Delhi High Court orders BSNL to take disciplinary action against its employees in the BSNL-ZTE Rs. 1000 billion “scam”

The Delhi high court has ordered Bharat sanchar nigam Ltd (BSNL) to take disciplinary action against its personnel, as advised by the CBI, for allegedly creating false bids and failing to properly prepare before issuing purchase orders for GSM mobile phone lines.

In a ruling dated February 9, a division bench of Chief Justice Satish Chandra Sharma and Justice Subramonium Prasad noted that the CBI had initiated a preliminary probe at the High Court’s request and had provided a status report following the conclusion of the investigation.

After studying the status reports, the court concluded that there was no good reason to reject the CBI’s status reports and issue no more orders. The HC issued a ruling in response to a petition by the NGO Telecom Watchdog, which said that BSNL officials had conspired with the Chinese corporation ZTE Telecom India Pvt Ltd and fabricated official documents in order to disburse “undue payments” of about Rs 1,000 crore to the business. The HC instructed the BSNL to take departmental action against its officers, as recommended by the CBI.

However, the HC made it plain in its ruling that it had not made any judgements about the validity of the “imputations of accusations on the executives of BSNL.” “Any activity started by the BSNL may be followed through to completion logically on its own merits. 

In its progress report from January 11, the CBI stated that although Trimax IT and Infrastructure Ltd (another business) had received the funds from ZTE, there was no proof that Trimax IT and Infrastructure Ltd had bribed BSNL executives.

The court took notice of the CBI report’s recommendation to open a departmental investigation into Anupam Srivastava, the former head of the BSNL management committee and CMD of the company, for “modifying the payment milestone without carefully considering the efforts to acquire the sites, which resulted in financial loss and technical degradation by having the add-on work contract with ZTE at the rate of year 2011.”

According to the CBI investigation, officers of BSNL might face departmental action if it was shown that they had created inappropriate bids and failed to properly prepare before issuing purchase orders.

According to the NGO, BSNL requested tenders in 2011 for 14.37 million GSM mobile telephone lines on a turnkey basis for the north, south, and east zones. After a transparent, competitive bidding procedure, ZTE Telecom was chosen as the winning bidder for all three zones at the cost of Rs 4,204.85 crore. The NGO claimed that BSNL had specified eight milestones for payment releases in its tender, under which only 50% of the total amount was due up to delivery, and the remaining 50% was to be given in phases upon installation and functioning.

The NGO claimed that despite the BSNL’s continued material acquisition, ZTE Telecom failed to prepare the locations for installation, causing significant material that was stored by ZTE to be lost. “The petitioner claims that M/s ZTE conspired with BSNL personnel to desire payments for the material to be delivered without the BSNL really taking control of the equipment. According to the petitioner, M/s ZTE had not met the milestones when the money was disbursed, the ruling said.

Following that, the NGO filed a complaint with the CBI outlining the collusion between BSNL officials and ZTE over excessive payments being given to ZTE without their meeting milestones. The NGO went to the HC after being unsatisfied with the CBI’s response. The NGO said that filing an FIR, in this case, is required if the information reveals the conduct of a cognizable offence and that no preliminary investigation is allowed in such a circumstance.

The NGO claimed that by failing to file an FIR despite the complaint indicating the conduct of a cognizable offence, the CBI had violated the ruling of the Supreme Court in Lalita Kumari v. Govt. of UP. On the other side, the CBI said that after looking into the matter, it was discovered that there was insufficient evidence to move on and that a closure report had been prepared with a number of recommendations.

The victims of the Kerala BSNL Society fraud said, “We are fighting for our money.”

More than 350 investors are said to have been scammed by the BSNL Engineers’ Cooperative Society Ltd. in Vanchiyoor in Thiruvananthapuram in what is turning out to be a significant financial fraud in Kerala. According to sources, the Society had deposits totaling almost Rs 100 crore. Many investors, the majority of whom are retired BSNL employees, have claimed that the Society has been withholding their contributions and interest since November 2022. The Crime Branch has been given the case.

Chief Minister (CM) Pinarayi Vijayan said in the Assembly on February 1 that harsh actions would be implemented against individuals responsible for the fraud. “Investment fraud and other anomalies have been discovered during the registration department’s inspection. According to the early findings, fraud was accomplished by issuing phoney fixed deposit certificates, and the funds received from investors as fixed deposits were documented in fictitious registers.

He continued by saying that the preliminary inquiry has shown the fraud to be worth Rs 92. 73 crores. A case was filed at the Vanchiyoor police station under Sections 408, 409, 420, 477A, and 34 of the IPC based on the findings of the investigative team formed by the Registrar of the Cooperative Society and based on a complaint made to the police alleging forgery and extortion.

“So far, the inquiry has shown that the group’s president, honorary secretary, and staffer are implicated. The State Crime Branch’s Economic Offenses Investigation Department has taken up the case’s investigation due to the incident’s gravity.

Under the direction of the Crime Branch SP (Superintendent of Police), a special team of 13 people, including two Deputy Superintendents of Police (DSP) and three detective inspectors, will continue the inquiry, the CM stated in the Assembly. The Cooperation Department has taken over about 20 of the President’s and staff members’ properties. According to the CM, steps would be taken to confiscate more assets owned by the responsible Society authorities.

One of the Society’s investors, Savithri M, informed TNM that they utilised the moniker “BSNL” to win the investors’ trust. “The board had no relationship to the firm, but its members were BSNL engineers, and it met on BSNL premises. The majority of the retired workers and even visitors descended there. It was our lifetime earnings for the majority of us, she remarked.

“Some folks who are beyond 80 years old are struggling financially. Since July 2022, depositors have tried to withdraw their money, but they have been denied. Interest payments have stopped as of November. As of right now, we are aware that the President, Secretary, and a number of other members have bought a large number of properties around Kerala “She went on. She said that over the last several months, the depositors had spoken with the Vanchiyoor police multiple times, but they had resisted filing a formal complaint.

The complainants claim that the Society’s 10-member Director Board withheld information regarding the number of accounts it had and the number of investments it had made. To better grasp the amount of money at stake, the complainants created a paper on their own and distributed it to other investors. “For over 35 years, my spouse and I both worked for BSNL in various capacities. We received a sizable sum of money when we chose to retire voluntarily, and it was all placed with the Society.

Because they collaborated with us, we knew each of the society’s 10 board members. My spouse and President Gopinathan spent years working in the same sector together. We trusted them with all the money because of this. The money was deposited during 2020 COVID-19 times. Depositing money into banks was difficult at the time due to regulations. We deposited our money with the Society since their processes were simpler. Now that it’s all gone, we don’t know how to survive. The scammers took all we owned, according to Jaya Preman, another victim.

Edited by Prakriti Arora