UPA 1 scam back to haunt UPA 2: CBI to probe PSU ‘fraud’ in Africa rice exports

However,flouting this stipulation,PSUs let private exporters come in and strike deals with African governments in alleged violation of norms. While the three PSUs,State Trading Corporation (STC),Minerals and Metals Trading Corporation (MMTC) and Projects Equipment Commodities Ltd (PEC),kept meagre margins of between 1% and 1.5% for themselves,private suppliers made between 26 and 40 times of what the PSUs did.

This is the key finding of the inquiry ordered by the Union Commerce Ministry which has sent a 40-page confidential report — along with a strong note from Commerce Minister Anand Sharma — to the Central Vigilance Commission which yesterday asked the CBI to step in.

In its report,the Commerce Ministry has calculated that 1.22 lakh tonnes of rice costing Rs 300 crore was eventually exported — just 9 per cent of the authorised amount — to Comoros,Ghana,Madagascar,Mauritius and Sierra Leone.

The Ministry asked for a CBI probe into the possible “criminality and collusion” between PSU bosses and the private entities. It also wants senior PSU officials — who have since retired — to be brought within the probe’s ambit.

For example,rice was exported to Ghana by one of the private firms for $684 per tonne while the domestic purchase price was only $261 per tonne. So the total margin for the private firm was $423 per tonne while the PSU showed a “trade margin” of only $11 per tonne. The private supplier earned $412 per tonne.

Interestingly,the nomination of the Indian supplier was made by the Government of Ghana even before the EGoM decided to lift the export ban.

The inquiry has revealed how instead of being nodal agencies,the PSUs became “intermediaries” in the deal — except in the case of exports to Mauritius.

The importing Governments selected both a supplier in India and did not associate the PSU while fixing the selling price and no one raised objections to this.

Thus,the report reveals,“technically,the PSUs exported the rice. All documents show the PSUs to be the exporters. However,in effect,the PSUs were merely the conduit through which private parties effected sales of rice to the importing agency…all transactions were concluded in their names and all payments were made to the PSUs. However,the sharing of the gains was,in effect,settled from the start in favour of the private suppliers.”

The Minister has come down heavily on the conduct of the PSU bosses as well as their vigilance set-up and stated how their inquiry “has clearly established a collapse of internal checks and balances which are crucial to functioning of such organizations and has cast a shadow on the role of the Board of Directors…” The report,in fact,contains a list of all members of the Committees of the STC,MMTC and PEC where the rice exports were discussed. Some PSU officials (of STC in particular) who were questioned by the Ministry’s inquiry officer have stated that they “cleared the operation” on telephone.

Commerce Secretary Rahul Khullar has clearly hinted at a criminal conspiracy in the manner in which the exports were executed. He has noted how,“it was crystal clear that the PSUs have not complied with the spirit of the public policy decision. Instead of directly exporting the rice,they settled for being mere standers-by watching on as individual private suppliers amassed huge gains from commercial transactions when,in fact,those profits should rightly have accrued to the PSUs…it is not an unreasonable surmise that there is a possibility of the PSUs acting in complicity with the private suppliers for a motive. This,in turn,implies the possibility of a criminal act.”

The Commerce Ministry has issued show-cause notices to around 15 senior officials of STC,MMTC and PEC demanding why penalty proceedings should not be initiated against them. Three private exporters,Shivnath Rai Harnarain,Amira Foods and Emmsons,have been blacklisted by the Ministry and debarred from dealing with any Government department or ministry.