The Vigilance and Enforcement Department of Andhra Pradesh has claimed to have unearthed a Rs 404.86 crore scam in the Employees State Insurance Corporation during the period between 2014 and 2019, when the Telugu Desam Party was in power.
Three directors of the Insurance Medical Service (IMS) implementing the ESIC scheme -- B Ravi Kumar, C K Ramesh Kumar and G Vijaya Kumar -- have been found guilty of large-scale irregularities, a report by the vigilance department said.
Besides the three directors, at least five joint directors and several other staff members have been named as culpable in the irregularities, it added.
State labour minister G Jayaram said action would be taken against all those involved, based on the vigilance report.
He said former labour minister in the Chandrababu Naidu cabinet, K Atchannaidu, and top officials of the department would be brought to book and the swindled amount would be recovered.
'We will not hesitate to send them to jail,' Jayaram said in a video statement.
Atchannaidu, who is currently deputy leader of the Telugu Desam Legislature Party, denied any wrongdoing and claimed he merely implemented the directives of Prime Minister Narendra Modi.
'In 2016, the Prime Minister convened a meeting of ESIC and wanted the states to introduce tele health services and the Centre wrote a letter to all states in December 2016 on the same.
We had decided to implement that and I asked our officials to follow Telangana model and issued a note,' Atchannaidu said in a video message from his village in Srikakulam district.
Maintaining that all relevant records were available and could be verified, the former minister said he was ready to face any inquiry.
The vigilance department said that the three directors were the 'kingpins of the procurement scam in the ESI, where gross irregularities were committed in purchase of drugs, medicines, lab kits, surgical items and furniture between 2014-15 and 2018-19, causing a loss of over Rs 151 crore to the state exchequer'.
Of the total Rs 975.79 crore worth of purchases made during the period, the three directors, along with other staff, violated all procedures and guidelines of the government and ESIC and caused 'huge wrongful loss to the exchequer', the vigilance report prepared by Director General K V Rajendranath Reddy said.
While the total budget allocation for the purchase of drugs and medicines during their tenure was Rs 293.51 crore, they made purchases worth Rs 698.36 crore, an excess of Rs 404.86 crore, in violation of procedural guidelines, the report said.
Of this, Rs 51 crore was found to be paid in excess as the drugs were purchased from non-rate contract firms, in clear violation of guidelines, it said.
An excess of Rs 85.32 crore was paid to three private firms on purchase of laboratory kits and another Rs 10.43 crore on surgical items, it said.
'The directors purchased furniture worth Rs 6.62 crore without calling for open tenders and, when compared to randomly with the market prices, the purchases were made at 70 per cent excess than market prices.
'This caused a loss of Rs 4.63 crore to the government,' the Vigilance report noted.
'The above acts of the officers and staff (of ESIC and IMS) and proprietors of various firms attract the provisions of criminal misconduct under Prevention of Corruption Act and cheating, criminal breach of trust, forgery for the purpose of cheating and using forged documents as genuine and other offences under the Indian Penal Code,' the vigilance report said and recommended suitable action.
