NAGPUR, July 1: The Central Bureau of Investigation on Monday arrested two retired officials of the Mineral Exploration Corporation Limited (MECL) in connection with Rs 4.44-crore drill purchase scam.

Retired General Manager (Materials) Ram Mohan Sharma, and retired Chief Drilling Engineer, Bindeshwari Prasad Sinha, were arrested by CBI authorities on Monday and produced before Additional District Judge S S Hingwe. They were later released on a surety of Rs 20,000 each.

Bailable warrants have been issued against two more suspects in the case, namely, retired Chairman-cum-Managing Director, Prem Dayal Gupta, and retired Director (Technical) Mukund Shenoy Nagar.

They have been charged with hatching a ``criminal conspiracy'' causing a loss of Rs 3.27 crore to the MECL by ``unnecessarily purchasing'' 26 conventional and three hydrostatic drilling systems. They have also been charged with ``cheating the MECL by abusing official positions, showing, creating false and fabricated records of performances of the hydrostatic drills and creating a fake demand''.

Besides, the officials allegedly overruled the pre-laid procedures of the MECL like inviting tenders for supplies, allotting orders to the lowest quotes and approving the orders by the Board of Directors. Their conspiracy not only left the MECL coffers lighter by Rs 3.27 crore, but also caused a loss of Rs 1.17 crore by way of interest.

On requirement orders for five conventional drills placed by the Chief Drilling Engineer, D S Reddy in April 1989, the GM (Materials), Sharma, allegedly influenced the Purchase Advisory Committee (PAC) to recommend purchase of 33 drills including five hydrostatic drills. Chief Drilling Engineer Sinha also endorsed the recommendations. To support their suggestion, the committee allegedly fabricated false data of performance of hydrostatic drills used previously by MECL. The Director (Technical), Nagar, also approved the suggestions.

The PAC consisting of Sharma and Sinha, later trimmed the demand to purchase of 26 conventional drills and three hydrostatic drills. Meanwhile, the Director (Finance) S Jairaman, recommended that the proposals be reviewed afresh.

It is alleged that the CMD, Gupta overruled Jairaman and approved the purchase of conventional drills on January 26, 1990 and those of hydrostatic drills on February 8, 1990. This was done despite the fact that the CMD could approve orders only upto Rs 25 lakh and has to seek approval of the Board of Directors for amounts exceeding Rs 25 lakh.

The CBI has charged Gupta with keeping the Board of Directors in the dark regarding the approval of orders. The CBI has further charged these officials with showing undue favours to M/s Kores India Limited by getting the proposal approved by the CMD.

Sharma and Gupta had allegedly prepared records which showed enhanced performance of hydrostatic drills compared to conventional ones. The CBI officials claimed that contrary to the claim made by these officials, the drill's performance was more or less same as that of conventional drill, while on cost factor, the hydrostatic drills were seven times costlier than conventional ones.

Meanwhile, Jairaman once again disapproved purchase of three hydrostatic drills at a total cost of Rs 1.77 crore. The MECL had a budgetary provision of just Rs 3 crore against the expenses of Rs 4.33 crore, Jairaman had claimed. He, however, approved purchases of 26 conventional drills costing total Rs 2.28 crore.

The officials placed orders of purchase with M/s Kores India, Voltas, Drillmax and Greaves Cotton on January 29 and February 9, 1990. The CBI has found that during actual use, the hydrostatic drills gave a productivity of 125 metres to 180 metres per month against the expected capacity of 250 metres.

The investigations were carried out by Inspector K N Sinha under the guidance of SP (CBI) R P Agrawal. The CBI has registered offences under the Prevention of Corruption Act against the four suspects.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.