War breaks out between A-I chief and vigilance officer

Sagar’s report itself is quite straight-forward, and deals with how top A-I officials virtually gifted Rs 3 crore to the General Sales Agent for London, M/s Welcome Travels, and even changed the rules post facto to allow this to happen.

Mascarenhas, who eventually signed the papers to allow this, however, says that it is completely unfair to blame him. “I just gave the technical approval. In all such cases — half a dozen such proposals come to me every day — the actual processing is down by concerned officials down the line. Once everyone concerned has studied the issue, and approved, I just sign on — if anyone has to be held responsible, it is the officers who studied and approved the deal,” he says. “How can you hold the managing director responsible for this?” he asks.

Mascarenhas, incidentally, has not given an official reply to the charges, though on March 27, 2000 he was sent a formal note on this from B G Loganathan, Government Senior Audit Officer in charge of A-I.

The CVO’s report was sent to the ministry last week, and has sent veritable shock waves through it. In his four page report, Sagar has accused three other officials besides Mascarenhas. These include former commercial director H S Uberoi, the then regional director for the UK P K Sinha, and the then commercial manager-marketing and co-ordination Captain K Behari.

Sagar has accused the four senior officials of massive irregularities and entering in to a “deep seated conspiracy” during 1997-98 in revising in a “shocking manner post facto” Productivity Linked Incentive (PLI) enabling the GSA to earn several crores of rupees by increasing PLI slabs.

Essentially, according to Sagar’s report, till 1996-97, the Performance Linked Incentive that A-I allowed for its general sales agents was capped at 5 per cent. In July 1997, however, a meeting was held between the representatives of both A-I and the GSA, and the PLI was raised to 7 per cent if the revenue generated was above 19 million pounds.

On April 20, 1998, however, S. Ranganathan, General Manager Finance, said that increasing the PLI was certain to invite criticism from the Board since the PLI had been finalised earlier — he said that while Welcome Travels had cited reasons like reduction in capacity for this, all these were known when the orginal PLI was finalised. Despite this, however, A-I’s commercial headquarters mooted a proposal on May 5, 1998 to increase the PLI for the year gone by — for financial year 1997-98. According to Sagar, this cost A-I Rs 3 crore.

Sagar adds that this PLI was paid on gross revenues and not on net flown revenues, though the agreement of July 1997 clearly said that payments were to be made on gross revenues. Mascarenhas, who says he doesn’t remember all the facts of the case, however, says that it is company policy to pay on net and not on gross.

Sagar also details other “acts of omission and commission and serious irregularities… GSA was paid PLI and over-riding commission even on A-I sales effected from A-I own’s offices and by A-I’s own staff.”