CAG discovers Rs 894 cr scam in equipment purchase
11 May 2012 3:53 AM GMT
The Central Bureau of Investigation (CBI) probe against V R S Natrajan, the tainted chairperson of Bharat Earth Movers Limited (BEML), a defence ministry PSU, could spell trouble for some top defence ministry officials. The agency has found that an audit report from the Comptroller and Auditor General (CAG) in 2009-10 claims there was rigging in the BEML account books to the tune of Rs 894 crore.
A CBI source has said that they are investigating if the defence ministry officially had any role to play in rigging these accounts. The source said that some top defence ministry officials could be interrogated by the CBI in this regard and ask them questions about the CAG report. BEML is the company through which the army gets the controversial Tatra trucks.
The defence ministry spokesperson said that the CBI indeed is on this track. 'We have given all the files related to it to the CBI,' said Sitanshu Kar, the spokesperson of the ministry. The CBI has already questioned Natrajan on the Tatra procurement issue.
In a reply in January 2009 to the CAG, the defence ministry had told the CAG that in view of serious nature of observations, BEML was directed to place the entire matter before the Audit Committee for detailed examination and directives. The CAG report had said in its report, 'In all, sales were inflated by Rs 894 crore. To legitimise the sales, the Company paid excise duty and sales tax even while the equipment was not ready for dispatch.' It had said that BEML Limited has been recognising sale of equipment on the basis of Goods Consignment (GC) Notes obtained from Transporter and Custodian Certificate (CC) from buyers/dealers, which is against Accounting Standard Principles.
The CAG in its audit report titled 'Report No. CA 24 of 2009-10' in Chapter VI said: 'The company has been recognising sales through deliberate violation of the various internal procedures prescribed in their quality manuals.' It further said, 'Being a miniratna, the company should strictly adhere to the Accounting Standards and principles.'Â Â
The report had said, 'Audit reviewed the company's internal control checks and its accounting policy on revenue recognition through a test check of 272 cases... from November 2007 to July 2008. Audit scrutiny revealed that there were deliberate violations of internal control procedures in certain cases.'
HOW CAG NAILED BEML IN 2009-10 REPORT
- Final inspection certificates were issued without completion of prescribed production/quality checks
- Sales were recognised without inspection
- Equipment showed as ready for dispatch by manipulating shipment documents
- Inspection certificates not obtained from the nominated authority
- Failure to send invoices to the customers for sales recognised
- Recognising sales of incomplete deliveries
A CBI source has said that they are investigating if the defence ministry officially had any role to play in rigging these accounts. The source said that some top defence ministry officials could be interrogated by the CBI in this regard and ask them questions about the CAG report. BEML is the company through which the army gets the controversial Tatra trucks.
The defence ministry spokesperson said that the CBI indeed is on this track. 'We have given all the files related to it to the CBI,' said Sitanshu Kar, the spokesperson of the ministry. The CBI has already questioned Natrajan on the Tatra procurement issue.
In a reply in January 2009 to the CAG, the defence ministry had told the CAG that in view of serious nature of observations, BEML was directed to place the entire matter before the Audit Committee for detailed examination and directives. The CAG report had said in its report, 'In all, sales were inflated by Rs 894 crore. To legitimise the sales, the Company paid excise duty and sales tax even while the equipment was not ready for dispatch.' It had said that BEML Limited has been recognising sale of equipment on the basis of Goods Consignment (GC) Notes obtained from Transporter and Custodian Certificate (CC) from buyers/dealers, which is against Accounting Standard Principles.
The CAG in its audit report titled 'Report No. CA 24 of 2009-10' in Chapter VI said: 'The company has been recognising sales through deliberate violation of the various internal procedures prescribed in their quality manuals.' It further said, 'Being a miniratna, the company should strictly adhere to the Accounting Standards and principles.'Â Â
The report had said, 'Audit reviewed the company's internal control checks and its accounting policy on revenue recognition through a test check of 272 cases... from November 2007 to July 2008. Audit scrutiny revealed that there were deliberate violations of internal control procedures in certain cases.'
HOW CAG NAILED BEML IN 2009-10 REPORT
- Final inspection certificates were issued without completion of prescribed production/quality checks
- Sales were recognised without inspection
- Equipment showed as ready for dispatch by manipulating shipment documents
- Inspection certificates not obtained from the nominated authority
- Failure to send invoices to the customers for sales recognised
- Recognising sales of incomplete deliveries
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