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Vigilance department unearths Rs 404 crore scam in ESI

The budget allocation for the purchase of drugs and medicines during their tenure is Rs 293.51 crore.

Published: 21st February 2020 11:04 AM  |   Last Updated: 21st February 2020 11:04 AM   |  A+A-

The department also accused the directors of buying surgical items worth Rs 47.77 crore from non-rate contract firms without inviting tenders at exorbitant rates.

The department also accused the directors of buying surgical items worth Rs 47.77 crore from non-rate contract firms without inviting tenders at exorbitant rates.

By Express News Service

VIJAYAWADA: The Vigilance and Enforcement Department after a thorough inquiry has concluded that three directors of the Insurance Medical Service (IMS) implementing the Employees’ State Insurance (ESI) scheme in the state issued purchase orders for procurement of drugs, medical equipment, surgical items, lab kits and furniture in the last five years in violation of procedures and guidelines and caused a loss of Rs 404.86 crore to the exchequer.

Naming the directors Dr B Ravi Kumar, Dr CK Ramesh Kumar and Dr G Vijaya Kumar, the department prepared a note, recommending action against them, accusing them of criminal misconduct under the Prevention of Corruption Act and cheating, criminal breach of trust and forgery among other offenses under the Indian Penal Code.

It also named proprietors of various firms for allegedly colluding with the directors for monetary gain. The directors are accused of purchasing drugs and equipment without constituting Drug Procurement Committee and without inviting open tenders.

The budget allocation for the purchase of drugs and medicines during their tenure is Rs 293.51 crore. However, they purchased drugs and medicines from rate contract and non-rate contract firms worth Rs 698.36 crore.  

Between 2014-15 and 2018-19, the directors procured drugs worth Rs 89.58 crore from non-rate contract firms. Had they purchased at rate contract prices, the expenditure would have been Rs 38.56 crore. Similarly, lab kits worth Rs 237 crore were purchased on nomination basis from non-proprietary firms — Legend Enterprises, Avantor Performances India Private Limited and Omni Medi by violating the rules. The directors allegedly paid 36 per cent excess amounting to Rs 85.32 crore.

The department also accused the directors of buying surgical items worth Rs 47.77 crore from non-rate contract firms without inviting tenders at exorbitant rates.

During enquiry, a random comparison of prices of items such as disposal syringe, disposal IV Pannula, clinical thermometer, trolleys for ECG machines etc with ESIC-Rate contract prices issued by ESI Corporation showed the excess amount paid to be around Rs 10.43 crore.

In the dock

IMS Directors Dr B Ravi Kumar, Dr CK Ramesh Kumar and Dr G Vijaya Kumar are accused of purchasing drugs and equipment without constituting Drug Procurement Committee and inviting open tenders

Flouted norms to purchase furniture

The directors have also purchased furniture worth Rs 6.62 crore without calling for tenders and paid 70% more than the market price. On verification of quotations of non-rate contract firms, most were found to be fabricated

Bought drugs from non-rate contract firms

Between 2014-15 and 2018-19, the directors procured drugs worth Rs 89.58 crore from non-rate contract firms. Had they purchased at rate contract prices, the expenditure would have been Rs 38.56 crore

The directors are also accused of buying surgical items worth Rs 47.77 cr from non-rate contract firms without inviting tenders

It was also found that payments were made by the directors from irrelevant Head of Account to non-rate contract firms by diverting the budget allocated and by violating first come first serve basis by keeping the bills of rate contract firms pending from 2012



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