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Rs 38 crore lottery scam unearthed in Nagaland

Kohima, July 24: The Comptroller and Auditor General (CAG) has unearthed a major financial scandal in the Nagaland state lottery amountin...

Kohima, July 24: The Comptroller and Auditor General (CAG) has unearthed a major financial scandal in the Nagaland state lottery amounting to Rs 38,297 crore.

According to the CAG report, submitted recently in the assembly, lottery tickets worth Rs 38,297 crore from the state lottery had not been credited to the Government account.

The entire scam took place between October 1993 and November 1997, when the sole distributor of the ticket M S Associates took the advantage of the lottery craze around the country and deprived prize winners of major prizes.Lotteries were organised to help mobilise additional revenue for the state but because of a vague and loosely worded agreement between the director of the state lottery and M S Associates, audit found that only 0.105 per cent of the total turnover of Rs 38,297 crore was credited to the Nagaland government.

The CAG report categorically states that during those days 83,254 lottery draws were held under different schemes. In each of the 1,522 days, 55 drawstook place each day and the turnover of each draw was Rs 45.75 lakh. Neither was the entire amount of sale of these draws amounting to Rs 38,297 crore deposited with the government as it should have been nor was the prize money given. The claim that 91 per cent of the face value of the ticket was paid as the prize money was not acceptable, said the CAG report.

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The looting of money was very simple. The last digit lottery was on its peak demand during that period and very few actually bothered to look for the main prizes, and invariably the major prizes were never given and the money was quietly siphoned off by a nexus between the state’s sole distributor M S Associates and higher-ups in the Nagaland Government.

Only minimum prizes were distributed in those 83,000-odd draws.

In fact the CAG found that the government should have got at least Rs 383 crore as profit of the entire sale of tickets, but under mysterious circumstances, it got only Rs 40.20 crore from M S Associates in the past four years. TheGovernment had also not received Rs 54 crore as taxable prize money, which was to revert to the Government and there was no account of non-taxable prizes worth Rs 15,194 crore, which could be won during the period between October, 1993 and November, 1997.

Further sale proceeds of tickets received from the SSD were not deposited in the treasury promptly by the director of state lottery. The amount received was first deposited in a bank account and thereafter a portion of it was subsequently deposited in the treasury after two to seven months.


e CAG also found anomalies in selecting the judges for the lotteries, which were selected by the liaison officer of Nagaland House in New Delhi without any authority from the government.

Instead of three judges in most cases, there were 20 judges while in 90 per cent cases, the names of ten judges were not recorded.

There was malpractice in declaration of prizes and CAG found instances, where prize winning numbers were actually non-existent numbers. Further theresults were never published in the Nagaland gazettes, but in some local newspapers of Nagaland.


According to the CAG, even legally the M S Associates was supposed to earn Rs 3,406 crore during the period after deducting the prize money and other guarantees returned to the Nagaland Government.

However, in most cases the major prizes were not given as the CAG in the test examinations found that winning numbers were mostly non-existent.Meanwhile, Chief Minister S C Jamir denied his government’s involvement in this biggest financial scandal of the country. He even charged the CAG with leaking the report to the press.

First published on: 25-07-1999 at 12:00:00 am
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