Telugu Desam Party (TDP) MLA from Tekkali in Andhra Pradesh, K Atchannaidu, was on Friday arrested by the Anti-Corruption Bureau (ACB) for his alleged involvement the procurement of medicines for ESI hospitals when he was a minister in the N Chandrababu Naidu Government.
Atchannaidu served as the labour minister in the TDP government and is considered to be very close to party chief N Chandrababu Naidu.
After coming to power last May, Chief Minister Y S Jagan Mohan Reddy had ordered an investigation into the dealings and contracts awarded by the previous TDP regime during which the ACB probed alleged irregularities in the procurement of medicines for ESI hospitals.
This morning, Atchannaidu was arrested after ACB sleuths visited his house in Tekkali in Srikakulam district with a team of more than 100 cops. He was taken to Vijayawada and will be produced in court later today.
According to ACB sources, Atchanaidu had allegedly asked directors of Insurance Medical Services to award contracts or purchase orders to a particular Hyderabad-based firm of his choice. The directors had allotted the work to the firm without calling for tenders. The firm had allegedly violated norms of the agreement but was still paid over Rs 4 crores.
Reacting to the leader’s arrest, Telugu Desam Party chief N Chandrababu Naidu took objection to the manner in which the 50-year-old was arrested in the wee hours. “They kidnapped Atchannaidu. It is political vendetta Police should reveal where they are holding him. The Home Minister should resign for the manner in which police is behaving,” he said.
TDP leader Varla Ramaiah said that if the ACB had issued a notice to Atchannaidu to appear before it, he would gone on his own. “What was the necessisity to haul him away like that early in the morning? Was he running away? How can the government treat a former minister and sitting MLA like a terrorist or a Naxalite?,” he said.
“The ACB says he ordered one of the directors to favour a Hyderabad-based company. But his request to allot the contract to the company was made after talks and it is on paper as he had sent the request on his letterhead. Why would he do that if it was illegal?” TDP leader B Umamaheshwara Rao said.
In Andhra Pradesh, there are 4 ESI Hospitals, 3 ESI Diagnostic Centers and 78 ESI Dispensaries. The employers and employees of the relevant sectors contribute their share of 3.25% and 0.75% of their salary, respectively, for the ESI Scheme. The expenditure ratio between the state goverment and ESI Corporation is 1:7. The entire expenditure is initially met by the state government and subsequently, the ESIC reimburses its share to the government.
According to the ACB, in the past five years, three persons who worked as directors of Insurance Medical Services — Dr. B Ravi Kumar, Dr C K Ramesh Kumar and Dr G Vijaya Kumar — had issued purchase orders for the procurement of drugs, medical equipment, surgical items, lab kits and furniture worth Rs 975.79 crore by violating procedures and guidelines issued by the Andhra Pradesh government.
The trio had made the purchase without constituting a Drug Procurement Committee and without calling for open tenders, causing a huge loss to the state exchequer. An inquiry by the Vigilance Department revealed that the quotations were fabricated and the directors had asked the pharmacists and other staff to write the quotations in connivance with suppliers who were not empanelled with the government for the purchase of medicines, etc.
The directors issued the purchase orders based on those fabricated quotations to avoid competitive bidding and to favour the Non-Rate Contract firms of their choice.
The inquiry also found that while the total budget allocation for the purchase of drugs and medicines during their tenure as directors was Rs 293.51 crores, the directors had purchased the drugs and medicines from Rate Contract and Non-Rate Contract firms worth Rs 698.36 crore.
The directors had issued purchase orders to two pharma companies and procured drugs worth Rs 15.93 crores. On verification of the invoice price of those two Non Rate Contract firms, the value of those drugs were found to be Rs 8.52 crore. After considering a trade margin of 20%, the value of those drugs is Rs 10.22 crore. The difference in price between the Purchase Invoice and Sale Invoice of the above two firms was Rs 5.70 crore.
According to the ACB, Atchannaidu had asked the then director Dr C K Ramesh Kumar to entrust certain purchase orders to Hyderabad-based M/s.Tele Health Services Pvt., Ltd. without calling for tenders. Based on a letter by the minister, Dr C K Ramesh Kumar entered into a Memorandum of Understanding (MoU) with M/s.Tele Health Services Pvt., Ltd., to provide toll free services and ECG services on nomination basis.
As per the MoU, the service provider has to provide toll free services to patients whenever they call for assistance of pending reimbursement and referral bills.
The director agreed to pay Rs 1.80 per month for each IP irrespective of calls attended. The director also entered into an MoU with the same service provider to provide ECG services to the patients @ Rs.480/- per ECG.
During the enquiry, it was found that the service provider had claimed the bill by submitting the call logs of Telangana State IPs and the directors had paid the amount without any verification. When verified later, it was found that the service provider had utilised the services of PG Diploma Clinical Cardiologists instead of qualified DM Cardiologists by violating agreement conditions and had claimed the bills.
The directors, Dr C K Ramesh Kumar and Dr G Vijaya Kumar, had paid Rs 4.15 crore for toll free services and Rs 3.81 crore for ECG Services.
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