Irregularities in Civil Supply Tenders Allegedly Cost Exchequer Rs 2,000 Crore During AIADMK Regime

The government of Tamil Nadu reportedly lost more than Rs 2,000 crore due to irregularities in a tender modification under the Tamil Nadu Civil Supplies Corporation (TNCSC) between 2016 and 2021. The All India Anna Dravida Munnetra Kazhagam (AIADMK) was at the helm in the state during the period.

The Chennai based anti-corruption organisation, Arappor Iyakkam (API), has lodged a detailed complaint with the Directorate of Vigilance and Anti-Corruption (DVAC) seeking action against offenders.

The TNCSC has been accused of modifying tender conditions for procuring toor dal, palmolein and sugar in favour of Christy Friedgram Industry and companies related to it. API has demanded the black-listing of these companies and sought legal action against the colluders in the scam.

Public sector companies, including State Trading Corporation (STC) and Mines and Minerals Trading Corporation (MMTC) have been accused of colluding with Christy Freidgram in incurring a loss to the Tamil Nadu government.

‘MASSIVE ILLEGALITIES MADE IN FAVOUR’

In its complaint to the DVAC, the APO has listed different violations made by TNCSC officials in favour of Christy Friedgram Industry. The organisation has made allegations based on the details available in the public domain.

“The illegalities require action under conspiracy, fraud and other sections of the Indian Penal Code, under the Prevention of Corruption Act, under the Tamil Nadu Transparency Act, the Competition Act and Financial Rules,” demanded Jayaram Venkatesan, Convener of the API.

The estimated loss to the state government has been put at Rs 2,028 crore in tenders for dal, palmolein and sugar.

In its complaint the API has listed the alleged illegalities by TNCSC including alteration of tender conditions/prequalification criteria, of excluding all other competitors leading to anti-competitive behaviour, awarding the tender at abnormally high prices ompared to the prevailing market price and violation of minimum time limit.

Allegations have also been made against public sector enterprises/societies such as MMTC, STC, Kendriya Bhandar and NACOF of conspiracy or collusion leading to corruption by public servants of the TNCSC and a select set of firms related to T.S.Kumarasamy.

MODIFICATION IN SUGAR TENDER OUSTED COMPETITORS

The government of Tamil Nadu has been procuring between 20,000 to 75,000 tonnes of sugar periodically based on requirement. Till 2019 tenders saw more than ten bidders competing for orders, but the number of bidders dropped after the modification of tender conditions.

List of bidders before and after the tender conditions were modified.

“The prior experience for participating in the tender was increased without any reason, while the condition of 100 delivery points for a single tender was also incorporated. In the three tenders after the modifications only the companies associated with Christy Friedgram participated,” Jayaram said.

List of bidders after the modification of tender conditions since 2019.

The government has procured 14,50,00,000 kgs of sugar via the three tenders since 2019.

“Due to the higher amount quoted for sugar by companies related to each other and the exclusion of other bidders, the total loss to the exchequer is Rs 256 crores. The Christy group has appropriated this amount in collusion with TNCSC officials," Jayaram alleged.

‘ELIGIBILITY MODIFIED FOR PALMOLEIN SUPPLY’

The API accused the TNCSC of modifying prior experience of supplying palmolein, to any food, to favour the Christy group in oil supply. In the tender published in July 2019, the annual turnover for eligibility was increased to Rs 72 crore in the last three financial years, a means to exclude other bidders, it has said.

Change of eligibility condition for supplying oil

“The change in tender conditions ensured that there were only two types of bidders. One are firms linked to Christy Friedgram and the other being public sector enterprises acting as proxy bidders on behalf of Christy Friedgram group,” Jayaram alleged.

On the question of how the public sector firms were accused of colluding with the Christy group, Jayaram alleged: “The public enterprises have buy back agreements with the firms related to Christy Friedgram group alone and are participating on behalf of these firms”.

“The total pouches procured from Christy group directly or indirectly through these tender illegalities is 56,56,00,000 pouches. Given an average loss of Rs 15.95 per pouch, the total loss to the exchequer Rs 902,13,20,000,” the API's complaint to the DVAC noted.

RE-TENDER FOR DAL EXPOSED CHRISTY GROUP

The tender conditions for the supply of dal also had changes similar to that of sugar and palmolein tenders. Change in experience, increase of annual toornover were put in place by the TNCSC to eliminate other bidders, the API alleged.

In the complaint to the DVAC, the API has listed the participants in the 2014 dal tender. There were 10 bidders in 2014, while the number of competitors was reduced to four after the modifications in tender conditions.

Tender awarded in 2013 and 2014, and estimated loss incurred in 2015 and 2017

“Approximately, given all the tenders floated, the Christy Friedgram group would have supplied around 5,00,000 MTs of Dhal to TNCSC since 2015. The estimated loss to the exchequer for the supply of at least five lakh metric tons at a very conservative margin of Rs 15 per kg is estimated to be Rs 750 crores," Jayaram said.

The recent tender for procurement of toor dal has exposed the activities of the Christy group, the API alleged in the complaint.

“Christy firms quoted between Rs 143 to Rs 147 per kg for split husked toor dal. After we wrote to the Chief Minister and new MD of TNCSC, the tender was cancelled and a new tender was floated with relaxed conditions,” Jayaram said.

The relaxed tender conditions enabled 11 bidders to participate in the bid. The firms associated with the Christy firms quoted much lesser prices in the new tender, leading to doubts about why they had quoted higher prices in the earlier tender.

“Christy’s firm Rasi Nutri Foods that quoted Rs 146.5 per kg for toor dal 20 days ago quoted Rs 87 per kg; the same company, which quoted Rs 142 per Kg for Canadian yellow dal 20 days ago now quoted Rs 78 per kg. This, by their own account, is an admission of how much they have been overpricing dal and is a direct evidence of Corruption,” Jayaram alleged.

An official from the Christy group to whom Newsclick reached out to said that the company had decided not to respond to the allegations at the time.

The API has also written to the CM seeking action against the then food minister and MD of TNCSC, IAS Sudha Devi, and demanding the black-listing of Christy Friedgram and its associated firms.