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Former finance secretary asked to explain contract to currency-paper supplier

Sources have told The Indian Express that DoPT has sent the former Finance Secretary a “show-cause” seeking his explanation on how extensions were given to DelaRue, a British firm, in 2012 for the supply of colour shift (security) thread without tenders when he was Finance Secretary.

Written by Ritu Sarin | New Delhi | Published: September 1, 2017 5:19 am
former finance secretary, arvind mayaram, DoPT, currency-paper supplier, DelaRue, british firm contract, india news, indian express news Arvind Mayaram (R) (File photo)

FORMER Finance Secretary Arvind Mayaram is in the midst of a controversy related to contracts given to suppliers who provide currency printing paper with proprietary security features. On Wednesday, he had called demonetisation a “serious error of judgment.” Sources have told The Indian Express that the Department of Personnel and Training (DoPT) has sent the former Finance Secretary a “show-cause” seeking his explanation on how extensions were given to DelaRue, a British firm, in 2012 for the supply of colour shift (security) thread without tenders when he was Finance Secretary.

The thread is a crucial component of a currency note that changes colours and, in some notes, appears as a straight line when the note is held against the light. Incidentally, DelaRue was blacklisted by the Government in 2011 (The Indian Express, September 14, 2011) after some of their supplies failed quality checks and later the company and its Indian representatives were named in the Panama Papers (The Indian Express, April 8, 2016).

When contacted, Mayaram confirmed that he had been asked questions by the DoPT about contracts given to DelaRue and said the genesis of this controversy was an anonymous complaint being received by the Central Vigilance Commission (CVC).

“The DelaRue matter is something to do with procedure and not substance and, yes, my explanation has now been sought on different counts. I have already sent my reply to the DoPT. It is indeed a sad reflection on how the system functions,” Mayaram said.

Finance Ministry officials and experts said that the security thread was among “proprietary” items used for currency-note printing and DelaRue’s contracts for it had been extended for years until 2012 when the security features were reviewed by a high-level committee. It was at this stage, with new security features not yet listed, that the Finance Ministry asked the RBI to give a further extension to DelaRue and it is the Finance Secretary, reportedly, who recommended a three-year extension instead of making it an annual exercise.

That decision has come back to haunt the retired officer. Officials said Mayaram has been asked to explain: one, why he sought a three-year extension of DelaRue’s contract; two, why had the Ministry not asked for a tender; and, three, why didn’t he seek the approval of then Finance Minister P Chidambaram.

In developments that followed, when the NDA Government came in, there was a fresh tender for the supply of the security thread and two other foreign firms, Fabriano of Italy and Crane of USA got the contracts. Officials in these companies said that following fresh tenders, the price for the supplies fell by about 35% and was pegged at Rs 650 crore annually.

Thus, as the CVC is understood to have been informed — in the original complaint — that around Rs 200 crore extra was spent every year by DelaRue getting fresh contracts for a three-year period.

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  1. M
    Sep 1, 2017 at 8:11 pm
    It is high time, the Ministry top Mandarins be accountable for their actions. This is not to say, he or she is guilty. A valid explanation is necessary. On similar lines, every Minister his advisers are also accountable for decisions they take.
    1. S
      Sep 1, 2017 at 2:42 pm
      Issuing a “show-cause” after 3 years of rule and that too one of the top bureaucrat is something fishy. Is it the way Go t that work to act. Ofcourse RBI took 10 months to count note and all bhakatas appreciate the outstanding speedy work culture of RBI. The show-cause also having the same speed or even less
      1. Sushil Rajdev
        Sep 1, 2017 at 12:41 pm
        Thiefs and thiefs who is bigger one it's a big question . Both are equally wrong so cannot bear criticism .
        1. G
          Sep 1, 2017 at 9:55 am
          35 reduciton in cost when vendors were changed. no wonder our polticians have bene ed a lot in certain regimes due to sheer callousness to established process
          1. C
            Common Man
            Sep 1, 2017 at 9:11 am
            Government/ BJP is not serious about corruption. Actions so far - raids, investigations, show cause, explanations etc. Whom are they trying to fool? No one has been jailed
            1. S
              Sep 1, 2017 at 11:18 am
              Judiciary also to be blamed. 2g judgement is nowhere in the horizon even though the arguments, final submissions were completed long ago. JJ case was dragged on till her death.
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