushan Tiwari had addressed in detail the financial mismanagement of NPCC accounts for year 2006-07, corroborated by annexures to the CVC complaints.

Tripathi rues, "It is unfortunate that DPE has conferred NPCC with such an honour. The PMO is aware of the mismanagement as is evident by its reply that 'the investigation is under process', but the latest is that the Inquiry Committee has already found NPCC CMD Arbind Kumar guilty of all allegations made against him. Even if the nominations were filed before the judgment was passed, the selection committee should have not considered a company which was under vigilance net with serious allegations against its CMD."

Rawat confirms that he did communicate the misappropriations in the NPCC to then Water Resources Minister Saif-ud-din Soz but there was no response. "I requested for the Inquiry Committee reports in my letter dated January 19, 2009, but was never forwarded one while I was constantly being told that the inquiry was under process. The fact was that the report had been lying with them for the past 16 months then."

While the PMO has hopefully assured of stringent action, it conveniently chooses to overlook the fact that MoU Excellence awards ought to be conferred only after vigilance clearance has been sought. This is in tune with the prestige of the award.

The NPCC CMD is still facing a vigilance inquiry for grossly mismanaging the balance-sheets for 2006-07 and 2007-08. Sunil Gautam, Deputy Secretary and CPIO, Central Vigilance Commission, in his January 15, 2010 reply to an RTI application, confirms that the request from the Water Resources Ministry regarding vigilance clearance against Arbind Kumar is still pending. Gautam, however, refused to comment on the issue though he confirmed that the status remained the same as mentioned in the RTI reply.

The Inquiry Committee constituted by the Ministry of Water Resources under the chairmanship of Additional Secretary S Manoharan has established, after investigation, that the balance sheets for year 2006-7 showed "unreal turnover and profitability."

The Inquiry Committee has also confirmed the "illegal appointment and faulty promotion" of tainted officers, including JP Saha, DGM, NPCC, and AK Maitra, Consultant. Though the Ministry has ordered immediate removal of AK Maitra and recovery from him of excess remuneration close to Rs 1 lakh, he stays put in the same post with the same remuneration.

Manoharan refused to comment why the Inquiry Committee report had been pending since January 2008.

DK Paliwal, Under Secretary, Water Resources Ministry, had sent a letter to Arbind Kumar, asking that the revised balance-sheet for 2006-07 be placed before the Board of Directors. Paliwal had also sought details on sundry debtors amounting to Rs 225 crore, loans and advances for nearly Rs 144 crore and FDRs worth Rs 12.48 crore -- not provided earlier to the audit committee and statutory auditors. Paliwal, however, refused to comment whether the NPCC management had provided the details sought by him.

The Inquiry Committee report on final charges against Arbind Kumar as also the Ministry's report on gross misuse of official powers by Kumar has been pending with the Ministry and the CVC for three years.

One is miffed why the CVC and the Water Resources Ministry are not taking action in right earnest against Kumar. Sources say Arbind Kumar's file for extension as NPCC CMD is under consideration by the Public Enterprises Selection Board (PESB). While the PESB has refused to comment, it would be ironic, yet worth watching, if Kumar gets an extension when the dice is loaded against him.

For reasons best known to it, the Water Resources ministry stonewalls any query on the issue. Simply stripping NPCC of the award when the cat is out of the bag will not serve the purpose. It is time the authorities concerned rose to the occasion and removed the fly in the ointment. This would set a precedent for fair selection of nominees for the country's public honours.