Former minister Atchannaidu arrested by ACB over ESI scam

Atchannaidu’s name first cropped up in the Vigilance and Enforcement (V&E) Department probe in February this year.

Published: 13th June 2020 11:21 AM  |   Last Updated: 13th June 2020 11:21 AM   |  A+A-

TDP leader Atchannaidu brought GGH in Guntur.

TDP leader Atchannaidu brought GGH in Guntur.

By Express News Service

VIJAYAWADA:  Former labour minister and TDP deputy floor leader in the State Assembly Kinjarapu Atchannaidu was arrested by the Anti-Corruption Bureau (ACB) at his residence in Srikakulam district early Friday for his alleged involvement in the multi-crore Employees’ State Insurance (ESI) scam.  Five others were also taken into custody from different parts of the State.

An ACB team led by DSP (CIU) TSRK Prasad, accompanied by local police, reached the TDP leader’s residence at Nimmada village in Kotabommali mandal around 7.20 am. He was brought to the ACB office in Vijayawada at 7 pm where his statement was recorded. After medical examination at ESI Hospital, he was produced before the ACB special court and the case was heard via videoconferencing.He is likely to be shifted to the Government General Hospital, Guntur for post-operative care.

ALSO READ: TDP leader K Atchannaidu sent to judicial remand for alleged involvement in multi-crore ESI scam

Atchannaidu’s name first cropped up in the Vigilance and Enforcement (V&E) Department probe in February this year. The V&E department investigated alleged irregularities in procurement of drugs and medical equipment between 2014 and 2019 when TDP was in power and Atchannaidu was the labour minister.

Briefing the media in Vizag, ACB Joint Director Ravi Kumar said five others involved in the case — Chintala Krishnappa Ramesh Kumar, retired director of  IMS (Directorate of Insurance and Medical Services), Dr G Vijaya Kumar, retired special grade civil surgeon, ESI Hospital Rajamahendravaram and former director of IMS, Dr V Janardhan, retired joint director of IMS, Kadapa, E Ramesh Babu, senior assistant, DIMS, AP, Vijayawada,  and MKP Chakravarthi, superintendent of DIMS, AP, Vijayawada (currently suspended) — were also arrested simultaneously in Tirupati, Rajamahendravaram and Vijayawada.

He said as per the State government’s directions, the V&E department probed alleged irregularities in ESI hospitals and dispensaries across AP in the matter of procurement of drugs and medical equipment, among other things, and found a deep-rooted scam involving hundreds of crores of rupees. After the V&E department submitted its report, the government directed the ACB to register a case against the accused and investigate. “The ACB found an amount of Rs 150 crore was misappropriated in the process of procurement of medicines and equipment worth Rs 988.77 crore. 

‘Fictitious companies floated in name of DIMS staff’

According to him, the irregularities took place in the procurement of medicines on non-rate contract basis, procurement of lab kits, surgical items, furniture, bio-metric devices and agreements for call centre and ECG services. Several guidelines were violated resulting in huge losses to the government. Medicines and surgical equipment were procured at a price that was 50-129 per cent in excess of the market price. Instead of e-Tender procedure, they were procured on nomination basis.

Ravi Kumar further said fictitious companies in the name of some of the staff members in the Directorate of Insurance and Medical Services  (DIMS) were floated and agreements inked for procurement of medicines, medical equipment, and services. “Some staff members of DIMS had used forged letterheads and envelopes for file quotations and even produced fake bills. We have identified some who are involved in such irregularities and are still investigating,” he said.

In regard to the Call Centre, Toll-Free and ECG services, he said on the directions of the then minister for labour Atchannaidu, M/s Tele Health Services Private Limited was given the contract by the then IMS director CK Ramesh Kumar. “For each ECG Rs 480 was paid, while for ECG in other hospitals, the cost was only Rs 200. Further, ECG services were rendered by diploma holders instead of cardiologists. Rs 1.80 per call was claimed for not only the calls received at the call centre, but also for the entire registered IP of the service provider and also fake calls,” he explained.The ACB joint director said investigation into irregularities in sewerage plants and bio-medical waste disposal plants is in progress.

Law will take its own course: Home Minister
Home Minister Sucharita, commenting on the TDP leader’s arrest, asserted that the law will take its own course. “The ACB has arrested him for corruption. Large-scale irregularities took place in the procurement of medicines and equipment. The law will take its own course. Shouldn’t we take action against the corrupt?” she asked and pointed out that during Atchannaidu’s stint as labour minister, contracts were awarded on nomination basis to whoever they wanted, without inviting tenders. In some instances, equipment worth Rs 15,000 was bought for Rs 60,000. 

Family members’ reaction
Meanwhile, taking exception to the hurried arrest of Atchannaidu, his family members said police did not even give him a chance to take medication as he underwent surgery recently. He was still on his bed when he was whisked away by ACB officials. “We were not even informed why my husband was being taken away by the police,” K Madhavi, wife of Atchannaidu told the media. His nephew and Srikakulam MP Kinjarapu Ram Mohan Naidu said Chief Minister YS Jagan Mohan Reddy was taking revenge against his uncle for confronting him on various issues in the Assembly. “The way the police arrested Atchannaidu appeared like they were arresting a terrorist or an extremist,” he said.

What is the scam all about?

In past five years, Dr B Ravi Kumar, Dr CK Ramesh Kumar and Dr G Vijaya Kumar worked as Directors of IMS. They together issued purchase orders for procurement of drugs, medical equipment, surgical items, lab kits and furniture worth Rs 975.79 cr by violating procedures & guidelines issued by Govt. of AP and ESI Corporation without constituting Drug Procurement Committee and calling for Open Tenders

M/s.Tele Health Services Pvt., Ltd.
The then Labour Minister K Atchannaidu ordered the then Director, IMS to entrust the work to M/s.Tele Health Services Pvt., Ltd., Hyderabad. Accordingly, then Director, Dr.C.K.Ramesh Kumar issued work order to M/s.Tele Health Services Pvt., Ltd., simply basing on the letter of the then Minister on nomination basis without calling  for Open Tenders.

Ramesh Kumar entered into MoU with M/s.Tele Health Services Pvt., Ltd., to provide Toll Free services and ECG services on nomination basis. As per 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 MoU with the same service provider to provide ECG services to the Patients @ Rs 480/- per ECG.

During enquiry, it is noticed that the service provider claimed the bill by submitting call logs of Telangana State IPs and the Directors paid the amount without verifying the genuineness of the 
call logs.

During enquiry, when verified it was observed that the service provider utilised the services of PG Diploma Clinical Cardiologists instead of qualified DM Cardiologists by violating agreement conditions and claimed the bills.

C K Ramesh Kumar and Dr.G.Vijaya Kumar paid Rs 4.15 Cr for Toll Free Services and Rs 3.81 Cr for ECG Services, though the Service Provider violated the terms & conditions of MoU / agreement.

This is vendetta, kidnapping by the police: Naidu
TDP chief N Chandrababu Naidu described Atchannaidu’s arrest as a kidnapping by the police, and said he was arrested in an unprecedented manner with over 100 police personnel. “Even phone connections were cut off to keep him from calling his family.

This is vendetta. He was arrested without any evidence,” he alleged. Naidu further claimed notices were not served before Atchannaidu’s arrest, and pointed out that it was just four days before the commencement of the Budget Session of the State Assembly. He also gave a call to TDP cadre to stage protests

How the former  minister was involved
The then minister for labour Atchannaidu directed for the contract for call centre, toll-free and ECG services to be given to M/s Tele Health Services Private Limited, the ACB said. As much as `480 was paid for each ECG, while the cost in other hospitals was `200. ECG services were rendered by diploma holders instead of cardiologists, and `1.80 was claimed per call, not only for calls received at the call centre, but also for the entire registered IP of the service provider and even fake calls,” Ravi Kumar said


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