Calcutta, March 13: The Comptroller & Auditor General of India's has stepped up investigations into the affairs of Hindustan Paper Corp Ltd, which has been rocked by a marketing scandal that led to the suspension of its marketing chief. The CAG's principal director of commercial audit & ex-officio member (audit board 1) has sent two sets of queries, dated March 6 and 7, on these irregularities and asked for a reply within a week.Activities at Hindustan Paper, which was witnessing a turnaround in its fortunes largely due to a financial restructuring, were severely affected after the marketing scandal was unearthed at the Delhi office last December.
Investigators have found links with some other offices in the north.An inhouse investigation was ordered and a three-member team was formed. The members were HPC's general manager for internal audit and deputy general manager for finance, and the subsidiary Hindustan Newsprint's senior manager for vigilance.
The CAG noted that the company had not taken actionagainst stockists whose cheques had bounced. It had instead given them undue cash incentives and other benefits, and failed to collect sales tax from them. It had also paid "service charges" to secure government orders.
The audit query has noted that there were about "153 occasions of cheques bouncing" during 1998-99. The amount involved was more than Rs 12.13 crore.However, the inhouse investigators felt that it is "neither alarming nor uncommon in normal commercial transactions".
Meanwhile, the executive director for marketing, Saugata Banerjee, was transferred to Mandya National Paper Mills, a ailing subsidiary of Hindustan Paper but was later suspended.
The CAG has questioned four other aspects apart from the non-adherence of marketing regulations and avoidable payment of godown rent and insurance charges worth Rs 29.22 lakh. The CAG audit has pointed out that the company failed to collect sales tax worth Rs 506.99 crore and also failed to collect Rs 228.16 lakh fom stockists with whom transactionshave stopped.
The company's failure to comply with payment terms has cost it Rs 20.32 lakh.
Hindustan Paper has also paid "service charges of Rs 472.84 lakh for procuring government orders." The Union government rules forbid public sector units from paying service charges, an euphemism for bribes and commissions. While the internal team has absolved the management of any blame, low-level officials of internal audit had already informed top officials about the irregularities. Three reports prepared by S Dass Mahapatra, deputy manager for internal audit, were sent to the general managers of internal audit and finance during June - July, last year.
"Though these reports were sent to all the necessary authorities in due course of time, no action was taken," company sources said.
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