The Employees’ Provident Fund Organisation (EPFO) has started an investigation into a scam case where its Mumbai suburban office staff is allegedly involved, leading to estimated losses of up to Rs 1,000 crore for the retirement body. This was allegedly done by creating bogus accounts and transferring funds or settling claims in defunct companies, including Jet Airways, according to an ET report.
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“We expect EPFO losses due to this particular fraud to mount to up to Rs 1,000 crore, arising due to violation of rules and tax evasions… Offenders should be punished for doing injustice to members’ life savings and maligning this apex retirement body,” said Prabhakar Banasure, a member of EPFO’s central board of trustees, according to the report.
The report, which quoted sources, said an internal inquiry is underway to ascertain the actual quantum of losses as the vigilance department is examining past records. A final report will be submitted to the EPFO’s central body soon.
It added that the fraud was allegedly committed in Mumbai’s Kandivali office. It was done by using the employments of then pilots and crew members of Jet Airways, including many expats.
Before Jet Airways was admitted to the National Company Law Tribunal (NCLT) for debt resolution, Machindra Bamne, senior social security assistant of Kandivali PF office, was reported to have been suspended over the alleged settlement of illegal PF claims of the airline’s then employees.
In an order dated August 18, regional provident fund commissioner-1 RO, Kandivali East, said that Bamne was found to have “received illegal gratification from some members into his bank account for settlement of PF claims related to employees of M/s Jet Airways”.
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PF accounts of many pilots or crew members of Jet Airways were allegedly misused to siphon off funds, which allegedly benefited some EPFO officials working at Kandivali office, the ET report said.
“They were hand in gloves with select manipulators on the Jet side before the airline company went to NCLT… I have been raising this matter to competent authorities including EPF chairman,” Banasure alleged, according to the report.
The report, quoting sources, also said the multi-crore scam was perpetrated in 2019 but deepened its tentacles during the pandemic.
Meanwhile, the government is planning to raise the equity exposure limit from 15 per cent to 20 per cent, which may be further increased to 25 per cent later. The proposal was to be taken up for discussion in the last meeting of the Central Board of Trustees in July, which could not be taken up as it was opposed by employees’ representatives in the executive committee meeting of the EPFO earlier.
EPFO trustee Harbhajan Singh Sidhu has said that there should be more detailed deliberation on the proposal before going ahead to amend the Employees’ Provident Fund Organisation’s investment pattern to increase the allocation of investible funds in equity-related instruments to 20 per cent from the existing 15 per cent in view of its volatile nature of the stock markets.
