ED pegs Rs 1,000 crore 'scam' in Telangana sheep distribution scheme

Hyderabad: In Telangana even dead persons received sheep under a government scheme. A comprehensive audit by the CAG has exposed extensive fraud in Telangana's Sheep Rearing Development Scheme (SRDS), with sheep units allegedly distributed to farmers who had been dead for up to three years.

The audit findings have formed the basis for an FIR by the ACB and a subsequent probe by the Enforcement Directorate (ED). The audit revealed a shocking discovery that farmers who died between September 2018 and January 2020 were granted sheep units under the SRDS between March 2021 and December 2021, meaning benefits were distributed 18 to 36 months after their deaths.

Sanction orders in all these cases were issued in the names of deceased beneficiaries, with approvals granted 14 to 36 months posthumously. The irregularities came to light when auditors cross-referenced SRDS beneficiary data from the e-Laabh portal with death insurance claims settled under the Farmers Group Life Insurance Scheme -Rythu Bima.

This comparison identified 860 farmers who had both died with death claims paid under Rythu Bima and appeared as beneficiaries under the sheep scheme. During a test-check of SRDS implementation across seven districts, the audit uncovered serious irregularities and suspected fraud involving Rs 253.93 crore.

The fraudulent activities included manipulated transport invoices for sheep transportation, fake vehicle documentation using passenger vehicles and non-goods vehicles in invoices, implausible transportation claims showing more than two sheep units transported in small goods vehicles and tractors, and more than six units in heavy goods vehicles, duplicate ear tags assigned to multiple sheep.

With a view to strengthen the rural economy through empowerment of shepherd communities in their traditional occupations and to increase meat production in the state, the then BRS government introduced in April 2017 a Special Package for Shepherd Communities called the Sheep Rearing Development Scheme (SRDS). Under this scheme, each beneficiary was to be given a sheep unit which consists of 20 ewes and 1 ram. The total cost of each unit was Rs 1.25 lakh out of which 75 per cent of Rs 93,750 was to be given as subsidy and 25 per cent of Rs 31,250 was to be the beneficiary contribution.

The scheme was launched in June 2017 by the government and was implemented by Telangana State Sheep and Goat Development Cooperative Federation Limited (TSSGDCFL) at State level and by the District Veterinary & Animal Husbandry Officers (DV&AHOs) at District level. As per the information furnished by the TSSGDCFL, as of December 2021, a total of 3.88 lakh sheep units were supplied to equal numbers of beneficiaries across the state with an expenditure of Rs 3,385.32 crore incurred towards subsidy.

During the compliance audit from June to October 2021 of 7 disricts audit test checked the records relating to subsidy payments made for purchase and transportation of sheep under this scheme. During the period from 2017-18 to May-September 2021 a total of 1,34,505 sheep units were stated to have been given to beneficiaries in these seven Districts and a total subsidy amount of Rs 1,153.94 crore was spent on purchase and transportation of sheep.

In reply to CAG government said that if death of beneficiary occurs after generation of sanction orders, it is not possible to change the name of deceased beneficiary and that the sheep units were given to their nominees with the approval of the District Collector and the name of the nominee is included in the e-Laabh data.

“The reply is not acceptable as the sanction orders in all these cases were issued in the names of dead beneficiaries 14 to 36 months after their death. Further, no evidence was furnished by the Department to show that the sheep units were given to the nominees. The e-Laabh portal also does not have any provision for showing the names of nominees,” observed CAG.

Ambulances, two wheelers, fire tenders, water tankers 'used' to transport 36 sheep

Audit that verified the registration numbers of the vehicles with the vehicle data of National Register e-services (vahan.nic.in)/Transport Departments of Telangana and Andhra Pradesh found that vehicle numbers mentioned in 262 invoices stated to be used for transportation of sheep were not found in VAHAN portal/State transport data.

The vehicles mentioned in 336 invoices were found to be passenger vehicles which are 53 two wheelers, 219 auto rickshaws, 35 passenger cars/vans, 27 buses and also two ambulances . As many as three to ten sheep units that means 63 to 210 sheep were shown as transported in each trip on the vehicles which were found to be two wheelers.

In 10 cases, the vehicles stated to have been used were found to be non-goods vehicles like fire trucks, water tankers and mobile compressor vehicles, which could not have been used for transportation of sheep. These observations showed that the transport invoices were fake and the supply of sheep to beneficiaries in the above cases was doubtful, indicating possibility of fraudulent payments towards purchase and transportation of sheep. The total amount of subsidy spent on purchase and transport of sheep in these cases works out to Rs 27.20 crore.

Also same vehicle was used from two different locations on a single day. In Mahabubnagar District, Audit found a case where the same vehicle was shown in two different invoices with same date of transport from two different locations.

Srikakulam District and Kadapa Districts in Andhra Pradesh are in two different opposite directions from Mahabubnagar District of Telangana. It could not have been possible that the same vehicle was available for loading sheep in these two locations on the same day. The subsidy cost of purchase and transportation of sheep stated to be transported in these two cases works out to Rs 6.16 lakh and Rs 6.78 lakh respectively and supply of sheep in at least one of these two cases was doubtful.

ED suspects Rs 1,000cr scam

The CAG audit was limited to only seven of Telangana's 33 districts, where the estimated government loss reached Rs 253.93 crore. Extrapolating these findings proportionately across all 33 districts ED understood the total state-wide loss likely exceeds Rs 1,000 crore.

ED's investigation corroborated the audit findings as it found that substantial government funds were transferred to bank accounts of various individuals and entities purportedly for sheep supply under SRDS. However, the investigation found that these fund recipients were not involved in sheep trading prior to the scheme's launch, no actual sale or purchase of sheep transactions occurred and government funds were illegally diverted to bogus vendors.

ED investigation also substantiated the findings of the audit, which identified payments made to fictitious vendors and evidence of recycling of sheep units, ostensibly to fraudulently claim disbursements from Government funds without actual supply of sheep units.

ED two days ago conducted search operations at eight locations in Hyderabad under the provisions of the Prevention of Money Laundering Act (PMLA), 2002 in connection with financial irregularities in the implementation of SRDS. Searches were conducted at the premises of G Kalyan Kumar former OSD to the then Animal Husbandry minister Thalasani Srinivasa Yadav as well as certain beneficiaries and middlemen identified during ED investigation.

ED initiated investigation on the basis of FIRs registered by Anti-Corruption Bureau (ACB), Hyderabad. In one FIR, it was alleged that after the formation of the new Government in the state, the OSD to the ex-minister, Thalasani Srinivasa Yadav had removed some records from the department office by breaking-in. Another FIR was registered by a complainant sheep merchant alleging that Rs. 2.1 Crore which was due to be paid to them for supplying sheep units, was siphoned off by the Departmental Assistant Directors by diverting the amount to other unrelated accounts.

Search operations led to the recovery and seizure of incriminating material evidencing transactions indicating illegal payments in the form of kickbacks to various Government officials and others. Additionally, documents pertaining to numerous bank accounts, including blank cheque books, passbooks and debit cards associated with over 200 suspected dummy/mule accounts linked to an illegal online betting application, were recovered from one of the premises. Searches also led to the seizure of 31 used mobile phones and over 20 SIM cards, which are suspected to have been utilized in the operation of the illegal activities.