FOUR years before the Bihar government finally ordered a probe into the Rs 700-crore Srijan scam, suspected to involve several high-ranking officials, a chartered accountant based in Godda, Jharkhand, had raised red flags about the money making its way into the accounts of the cooperative society.
In emails he sent to the Bihar Chief Minister, Nitish Kumar, the state Cooperative Department, and to then Union finance minister, P Chidambaram, Sanjit Kumar asked how a government cheque of Rs 7.32 crore had been deposited with the Srijan Mahila Vikas Sahyog Samiti Limited, a Bhagalpur-based registered society, when it was neither authorised to function as a bank nor to accept such high-value cheques, as per RBI norms.
Kumar, who is originally from Bhagalpur, claims he received no acknowledgement from the state government, but that in response to his letter to the Centre, RBI Assistant Manager Priya Pravas Ranjan wrote to the registrar of cooperative societies, Bihar, to look into the matter. “But the RBI’s instructions went unheeded,” he says.
Two days ago, the officer who deposited the cheque with Srijan, then Banka district magistrate Jayshree Thakur, was dismissed.
An investigation by The Indian Express shows that at the heart of the scam is Srijan founder Manorama Devi, who allegedly operated right under the government’s nose, sharing the stage with ministers and flaunting her links with senior bureaucrats, businessmen and politicians. Manorama Devi died this February. A special investigation team of the Bhagalpur police has so far lodged nine FIRs and arrested 12 persons in the case. Manorama Devi’s daughter-in-law and Srijan secretary Priya Kumar and Manorama Devi’s son Amit Kumar are on the run.
The Bihar government has recommended a CBI probe into the scam.
In the email he sent to the Bihar CM and Cooperatives Department and Bihar chief secrerary on July 14, 2013, Kumar wrote, “A senior officer of Bihar administrative service (Jayshree Thakur) has made deposit of Rs 7.32 crore with a cooperative society named as Srijan Mahila Vikas Sahyog Samiti Limited, Bhagalpur. As per the statement of (Srijan) secretary, Srijan is running a bank at Sabour block of Bhagalpur, which is affiliated to Cooperative bank. They (have) 10,000 account holders.”
The CA told The Indian Express: “When I learnt about then Banka ADM depositing a high-value cheque into Srijan’s cooperative bank at Sabour and heard Srijan secretary Manorama Devi accepting it, I promptly sent an email to the Bihar Cooperative Department and also marked it to the Bihar CM… What I wanted to point out was that Srijan cannot run a bank as it was not granted a licence and permission by the RBI to do so. The Cooperative Societies Act clearly says it can carry maximum transaction of Rs 50,000.”
Kumar has complained against over two dozen “illegal” non-banking financial companies to Central and state governments and the RBI over the last 12 years.
Kumar says he did not receive any acknowledgement from the state government on his July 2013 email. However, a day after the email, the government asked then Bhagalpur district magistrate Prem Singh Meena to probe the matter. Meena ordered an inquiry by a two-member team of then additional district magistrate Sudhir Kumar and then Bhagalpur district cooperative officer Pankaj Jha. While it is not known if the team conducted an inquiry into Srijan’s “dubious” activities, Thakur was suspended. A few months later, DM Meena was transferred “prematurely”, having served in Bhagalpur from June 2012 to January 2014. Pankaj, incidentally, was arrested on Saturday for his alleged connivance in transferring Rs 48 crore of the Cooperative Department funds to Srijan.
Sanjit Kumar says he had also alerted the Bhagalpur district administration about Srijan possibly “parking government funds”.
Ten days later, on July 25, 2013, the CA wrote to the Union finance minister. He raised four questions in his letter — can a cooperative society do banking without RBI permission, can an officer with a state government become its member, could Srijan bank carry proceeds of third-party transfer (in this case, the cheque was issued in favour of Jayshree Thakur but the money was deposited in Srijan account), and why the bank that cleared the cheque did not treat it as suspicious transaction.
“National economy is being damaged by a large number of organisations involved in illegal business of acceptance of huge deposit,” he wrote.
Heartened by the RBI response seeking a probe, Kumar says, “I pursued the matter through emails till December 2014, and then gave up out of frustration.”
Kumar also asks how the Economic Offences Unit team that raided Srijan premises in 2013 after the high-value cheque in name of Jayshree Thakur was deposited with it, failed to detect the illegal banking. “The EOU, which is now advising the Bhagalpur SIT in the Srijan scam probe, could have prevented siphoning of hundreds of crores of government funds to Srijan’s accounts,” says the CA.
In 2011, an Income Tax department team carried out a regular survey of Srijan on instructions of then Bhagalpur income-tax commissioner, Prashant Bhushan, but did not find any wrongdoing.
Incidentally, in January 2013, seven months before Kumar sent his letter, Principal Secretary, Bihar Finance Department, Rameshwar Prasad Singh had put out a list of 41 banks in the state where individuals should keep their money, while warning the public to “keep your capital safe”. Srijan was not on the list.
In May 2013, then Bihar finance minister Sushil Kumar Modi held a meeting on illegal non-banking financial companies. On how Srijan went undetected, Modi, back as finance minister as well as deputy CM now, told The Indian Express, “During my tenure (then), I received only one complaint about a cooperative society, but not against Srijan. As a corrective measure, we have now asked all district magistrates to give a monthly certificate saying district funds are not kept at any place other than banks.”
Asked why the sustained siphoning of government funds went undetected for 10 years, Modi said it was the primary responsibility of the district administration.