Karnataka’s COVID-19 response is tainted by a Rs 167 crore scam, with an FIR revealing corruption under the previous BJP government. It details misuse of funds, including inflated procurement costs and overpriced, expired medicines
Published Dec 14, 2024 | 1:45 PM ⚊ Updated Dec 14, 2024 | 1:45 PM
Representative image of PPE kits
Karnataka’s COVID-19 pandemic response is now under the shadow of a ₹ 167 crore scam, as the state filed its first FIR. The FIR makes alarming corruption allegations against the previous BJP government.
The FIR filed at Vidhanasoudha police station, details a brazen misuse of public funds during one of the state’s darkest crises, from inflated medical procurement costs to outdated medicines bought at exorbitant rates.
A detailed complaint has been filed by Dr Vishnu Prasad M, Chief Accountant working in the Directorate of Medical Education at Vidhanasoudha police station in Bengaluru. The complaint alleges that when the records of PPE kits and N95 masks procured by the DME were reviewed, several irregularities were identified.
It was found that the government officials, in collaboration with private individuals, formed a conspiracy to misappropriate funds, causing significant losses to the government while benefitting themselves. The records allegedly revealed that there has been a major financial ‘scandal’ involving the procurement of essential medical supplies during the Covid 19 pandemic.
The police have booked a complaint against the then Directorate of Medical Education Director Dr PG Girish, along with State Accounts Department’s Joint Controller Raghu GP, Health Officer Muniraju, Laj Exporters, Prudent Manage Solutions, people representatives, government officials and others. However, it does not mention names of any politician.
Complaints have been booked under the sections 120B (criminal conspiracy), 403 (dishonest misappropriation of property), 406 (Criminal Breach of Trust) and 409 (criminal breach of trust by public servant) of the Indian Penal Code and under section 23 of the Karnataka Transparency in Public Procurements Act, 1999 rules.
The FIR lodged against the Directorate of Medical Education (DME), highlights grave irregularities and deliberate violations in the procurement of essential materials during the COVID-19 pandemic, causing an estimated loss of ₹167 crore to the state exchequer.
Dr Vishnuprasad M, Chief Accountant Officer of the DME, outlined in the complaint, how officials exploited the pandemic emergency to bypass regulations, misuse funds, and profit through illegal transactions. Below is a detailed account of the fraud.
Misappropriation of funds allocated for PPE Kits and N95 masks
On 18 August 2020, the Karnataka government sanctioned ₹41.35 crore for procuring 2.59 lakh PPE kits and an equal number of N95 masks for medical colleges and a super-specialty hospital. However, instead of adhering to the terms of approval, the entire amount was spent exclusively on PPE kits, violating the directive to include N95 masks. Despite ₹41.34 crore being disbursed, there is no record of these kits being delivered to the intended institutions.
Tender process manipulation
According to the FIR, three companies had participated in the tender process. In which the lowest bid of ₹1,312.50 per PPE kit was accepted from Laj Exports. A purchase order for 2.59 lakh PPE kits was issued on 7 September 2020, stipulating delivery within 15 days. However:
Payments totalling ₹41.34 crore were made in another contract to supply not only 2.54 lakh PPE kits but also an additional 55,784 kits worth ₹7,32 crore to another company Prudent Manage Solutions, a Mumbai-based firm that neither participated in the tender process nor had direct dealings with Laj Exports.
Additionally, 55,784 PPE kits were similarly purchased without following the tender process, costing ₹7.32 crore.
Further irregularities include:
13,784 PPE kits were purchased without a supply order or grant approval for ₹1.80 crore. These kits were not accounted for in distribution records.
₹39.54 crore was paid to Prudent Manage Solutions, bypassing the designated supplier, Laj Exports.
Violation of the KTPP Act
Between 20 December 2020 and 20 March 2021, an additional ₹35.31 crore was allocated to procure PPE kits and N95 masks under strict utilisation guidelines. Despite these measures:
6.22 lakh PPE kits were procured directly from Laj Exports for ₹81.68 crore across five purchase orders, bypassing the tender process and violating the Karnataka Transparency in Public Procurement (KTPP) Act.
Illegal transactions and misuse of supplies
2.67 lakh PPE kits worth ₹35.16 crore were supplied to the Karnataka State Minerals Corporation Limited (KSMCL) without any payment. This transaction was deemed illegal.
Institutions like the Mandya Institute of Medical Sciences and Belgaum Institute of Medical Sciences reported unused stocks of PPE kits valued at ₹9.99 crore, causing additional financial losses.
It may also be noted that the Justice D Michael C’unha Committee also looked into the alleged irregularities in Covid 19 procurements by the the previous BJP government and submitted it’s interim report to the state government in August 2024. The interim report had recommended the prosecution of the then Chief Minister BS Yediyurappa and his minister for health and family welfare B Sriramulu.
Sources said that the commission had found irregularities over the purchase of three lakh PPE kits from two Chinese firms in April 2020, at exorbitant rates without any explanation or compelling reason to do the same.
The report is said to have mentioned that there has been several procedural and administrative lapses in the purchase orders worth over ₹918.34 crore issued by the DME towards procurement of medical equipment, PPE kits, masks, ICU units, CT scanners, baby incubators and other consumables in the years 2019-20 to 2023.
In response to the commission’s findings, the Karnataka government on 14 November,2024 formed a Special Investigation Team (SIT) to conduct a thorough investigation into the alleged financial mismanagement. The SIT, to be headed by an officer of at least Inspector General of Police (IGP) rank, is tasked with delving deeper into the irregularities and initiating legal action against those found culpable.
However, it can be noted that an order to form an SIT can be issued only through transferring a specific FIR to the SIT. Hence, for technical reasons, an FIR has now been registered. The order to constitute SIT is expected to be issued on Monday, 16 December, following which detailed investigation into the allegations will take place. According to sources, more FIRs are expected to come as the amount of misappropriation done is massive and needs thorough investigation. Names of politicians involved, though not mentioned in this FIR, are expected to come out during the investigation and future FIRs.
(Edited by Ananya Rao)
