Amid pandemic, Rs. 21cr fraudulently withdrawn from Mumbai PF office
Over Rs. 21 crore was reportedly siphoned from a common PF pool at a Mumbai office of the Employees Provident Fund Organisation (EPFO) between March 2020 and June 2021. An internal investigation has reportedly found that a nexus of employees is behind the scam, which was masterminded by Chandan Kumar Sinha, a 37-year-old clerk at the EPFO's Kandivali office. Sinha is now absconding.
Fraudsters used accounts of migrant workers to withdraw funds
The probe found that fraudsters used 817 bank accounts of migrant workers to claim PF on their behalf and deposit it in their accounts. Almost 90% of the money transferred to these accounts has been taken out, The Indian Express reported. Officials clarified that the money that was siphoned off belonged to the pooled fund of the EPFO and not any individual PF account.
Equivalent of a bank robbery: Official
"No individual PF account has been misused (in the fraud). The money belonged to the pooled fund and it is a loss to EPFO, not any individual. It is the equivalent of a bank robbery," The Indian Express quoted a senior official as saying.
Fraudsters exploited loopholes in system
The fraudsters meticulously took advantage of loopholes in the system as they had intimate knowledge of its working mechanisms. They used passwords given to them by senior officials during the lockdown to avoid coming to the office. They also made PF claims in the range of Rs. 1 lakh-3 lakh as withdrawals above Rs. 5 lakh need approval and second verification by senior officials.
Few section officers actively helped Sinha siphon funds: Official
"The probe... found that a few section officers at the branch actively helped Sinha siphon funds. It is a bit embarrassing that some of our officials gave their passwords to him and did not bother to change them later. This is negligence," an official said.
How was the scam carried out?
First, Sinha and others obtained details of active bank accounts and Aadhaar numbers of jobless migrant workers, by paying commissions as little as Rs. 5,000. Then, they opened PF accounts on behalf of these workers as employees of Mumbai-based companies that shut shop 10-15 years ago. Interestingly, they took advantage of the fact that the EPFO does not maintain double-entry bookkeeping for shuttered companies.
How did the scam come to light?
The scam came to light in early July after an anonymous complaint from a relative of Sinha, who was apparently jealous of Sinha's lifestyle. "We came to know that he owned high-end cars and multiple sports bikes including a Harley Davidson," an official told TIE. After being exposed, Sinha—a philosophy graduate from Bihar's Magadh University—admitted himself into a local hospital and subsequently went missing.
What measures is the EPFO undertaking now?
Since the scam's emergence, the EPFO has adopted various measures to tweak its processes and secure withdrawals. It has reportedly expanded its internal audit to cover around 12 lakh PF claims approved by the branch in the last two years. It has also decided to start a mechanism where passwords of employees for accessing the system will become invalid after 15 days unless changed.
Rs. 2 crore recovered; EPFO asked banks to freeze accounts
The EPFO has also written to banks to freeze the accounts that received fraudulent withdrawals. It has recovered roughly Rs. 2 crore so far. "[The EPFO] is looking to invoke...CrPC that allows recovery of money from the salaries of the accused," an official added.
