EPFO scam: One lakh cos siphoned off Rs 3,450 cr
New Delhi: The rot in the provident fund runs deep and the salaried class can do little about it.
Over the years, more than 1,00,000 companies across the country have connived with hundreds of Employment Provident Fund Organisation (EPFO) officials to siphon off almost Rs 3,450 crore — the money that rightfully belongs to the tens of thousands of people working in various organisations, including some top-notch ones.
Under the Right to Information Act, dna found that 2,700 well-known companies have defrauded a major chunk of this money. And 600 of these companies owe the EPFO more than Rs1 crore. Annual reports say this has been going on for the past 10 years.
The RTI reply also revealed that at least 1,350 EPFO employees have had corruption charges against them in the past five years. Of this, 450 are from the officer grade. Most of these officers have been accused of misusing power and colluding with companies to turn a blind eye to their wrongdoings. And every year, more and more such officers are coming under the scanner.
Confirming the trend, DL Sachdeva, a member of the EPFO board, said it would be next to impossible for any company to siphon off money without the help of EPFO officials.
So, can’t the board do anything?
Sachdeva said the matter has been discussed in board meetings several times but the number of defaulting companies keep growing.
dna found from the various documents and information collected under the RTI over the past two months that several blue chip companies are part of this ongoing scam. The list of defaulting companies includes Aditya Birla Money Ltd, Reliance Industries Limited, ACC Ltd, Coca Cola, Tata, Sahara and some public sector companies like NTPC, BHEL and FCI.
And the Rs3,450-crore is just the tip of the iceberg. The actual amount is bound to run into thousands of crores because there are many companies, which are still to be assessed, MP Srivastava, a former EPFO enforcement officer, said.
So, how do companies swindle employees and get away without being caught?
It is a vicious cycle. Since everything is computerised, the moment a company defaults on payment, it is recorded. But enforcement officers rarely take any action. Even if they do, the companies dilly-dally and seldom show up to present their case.
Some officers do go the extra mile and issue summons. But the defaulting company immediately moves court and gets a stay order. And this continues year after year.
A case in point is Sahara. Five of its companies defaulted on payment for 10 years from 1995 to 2005 after which the EPFO summoned them. But nothing has happened to date. The dues have instead accumulated over the years.
There are hundreds of such companies in the EPFO’s list of defaulters. Another case is cement giant ACC Ltd’s Jabalpur unit. Official records show its dues pending for 15 years from 1990 to 2005.
“Companies often bribe enforcement officers who are supposed to keep a check on such activities. Naturally, their reports never say anything about such companies,” Srivastava said. This way companies keep evading the law for several years.
While many companies manage to evade compliance tests, some — pulled up for flouting rules — manage to defer hearing for years. dna found that 100 companies were served with show-cause notices. But in one case the company managed to adjourn the hearing 24 times. The rules say all proceedings against a defaulting company should be completed within six months. If it does not happen, the regional officer in charge has to record the reasons for the delay.
Citing the large numbers of cases pending, a November 2011 circular says: “This shows that desired, focused and sincere effort are yet to be taken in order to liquidate the pendency in concluding the proceedings launched.”
Going through the list of pending cases, dna found that most cases are kept pending with just one remark: “enforcement officer’s reports are wanting”.
According to a parliamentary standing committee report, a stay order had been issued in more than 5,000 cases involving Rs1,058 crore till March 2011. “About 70% of the cases are pending mainly because as soon as a case is filed for recovery, the defaulter goes to the courts,” the report said.
By the time a final verdict is given, many of the defaulting companies have either shut down or turned sick. “And in absence of any strong law to prosecute the proprietor, the management gets away,” a former vigilance officer with the EPFO said.
Despite several reminders, EPFO commissioner Anil Swarup did not respond to dna’s emailed queries.
dna/Gangadhar S Patil