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J&K Admin Ignored Own Depts' Advice to Amend Multi-Crore Contract to Favour Private Co: IAS Officer

Ashok Kumar Parmar has written to the Central Bureau of Investigations seeking a 'deeper probe' by the Insurance Regulatory and Development Authority of India and the CBI into the matter.
Manoj Sinha. Photo: X/@manojsinha_

Srinagar: The Jammu and Kashmir administration headed by Lieutenant Governor Manoj Sinha went against the advice of the finance and law departments and amended a multi-crore contract midway to favour a private insurance company, a letter by an IAS officer has alleged.

The contract was signed between the State Health Agency (SHA), the nodal department involved in rolling out the Pradhan Mantri-Jan Arogya Yojna (PM-JAY) insurance scheme in Jammu and Kashmir, and Bajaj Allianz General Insurance Company, on December 26, 2020.

A day later, on December 27, 2020, the son of Dr Arun K. Mehta – who would by May 31, 2021 be appointed Chief Secretary of J&K – Lakshya Mehta, was hired by the same insurance company. Here, Lakshya Mehta currently serves as a ‘Senior Executive’, according to his LinkedIn profile.

When the insurance company sought to pull out of the contract in September next year, the SHA modified the contract by providing a 15% addendum to the existing policy without any legal backing. The ‘illegal’ changes were regularised by the Administrative Council headed by Lieutenant Governor Sinha, even though J&K’s finance and law departments objected to the decision.

When an activist flagged these alleged irregularities to the Central Bureau of Investigations, the agency transferred the complaint after six months to Jammu and Kashmir’s Anti-Corruption Bureau (ACB) whose director reports to the Lieutenant Governor, one of the alleged suspects in the purported case.

These claims are part of a letter by the Chairman of the Bureau of Public Enterprises, J&K, and 1992 IAS officer, Ashok Kumar Parmar, to the Central Bureau of Investigations. The letter seeks a “deeper probe” by the Insurance Regulatory and Development Authority of India (IRDA) and the CBI into the matter.

Also read: J&K: Why a Top IAS Officer Has Sought a CBI Probe Into the Flagship Jal Jeevan Mission

Parmar, who previously flagged the alleged irregularities in the implementation of Jal Jeevan Mission, a centrally-sponsored scheme, in Jammu and Kashmir, has also sought protection under the Whistleblowers Protection Act, 2014 in his latest letter which is also marked to the Principal Secretary to Prime Minister in PMO, Cabinet Secretary, Ministry of Home Affairs, Department of Personnel and Training and Chairman, IRDA.

The Wire has reached out to Yatish Yadav, the Media Advisor to the Lieutenant Governor, and also Chief Secretary Mehta, on the allegations of “abuse of official position” and “illegal acts” to “confer undue benefit” on a private firm linked to Mehta. This story will be updated as and when their responses are received.

A top government official who did not want to be named said the government will hold a press conference on the issue.

The CBI spokesperson could not be reached for comment.

The PM-JAY insurance scheme is fully funded by the Union government in Ladakh while in J&K, local administration provides 10% funding support while the rest is borne by the Union government.

According to Parmar’s letter, the State Health Agency (SHA) of J&K and Bajaj Allianz signed the three-year contract on December 25, 2020, with a provision of annual review after two years, according to official documents.

Clause 9(A) of the contract, accessed by The Wire, states: “The three year term of this insurance contract is subject to renewal after two years for one more year.”

In September 2021, less than a year after the contract came into force, Bajaj Allianz sought to withdraw, reportedly citing losses. A top official of the administration, who is privy to the matter, told The Wire that the insurance company didn’t have the freedom to withdraw from the contract unless the SHA agreed in writing.

“The SHA never agreed to the plea in writing. Instead, it changed the contract into a full reimbursement contract on December 25, 2021 with a top up fee of 15%,” the official said, underlining that “the original contract happened as a part of tendering process, but the addendum was arbitrary.”

“Insurance companies cannot claim that they are running into a loss due to a particular insurance policy for J&K as that is what insurance is all about. Diversification leads to its viability. These claims and the SHA agreement in this particular contract has no basis in the insurance world,” the official added, claiming that the number of families was also “increased by 1,087,108 to provide more financial benefit” to Bajaj Allianz.

The alleged scam happened between December 2021 and April 2022, as per the modified agreement, and it has caused losses worth more than Rs 500 crore to the state exchequer, according to Parmar’s letter.

As per a J&K government order (No. 49-JK(GAD) of 2019 Dated: 19-11-2019), fund authorisation in central and state schemes in J&K having financial implication of more than Rs 50 crore need the approval of Chief Secretary Mehta.

A notification dated January 9, 2020, by J&K’s finance department states that projects above Rs 20 crore shall be green-lighted after the approval of Lieutenant Governor Sinha. “Both the offices have to be in the loop on the matter. It is either pure incompetence or a criminal nexus,” the official quoted above said.

A top J&K administration official, rejecting the claims made by Parmar in his letter to the CBI, said that the policy was modified midway because Bajaj Allianz “refused to renew” the contract.

“New contract would have taken perhaps three more months to finalise. During the intermediate period, an arrangement was made by the Health department as per General Finance Rules,” the official said, asking not to be quoted.

The official couldn’t point to the rules under which the contract was modified, “The choice was between continuity of service or disruption. Calculations made by the health department show that the model they adopted (to provide 15% extra charge to Bajaj Allianz was least costly,” the official added.

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