Two former executives of the Uttar Pradesh Power Corporation Limited have been arrested on the charge of illegally investing Rs 2,631 crore of the Employees Provident Fund money, and with a company that is being investigated for alleged fraud and terror links.

Sudhanshu Dwivedi, former finance director of the corporation, and Praveen Kumar Gupta, former general manager (finance), are accused of investing the money with Dewan Housing Finance Corporation Limited between March 24, 2017, and December 31, 2018, police sources said.

If correct, this would mean the diversion of the EPF funds — which a union leader termed a “scam” — began five days after the Yogi Adityanath government took charge.

Adityanath has recommended a CBI probe. One of his ministers sought to deflect blame, saying the investment of EPF money was a policy decision taken by the previous Akhilesh Yadav government that some officials later implemented without informing their superiors.

Only a small fraction of EPF money can legally be invested in the stock market, and only the Union labour ministry can decide to do it — and only through the services of an accredited handler. Under current laws, the state government and its officials can have no role in it, official sources said.

While the Samajwadi Party and the Bahujan Samaj Party had not reacted till Sunday evening, Congress general secretary Priyanka Gandhi Vadra had posted several tweets since Saturday.

She has also asked state Congress president Ajay Kumar Lallu to start a state-wide movement against the Adityanath government.

“The BJP government has blocked the hard-earned money of the employees of the power department by putting it with the DHFL. The government took the decision to invest the money of the employees at a dubious place,” Priyanka tweeted on Sunday.

The Centre had last week ordered a Serious Fraud Investigation Office probe into alleged financial irregularities at mortgage lender DHFL after finding instances of suspected fund diversions, a PTI report said.

It added that the company stood accused of siphoning off Rs 31,000 crore worth of bank loans through layers of shell entities.

Also, the Enforcement Directorate recently questioned the DHFL promoters over alleged links with a front company of Iqbal Mirchi, the late associate of fugitive terrorist Dawood Ibrahim, the agency report added.

Priyanka expressed dissatisfaction at the arrest of only two officials of the department, tweeting: “They (the government) are diverting attention by arresting small fish. Actual culprits should be brought to book.”

Lallu said the Congress was “playing the role of the main Opposition in Uttar Pradesh” and would launch a movement against the state government’s “anti-employee decision”.

“We want to know which other departments’ provident fund money has been secretly invested with private firms. We have got some details and will share it with the people soon.”

A media statement from the state government’s information department confirmed the two arrests and said: “Gupta and Dwivedi invested more than 50 per cent of the fund of Uttar Pradesh State Power Sector Employees Trust and Uttar Pradesh Power Corporation Employees Provident Fund Trust in DHFCL in violation of rules.”

The government said Rs 1,185 crore of the invested Rs 2,631 crore had been realised from the private company and that Rs 1,445 crore remained to be recovered.

But Shaelendra Dubey, a leader of the power employees’ union, claimed that more than Rs 4,000 crore had been invested with DHFL, of which more than half was yet to be recovered. He demanded a white paper on the “scam”.

Arrested on Saturday evening, Dwivedi and Gupta were on Sunday sent to 14 days’ judicial custody after a six-hour grilling by the economic offences wing of the state police.

Gupta had been suspended last month on the vague charge of “certain irregularities”. The EPF funds diversion came to light on Friday when some officials of the power corporation — responsible for electricity transmission and distribution across the state — revealed the DHFL investment.

Hours before his arrest, Gupta had told reporters the investment was done at the behest of “governments”, appearing to implicate both the Akhilesh and Adityanath administrations.

Energy minister Shrikant Sharma told reporters the Akhilesh government had taken the “dubious” decision to invest the EPF money in April 2014, and the “process of investment was carried forward in 2016 and on December 17, 2016, (Gupta and Dwivedi) were authorised for this”, PTI reported.

He added that Gupta and Dwivedi began the actual investment in DHFL from March 2017 without informing the corporation’s managing director, the agency report said.

A power corporation official confirmed to reporters on the condition of anonymity that the Akhilesh government had in 2014 indeed decided to invest the EPF money.

“We came to know that Rs 2,631 crore had been invested with the housing company between March 2017 and December 2018. We were directed to keep mum, but someone spilled the beans,” he said.