CAG indicts Nagaland Govt in lottery scam

NEW DELHI, JUNE 23: It's finally official now. The special audit by the Comptroller and Auditor General (CAG) of the infamous Nagaland lo...

NEW DELHI, JUNE 23: It’s finally official now. The special audit by the Comptroller and Auditor General (CAG) of the infamous Nagaland lottery — ordered by the Union Home Ministry two years ago — has confirmed a scam running into more than Rs 5,000 crore. But what’s more damaging, it has indicted both the Nagaland Government and the state’s sole distributor for defrauding the public as well as the exchequer of the amount.

The CAG report, now handed over to Governor O P Sharma and scheduled to be placed before the Assembly in July, is a veritable time-bomb ticking away for Chief Minister S C Jamir and his ministerial colleagues. The state government has been given a copy of the report. Jamir is in a fix since it is mandatory for him to place the report in the Assembly when the House convenes next month.

Unambiguously castigating the state government and the distributor, M K Subba (a former Congress MP who also has had dubious business tie-ups with Romesh Sharma), the CAG report holds that “the NagalandState Lottery did not meet the requirements of the Supreme Court. It was state-authorised and not state-organised. Every opportunity was taken by the state to benefit the state’s sole distributor (Subba’s company, M S Associates) at the cost of the state. Every conceivable transgression took place in the running of the lottery.”

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Ironically, while the meticulously dug out evidence by the CAG attempts to make a water-tight case against the scamsters, the CBI has yet to speed up the probe into the matter. On the face of it, the CBI is hamstrung as its officials have yet to be provided adequate security by the state government to venture into Nagaland and begin investigations.

All this has been brought to the notice of Union Home Minister L K Advani and Prime Minister Atal Behari Vajpayee by a senior official in the cabinet secretariat (through a five-page confidential representation marked DTS/16/OSD/1999, for Advani, and DTS/15/OSD/199, for Vajpayee recently).

The CAG report, expectedly, has caused aflutter in the North Block. Senior officials maintain that it’s now certain that screws will be tightened on all those found guilty by the CAG. The only thing not clear is exactly what New Delhi may choose to do. Coming so close to the General Elections, the observers also do not rule out a political fallout of a move aimed explicitly at a Congress-ruled state.

Despite repeated attempts by The Indian Express, Subba was not available for comments.

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The CAG has confined its report to a four-year period, from October 1993 to November 1997, though Nagaland Lottery has been running since 1971. Among the glaring alleged illegalities detected by the CAG are:

The total value of the tickets lifted by the state sole distributor (SSD, for sale throughout the country) was Rs 38,297.32 crore. The SSD is required under the agreement to pay Rs 5,000 per draw in case of bumper draws and Rs 4,000 for other draws. However, an amount of Rs 3,406.56 which should have been deposited in the state treasury was notdeposited.

The state government claimed that 91 per cent of the face value of the tickets is declared as prize money. Audit calculations, however, revealed that only 78.25 per cent of the face value of tickets in respect of 42,459 draws checked by it was declared as prize money. This resulted in an amount of about Rs 5,000 crore being retained by the SSD.

With regard to taxable prize amount, an audit of 42,459 draws revealed that the SSD should have paid to the state Rs 59.45 crore. However, the state received only Rs 4.70 crore as prize money. This resulted in a loss of Rs 54.75 crore to the government.

According to the audit, prizes going to actual prize-winners from the general public were very few and a major chunk went to persons connected with the lottery trade, of which there are no further details. It is also not clear if these categories of persons actually existed.

The CAG’s findings — both Advani and Vajpayee were told — would indicate the overall dimensions of this scaminvolving a political-businessman-bureaucrat-criminal nexus. The confidential representation points out that the possibility of a part of these funds going to insurgent groups in the North-East, particularly in Nagaland, cannot be ruled out.

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