Patna: When Bihar Chief minister Nitish Kumar made an oblique reference of embezzlement of government funds in Patna on August 7, nobody present there could understand what was going to unfold in coming days.
The Economic Offence Unit was flown to Bhagalpur the same afternoon, and by the evening a scam came to light, whose size and scale has been continuously growing as the investigation progresses.
Till the state government decided to recommend CBI investigation into the scam on August 17, nine FIRs were lodged and 12 people arrested. One accused, Mahesh Mandal, an official in Bhagalpur treasury, died in jail on Sunday night.
According to the latest reports, more than Rs 750 crore from Bhagalpur and Rs 150 crore from the government bank accounts of Saharsa were siphoned off by Srijan Mahila Vikas Samiti. Embezzlement of government funds started in 2013 but went unnoticed till the first week of August.
Death of Manorma Devi, founder of Srijan, in February proved crucial as the scam started unravelling after that. It was fully exposed on August 4 when a cheque of Rs 270 crore, issued by Bhagalpur District Magistrate Adesh Titirmare, to farmers against land acquisition for a power plant bounced.
He immediately informed chief secretary Anjani Kumar Singh who in turn alerted CM Nitish Kumar. This led to an inquiry which revealed a scam whose modus operandi was reminiscent of the Harshad Mehta scam in 1992.
(Srijan founder and kingpin of the scam, Manorama Devi)
Devi used banks, in which accounts of government welfare departments are operated, her links in the district administration, particularly the personal assistant of the DM and welfare officers to route money into the account of Srijan.
Like Mehta used to invest a bank’s money for share trading and after earning huge profits, would refund the amount back into the bank. Devi followed the same modus operandi with government money. The moment a DM would send withdrawal request, her accomplices in these two banks would inform her. She, in turn, would deposit the amount so that the cheque was cleared on time, making the scam foolproof.
She chose two banks – Indian Bank and Bank of Baroda – in which money allotted for most of the government schemes was parked and opened accounts of Srijan with them. The moment a huge amount would be deposited in any of these banks, a clerk or manager or someone from district administration will inform Devi. She, in turn, used fake cheques with forged signatures of the DM to transfer money into Srijan’s account.
But this chain was broken after her demise in February this year. Her daughter-in-law Priya and son Amit, both absconding with a lookout notice now issued against them, could not complete the scam cycle. As a result, many government cheques bounced, exposing the scam.
Devi started her organisation with one sewing machine in 1996. By the time she died, she had developed an empire. Her NGO got the status of a cooperative society later which limited financial transactions up to Rs 50,000, an RBI norm which it never adhered to.
The scam began in Kumar’s second term as chief minister. Devi started tracking funds for many developmental projects allotted to respective districts. Initial investigation reveals that funds allotted for urban development, building construction, land acquisition and health department were transferred to Srijan.
There are two ways of transferring government fund to the designated banks – NEFT or by cheque. Whenever a cheque was submitted, someone from the district administration would mention account details of SMVS on the back, either by the PA of the DM or Nazir (district treasury officer) who is responsible for every transaction in the district. The bank, in turn, would credit the amount to Srijan after a few days.
Another method was of getting the next series of cheque book. If a DM was issued a cheque of 50 leaves, starting 01 to 50, then the next series cheque book was made available to Srijan either by bank officials or Nazir (as he can also request for issuing a cheque book). It was used to withdraw money from the government accounts.
While the fraudulent withdrawals were going on for the last four years, they went un-noticed by auditors. Srijan, in connivance with banks roped in Vanshidhar Jha, a private printer and publisher in Bhagalpur to provide fake bank statements and passbook updates. Whenever the DM requested for the statement or passbook update, Jha would step in. A statement/passbook update would be provided without mentioning withdrawals or deposits by Srijan, making the authorities believe there was nothing unusual in the transaction.
Jha has been arrested along with the DM’s PA.
Devi also provided interest-free loans to politicians, bureaucrats and others who helped in her murky activities. Politicians from every party reportedly received benefits from her. Vipin Sharma, a leader of the ruling JD (U), was suspended by Kumar after his name surfaced as a beneficiary.
This scam has provided fodder to Lalu Prasad’s Rashtriya Janata Dal (RJD) who is demanding CBI probe under the supervision of a court-appointed SIT.