ED raids BMC premises: What the CAG audit of Covid-19-related spending found

On June 19, the Maharashtra government ordered the setting up of a Special Investigation Team (SIT) headed by the Commissioner of Mumbai Police to investigate alleged financial irregularities in several departments of the BMC.

The alleged irregularities were pointed out by the Comptroller and Auditor General (CAG) of India in its audit of expenses at nine BMC departments between November 28, 2019 and October 31, 2022.

The audit was carried out at the behest of the state government, which pointed to alleged irregularities amounting to Rs 12,000 crore in 76 projects, most of which were undertaken during the pandemic. The Shiv Sena-NCP-Congress government was in power at the time.

What the CAG report said

Of the Rs 12,000 crore expenditure, the CAG could audit spending of only Rs 8,500 crore after BMC objected. “The CAG…moved to take up the audit from 14 November 2022. However, BMC issued a legal notice on November 17, 2022… to not proceed with any audit of any acts, works, decisions taken pursuant to Covid management and expenditure costing Rs 3,538.73 crore, referring to its interpretation of the provisions of the Epidemic Act, 1897 and Disaster Management Act, 2005,” the report said.

A special audit of Covid-related spending — including on 13 Jumbo Covid Centres, 24 Ward Offices, almost 30 small and large hospitals, etc. — had been sought by the state government in October 2022, the report noted.

Project audits and findings

In its 146-page report, the CAG pointed out the weakness of internal control mechanisms in the BMC. It noted that the civic body had awarded work orders on 20 projects without inviting tenders, which required an internal vigilance investigation.

In 64 other works worth Rs 4,755 crore in five departments, contractual documents were not executed, the report said. “In the absence of formal agreements, BMC would not be able to take any legal recourse against the contractors in the event of default… In 13 works costing 3,355.57 crore across three departments, third party auditors were not appointed to ascertain the quality/ quantity of works executed by the contractors,” the CAG said.

It said that the lapses pointed to the absence of respect for established procedures and weak internal controls, which leads to a lack of transparency and probity in the execution of works.

Departments, projects under lens

While the ED has started investigating financial transactions carried out during the pandemic period, the financial irregularities highlighted by the CAG cover multiple departments.

* In the Development Plan Department, the CAG has shown overvaluation of expenditure during land acquisition by Rs 206 crore. It has pointed to the incorrect application of rate in contravention of the Land Acquisition Act, and flagged an abnormal delay in acquiring a land parcel at Eksar village in Dahisar for creating public amenities.

* The report says the BMC’s Bridges Department awarded work orders to private contractors without registering them with the BMC.

* The CAG has pointed to a cost escalation of Rs 1,600 crore in the Goregaon Mulund Link Road (GMLR) project, with deliberate delays in getting forest clearance certificates for underground tunnels.

* The report also stated that the BMC had deliberately delayed the appointment of Quality Monitoring Agencies (QMA) for monitoring the improvement work taken up in CC roads.

* It said the BMC’s IT Department had issued work orders worth Rs 159 crore to one particular vendor multiple times, and without inviting tenders.

* Eighteen projects at a cost of Rs 54.53 crore were awarded to contractors without inviting tenders, which eventually gave an undue benefit of Rs 5.27 crore to contractors as a result of micro-silica and ice flakes not being used in the concrete used for road works, the report said.