Tuesday, November 25, 2008


A road contractor in E ward (Byculla) withdrew Rs 27 crore from the Brihanmumbai Municipal Corporation’s accounts using confidential code numbers of E ward officials in the computerised accounts system. However, instead of immediately lodging an FIR, the civic body has decided to set up a committee to probe the incident.

According to senior civic officials, Kirti Shah, owner of K C Corporation, had undertaken road construction and maintenance work in E ward area.

“Shah carried out road construction work that cost Rs 27 crore in February-March 2007. The BMC could not pay him money on time. However, instead of waiting, Shah managed to get the confidential code number of the E ward’s accountant and junior engineer and withdrew Rs 27 crore. When the BMC started the book closure process at the year-end, it found out that while the money was withdrawn, no hard copy of the withdrawal slip was submitted to BMC. Then, the BMC vigilance department started probing the matter and found out that the contractor had withdrawn the amount without the knowledge of BMC officials,” said an official, requesting anonymity.

Sources said that BMC wrote to Shah, asking him to return the Rs 27 crore. “Shah returned only Rs 2 crore and refused to give back the rest. After further pressure and a threat to lodge an FIR, Shah recently returned the money. But, it was a major goof-up. The question is, how did Shah get the confidential code number of the BMC officials?” the official questioned.

Municipal Commissioner Jairaj Phatak confirmed the incident and clarified that Shah had returned the money. “I have called a meeting of all civic officials involved in this incident to discuss it. We will decide on the final course of action after the meeting next week,” he said.

Now, Phatak has asked senior officials to lodge an FIR against the people responsible for this goof-up. Shah, the contractor in question, said he was not fully aware of the incident. “It may have been done by my assistants,” he said.

Ravindra Waikar, chairman of the Standing Committee, has written to Phatak, asking him to investigate the matter thoroughly and take action against the guilty.

“This incident is just the tip of the iceberg. There are many such cases where the BMC administration has made deliberate mistakes to siphon off civic funds. We will not tolerate this anymore,” Waikar stated.

How the system works

In BMC’s new SAP-enabled accounting system, the civic body creates the purchase order (PO), then the system approves the work order, picking from submissions made by contractors. Once the work is done, the concerned BMC official verifies and certifies the work, then releases funds from the BMC account to the particular contractor, using his confidential code word. After releasing funds, the official has to submit the ‘hard copy of the payment slip’ to BMC’s accounts department for annual account assessment.

But even with the needle of suspicion pointing at him, the BMC has decided to award a fresh contract to the same company.

KC Corporation was appointed to perform and oversee odd jobs like filling potholes and carrying out small construction work in the ward by the BMC for financial year 2006-07.

Having completed its road work in the stipulated time, KC Corporation was not made the payment. That is when the proprietor of the firm allegedly withdrew Rs 27 crore from the BMCs computerised account.

Despite this, the BMC has decided to award a fresh contract to KC Corporation for renovation of a civic school in Mahim. “Prima facie, it does not look like it is the contractor's fault," said municipal commissioner Jairaj Phatak. "It might have been caused by a technical mistake. The contractor returned the amount when he realised the error.”

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