New Delhi: For more than two years before referring the case to the Central Bureau of Investigation (CBI), the Jammu and Kashmir (J&K) administration failed to implement the recommendation of its own anti-corruption agency to recover more than Rs 44 crore from two private companies under investigation for alleged insurance scheme fraud.
The Anil Ambani led-Reliance General Insurance Company Ltd (RGICL) and Trinity Reinsurance Brokers Private Limited (TRBPL) along with unknown J&K officials are currently under the CBI’s scanner for “irregularities” in the contracting process of the insurance scheme.
The multi-crore scheme was rolled out for J&K employees and pensioners by the way of a contract between the State of J&K and the RGICL on October 15, 2018.
Over four months after the incumbent lieutenant governor Manoj Sinha took over, the Anti-Corruption Bureau (ACB) in a report on December 30, 2020, recommended that over Rs 44 crore, paid as advance premium, should be recovered from the RGICL, as the three-year contract was terminated midway.
However, more than two years after the ACB filed the report, LG Sinha said on March 24, 2022 that the investigation of the case was being handed over to the CBI without recommending any measures to recover the losses suffered by the exchequer.
Did the J&K administration delay action?
To understand why the administration did not act earlier on the ACB report, preferring no action for over two years before referring the matter to the CBI, The Wire wrote to Yatish Yadav, Media Advisor to the Lieutenant Governor J&K and to BVR Subrahmanyam, Chief Executive Officer of NITI Aayog.
The Wire sought responses on why, despite the December 30, 2020 report by the ACB, the administration made no moves. This report will be updated as and when responses from either of the offices are received.
Earlier, citing irregularities, the then J&K Governor Sayta Pal Malik, who has been questioned by the CBI in the case, called for foreclosing the contract during a meeting on October 25, 2018, with the then chief secretary B.V.R. Subrahmanyam and then principal secretary to finance (J&K) Navin Kumar Choudhary.
A probe by the ACB was also launched into the contract.
The scrutiny of official documents by The Wire suggests that J&K administration, which was then headed by Subrahmanyam (the incumbent NITI Aayog CEO), approved the ACB report which had said that there was no irregularity in the contracting process.
However, the probe was revived when Girish Chander Murmu, who is now the Comptroller General of India, took over as first lieutenant governor of J&K in 2019.
“May accept the report of the ACB and approve closure of the matter,” Subrahmanyam noted in his first report to Murmu on January 23, 2020 who, however, sought more details.
“How much premium was paid (to RGICL)?” Murmu asked Subrahmanyam at one point, “What was the scope of insurance? Please get all details with related records so that considerate view can be taken before closure.”
In his brief, nine-month tenure, Murmu raised red-flags about the contract on two occasions.
He noted that the “ACB had observed but not investigated” that “certain amendments” were made in the contract “at different stages” which raise questions “on the integrity of the process as per laid down norms of CVC (Central Vigilance Commission) and IRDA (Insurance Regulatory Development Authority) guidelines.”
“This requires investigation by the ACB,” Murmu said, while referring the case for a second time to the ACB for a “thorough professional investigation and categoric recommendations” into the allegations that the RGICL and Trinity Limited bagged the contract on “extraneous conditions”.
According to official documents, the administration paid the first quarter instalment (Rs 66.95 crore) of the premium to the two companies on September 29, 2018, a fortnight before the agreement actually came into effect.
“Premium was paid to the company in advance even before signing of the Agreement, without enrolling beneficiaries or deducting it from their salaries, and in contravention to the conditions of the Agreement regarding payment of the 1st instalment of the premium,” Murmu noted.
“The haste in the payment and the waiving of the Bank Guarantee by the company provided in the NIT (Notice Inviting Tender) has not been investigated by the ACB,” Murmu, who has also served as Expenditure Secretary of India, had gone as far as saying in a note.
In January this year, the Enforcement Directorate said that it has attached fixed deposits and a land parcel worth over Rs 36 crore belonging to RGICL and TRBPL. However, the role of J&K officials in the decision-making process to grant the contract to RGCIL and TRBPL has not been scrutinised so far.
The ED probe has found that unnamed officials of J&K’s finance department “deliberately” awarded the tender by “dubious or questionable” process to the two companies who were not holding the “essential eligibility criteria”.
Backstory
Earlier, a team comprising Bharat Bhushan Vyas, a 1986-batch IAS officer and one of Malik’s four advisors after the collapse of the PDP-BJP coalition government in 2018, along with officials of J&K’s Vigilance Organisation and ACB, was asked to prepare a report after Governor Malik cited irregularities in the contracting process.
According to an internal memo which has been verified by The Wire, some of Malik’s allegations turned out to be factually incorrect. Malik had falsely claimed that the bid was opened on a holiday and the bid document was not circulated properly.
However, Malik’s claim of the modification of the contract by the J&K government in the middle of the tendering process to allegedly suit the two companies, which was against the insurance regulatory guidelines, was correct.
Malik had also noted that the RGICL was “blacklisted” by the Haryana government but documents show that officials rejected his claim. Now, the ED probe has found that Trinity Limited was blacklisted by the Chhattisgarh government when it was roped for rolling out the insurance contract in J&K.
The ACB probe had also found that the terms of the contract were changed in the middle of the tendering process.
It was revealed that J&K’s Finance Department first floated a tender for hiring a company in 2017 to roll out the insurance policy but later cancelled the tender due to “poor response”. Later, the administration floated a different tender and the contract was bagged by Trinity Re-Insurance Brokers which sought the contract’s amendment, citing IRDAI guidelines.
The request was granted by the administration, but the date on which a mandatory corrigendum for modifying the contract was issued, has not been revealed, according to the ACB probe.
The contract had provided for imposing penalties on the insurance broker for “non-adherence of timelines” but the ACB probe stated that the “records are not clear whether such penalties were actually imposed or not.”
