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CHAPTER - 8
PROCEDURES/SYSTEMS IMPROVEMENT SUGGESTED BY THE COMMISSION
8.1 In many a case various organisations have explained irregularities due to systems failure. The Commission have also observed that in many cases proper procedure/system was not adhered to. If the same were followed many irregularities could have been avoided. In a number of cases, the Commission had advised the organisations to streamline their systems/procedures and follow it up. Some illustrative cases are narrated below:-
1. MINISTRY OF COMMERCE
The Commission has observed that para 21 of the Export and Import Policy appears to confer extensive powers on the Director General of Foreign Trade (DGFT) to effect amendments to licences on receipt of a request for relaxation on the grounds of genuine hardship or adverse impact on the trade. On an application made to him, the DGFT may allow "such relief as may be necessary". He may also pass such orders or grant such relaxation as he might deem fit or proper. His powers do not seem to be fettered or circumscribed by the satisfaction of any specific condition/precedent other than the hardship of the applicant or adverse impact on trade. This power is at best subject to a review under Section 16 of the Foreign Trade Development and Regulation Act, 1992.
The procedure in vogue, however, does not appear to reflect a well established system of reporting whereby such amendments/relaxations are reported to the Ministry with a view to enabling the latter to review such cases. The Commission has pointed out that a belated review might not serve any purpose. It, therefore, advised the Ministry of Commerce to evolve system and procedures whereby the relaxations and amendments get reported to the Ministry periodically and are reviewed at the appropriate level for ascertaining whether there has been any deviations which would warrant a review under Section 16 ibid. Action taken by the Ministry of Commerce in this regard, however, is yet awaited.
2. DELHI DEVELOPMENT AUTHORITY :
(a) Land Branch of DDA holds `General draw' and `Mini draw' for allotment of plots and flats to the applicants. It was observed that Mini draws were held more frequently and general draws were held after a long gap. In most cases, Mini draws were held only for one applicant. Further, these applicants were allotted plots/flats in the areas where they were not entitled. Thus, undue favours were extended to the selected individuals. To curb this malpractice, DDA was advised to examine the feasibility of doing away with the `mini draw' system and ensure that General draws were held at regular intervals after giving due publicity in national dailies.
(b) Due to non-availability of records, particularly, relating to execution of sub-standard works responsibility for various lapses could not be fixed. DDA was advised to review the existing record management system and issue necessary instructions on the subject.
3. GOVT. OF N.C.T., DELHI
(a) There have been complaints regarding malpractices/malfunctioning of Employment Exchanges in Delhi causing dissatisfaction among the general public. At present, records are maintained manually and due to increase in the number of registrants, it has become more and more difficult to maintain the records properly. Some officials are exploiting the situation due to improper record management. GNCTD was advised to computerise the records of Employment Exchanges to overcome the above problem. It will enable them to give quick response to the user departments.
(b) Directorate of Education of GNCTD makes recruitment of teachers on regular basis. The selection is done on the basis of `Points' given to the candidates for his/her educational qualification.
Despite simplification of the procedures, malpractices still continue in the recruitment as number of applicants is very large. There have been complaints where wrong marking was done in a number of cases to favour the selected few and names of some candidates were not considered at all. To overcome this problem, GNCTD was advised to computerise the selection process of teachers.
4. DELHI VIDYUT BOARD
DVB gives electricity connection keeping in view the land-use plan for the area. As per the extant instructions domestic connections (below 11 KW load) in a building are to be energised from a single phase by a loop system. However, it is noticed that in many cases domestic connections in the same building were energised by the DVB zonal staff from 3 different phases by using a cable of 4x25 mm on the pretext of balancing the load with the result domestic connections were misused for industrial purpose. This was in violation of the land-use plan and also caused financial loss to the public exchequer. To overcome this problem, DVB was advised to examine the feasibility of using cable of 3x25 mm for energisation of domestic connections in residential areas. Further, in unplanned residential colonies, the electrification may be done by using 2 phases only.
5. MINISTRY OF RAILWAYS
The procedure adopted in inviting, processing and evaluating tenders adopted in Govt., is based, by and large, on the pattern fixed by CPWD. The Railways, however, have certain distinct features vis-à-vis the system generally followed in other major Departments/CPWD. The Commission have been observing that the procedures adopted in the Railways has had some loopholes which could be exploited by dishonest elements to their advantage and against the interests of the Department. These deficiencies normally occur at certain activity stages e.g. the practice of calling single tender on the ground of urgency, pre-qualification process, justification of the bid price etc. The deficiencies in the system as noted were discussed by the Commission with the Railway Board and consequently, the Ministry revised some of the existing provisions/procedures vide their circular dated 17.09.97.
The Commission made a study of the revised guidelines and after careful evaluation, the following suggestions/ recommendations/improvement in the system have been suggested:-
(i) Laying down clear eligibility criteria for contractors in the NIT itself with a view to (a) avoiding arbitrariness in the matter of judging the eligibility factor subsequently and (b) ensuring elimination of non-serious bidders;
(ii) Dispensing with the practice of awarding works by the "single-tender" method (which is peculiar to the Railways which literally tantamount to awarding work without call of tenders) and resorting, instead, to short-term limited tenders confined to local contractors;
(iii) A review of the "two bid system" (involving separate technical bid and financial bid for the same work) with a view to avoiding aberrations and distortions noticed in the matter of deciding eligibility criteria;
(iv) Ensuring that "negotiations" with contracts should be resorted to only if it is inescapable and not as a rule/routine;
(v) Also, when negotiations are held, all eligible bidders should be called;
(vi) Reasonability of rates should be worked out in advance on the basis of relevant indices. The practice of assessing reasonability after tenders are received and opened is prone to maneavourings and it should, therefore, be dispensed with;
(vii) There should be a minimum of one or two days gap (instead of just 4 hours only, as of now) between cut-off time of sale of tender-papers and opening of tenders;
(viii) When tenders are invited on turn-key basis, it is preferable to invite tenders by two bid system; and
(ix) In the testing of building material, the stipulation of concrete mix design should be limited in the cases where design mix is required for using higher design mix values.
6. DEPARTMENT OF TELECOMMUNICATIONS
In the past, Department of Telecommunications used to carry out cable laying work through departmental labour. With the expansion of net work, the work is now executed through contractors. The Manual provisions do not appear to have been modified resulting in different practices/procedures in various zones. In some places, Measurement Books (M.B.) are used for recording measurements while in other places registers/loose sheets are used. The bills of the contractor indicating the quantity and rates are verified by the JTO/AE and the DE checks quantity with the M.B./Register. The amount is worked out by the Accounts Branch and passed by the TDM/GMTD. In some cases, there are over-payments, because of manipulations of the quantity in the Accounts Branch.
To avoid such manipulation and over-payment, the Commission has advised DOT to issue instructions/modify the Manual to incorporate:-
(a) recording measurement in the M.B.;
(b) recording quantity in words also;
(c) recording abstract of cost along with details of recoveries in the M.B.; and
(d) attestation of cuttings etc. by the bill initiating officer.
7. MINISTRY OF WATER RESOURCES
The Ministry of Water Resources had referred a case relating to irregularities in the maintenance of Cash Book and other records relating to financial transactions. The case involved embezzlement of cash by a Cashier, West Central Regional CGWB, Ahmedabad. The case was initially detected during a physical check by Regional Office and found Rs.318/- in excess of the balance shown in the cash book. The cashier could not reconcile the discrepancy and subsequently the Office Superintendent was asked to reconcile the entries. Subsequently, a shortage of Rs.4,495/- was detected. The Cashier admitted the discrepancies claiming that they were due to over sight and offered to deposit the amount found short. Investigation in this regard revealed that a large number of transactions were due to mistakes committed by the cashier by not following the prescribed procedures. These primarily related to drawing of pay and allowances and disbursing them to the concerned officials. The amount actually embezzled and found short was to the tune of Rs.8,231/- The Cashier was primarily responsible for all the irregularities but the DDOs also failed to properly supervise the work of the cashier.
The frequent mistakes committed and embezzlement of the amounts was further facilitated because DDOs were changed 34 times during June, 92 to Jan.95 i.e. 31 months. A number of DDOs functioned for only about a week and no DDO functioned for more than 2 and half months at a time. It was pointed out that the practice of assigning the job to a technical/scientific officer for short spells, in addition to their technical assignments, should be discouraged, especially when the scientific officers were not conversant with financial matters. The situations only helped the cashier to take advantage due to the frequent change of DDOs and their not being conversant with the procedures. Entries were manipulated and made in the Cash Book and other records were got signed by the DDOs. The Ministry of Water Resources was advised to initiate RDA against the Cashier and to issue instructions to the CGWB not to change DDOs frequently as a step in the direction of systemic reform.
8. INDIAN AIRLINES
The Indian Airlines brought to the notice of the Commission certain irregularities in the issue and utilisation of aircraft spare parts and other consumable items from the air lines stores. It was suspected that the aircraft spare parts and other consumable materials were being pilfered from the Airlines stores and unauthorisedly supplied to Air Tax operators by the Air-lines' own staff members who were in league with their ex-employees re-employed by Air Taxi Operators.
The Commission advised the CVO, Indian Airlines to make a detailed study of the matter which was serious and fix the responsibility for the lapses on the part of concerned officials. Accordingly, with a view to plug loopholes, a study was carried out by the Vigilance Unit of the Indian Airlines, of the systems/procedure followed by the Engineering/Stores Department in the matter of procurement and utilisation of spare parts/materials for use on Air-crafts.
The study disclosed that the laid down systems/procedures in respect of issuance/consumption of the spare parts/materials were not being followed with the result that the possibility of pilferage of those items could not be ruled out. During the course of study it was observed that there was no monitoring in the major maintenance hangar with regard to the quantities of spare parts actually drawn and utilised on the aircraft. Also, no proper account was maintained of other consumable items like oils, grease, adhesive tapes etc. Even the requisition slips/books were handled very casually and sometimes, spare parts were issued by the Stores Department without proper requisitions. Surprise checks of certain items at random in the different stores at I.G.I.Airport, New Delhi had revealed glaring discrepancies. This clearly showed that there was no proper system of accounting and the matter was basically a case of systems failure. Accordingly, with a view to plug the loopholes, the Engineering and Stores Department of the Indian Airlines issued the following revised guidelines/instructions to regulate the issuance/utilisation of aircraft spare parts and other consumable items:-
(a) Proper handling, accounting and safe custody of requisition books as envisaged in the Stores Manual.
(b) Proper handling/taking over of requisition books at the time of change of each shift.
(c) The Stores Department under no circumstances should issue any spare part or consumable item without proper requisition from the Engineering Department.
(d) Requisitions issued by the Workshops and consequent consumption of spare parts/consumable items should be closely monitored by the PPC to ensure that there are no unnecessary issuance of materials. It may also be ensured that material not used is returned to the Stores.
(e) The Stores Discrepancy Adjustment Committee (SDAC) before approving the adjustment of shortages/excesses should invariably look into the reasons for discrepancies and wherever necessary, carry out/recommend thorough probe.
9. BANK OF BARODA
During the year 1989-90, one individual opened NRE account in a number of Indian Commercial Banks and foreign Banks with the objective of wrongfully converting Indian rupees into foreign currency and remitting them for credit to their accounts in Middle-East Countries. The modus operandi adopted was to present SB cheque for collection at the Banks where he was maintaining NRE accounts. With a view to circumventing the RBI guidelines and preventing suspicions, he fraudulently affixed a rubber stamp bearing legend "NRE" on the SB cheques. When the cheques were presented through clearing, the drawee banks paid the cheques and the amount was resultantly credited in the lodger's account. Subsequently, Indian rupees were converted into foreign currency and remitted abroad.
The investigation carried out by the CBI did not find any malafide on the part of the concerned Banks' officers and ultimately suitable action was taken against all concerned for their negligence. The attempt of the fraudsters could have been frustrated had the Banks evolved a proper system to segregate ordinary SB accounts from NRE accounts. Banks were accordingly, advised by the Commission and Bank of Baroda has confirmed having taken remedial steps to guard against the recurrence of similar frauds. The branches of Bank of Baroda were accordingly advised to open NRE accounts with serial numbers different from their ordinary SB accounts. This improved system will help the Bank's functionaries to ensure that domestic funds are not credited to the NRE accounts for their repatriation abroad.
10. DEPARTMENT OF TELECOMMUNICATIONS
In a disciplinary case referred to the Commission by the Department of Telecommunications, the irregularities related to purchase of a number of computers at the cost of Rs.50 lakhs during February/March, 1996. Open tenders were not invited for the supply of the computers even though the amount involved was quite large and instead the stores were procured through limited tenders. Only 8 days time was given for admission of the limited tenders against the mandatory requirement of 21 days and the tender process was completed within 30 days. The accused officers justified their action in the purchase of the computers, stating that only limited and reliable parties were available for the supply of this sophisticated equipment and that it became necessary to reduce the period for submission of the limited tenders because of urgency and shortage of time available before the close of financial year after which the funds would lapse.
Computers have become an important tool for day to day functioning of organisations both at the operational as well as policy-making levels. The Commission, therefore, felt that it would be in the overall interest of the Government to identify the agencies through which various departments may procure computers at rates approved by the DGS&D or any other authorised nodal agency, instead of leaving decision making in this regard, largely decentralised as at present. The DOT has been advised accordingly.