Exclusive: Rail Ministry Overlooked CBI FIR Against Key PSU Head Named for Causing Rs 144 Crore Loss

The vigilance directorate of the railway board gave a clean chit to Amitabh Banerjee despite CVC guidelines.

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New Delhi: In October 2020, the Ministry of Railways gave vigilance clearance to Amitabh Banerjee, chairman and managing director of one of its key public sector units, the Indian Railways Finance Corporation (IRFC), for a full term. It did so without taking into account the fact that the Central Bureau of Investigation had by then named him in an FIR about a multi-crore case of financial bungling at another PSU where he had earlier worked. 

The ministry’s move appeared to have gone against its own precedent on zero tolerance to allegations of corruption. Banerjee’s predecessor, S.K. Pattanayak, did not make it past his probationary period in 2018, while National High Speed Rail Corporation managing director Satish Agnihotri – brought in to handle the Narendra Modi government’s dream bullet train project – was removed by the ministry earlier this year after graft charges surfaced against him at his previous position at another PSU, the Rail Vikas Nigam Limited. 

Like Pattanayak, Banerjee, who was approved for post by the cabinet committee on appointments (ACC) in October 2019, was supposed to go through a mandatory one-year probation period – after which he would be confirmed provided he met benchmark norms for confirmation

According to guidelines set by the Central Vigilance Commission for confirming an officer, the Railway Board’s  vigilance directorate was supposed to not only check for any allegation of misconduct involving vigilance against Banerjee while at the post for the year (October 2019-October 2020), but also run a background check on his integrity for the past 10 years. 

Though the principal executive director of vigilance – which reports to the Railway Board – cleared Banerjee at the end of his probation period in October 2020, official documents reviewed by by The Wire indicate that the vigilance check overlooked an FIR filed by the Central Bureau of Investigation in March 2020 which named Banerjee, among others, as an accused in a corruption case at the Hindustan Paper Mill Corporation Ltd (HPCL) in Shillong. Banerjee was accused of abetting a loss of at least Rs 144 crore to the Union government between the years 2011-2013, when he was director, finance at HPCL, a PSU under the ministry of heavy industries. 

The FIR was filed on March 4, 2020 in Meghalaya’s East Khasi Hills district by Vivek Dutta, head of the CBI’s Shillong branch. The formal legal move was based on the verification of a written complaint by the Ministry of Heavy Industries in 2017 to the agency, seeking registration of a case against all persons – “private or serving or retired” – responsible for causing heavy losses to the PSU by indulging in “serious irregularities” in procurement of bamboo from Assam’s Dima Hasao Autonomous Council.

The FIR named Banerjee as the third accused in the case, after the former HPCL chairman and managing director V.N. Rao and former director of operations, S.N. Bhattacharya.

Cachar HPCL Mill workers at a protest in 2019. Photo: Manabendra Chakraborty/Files

In fact, HPCL had ended up as a sick enterprise a few years ago due to massive financial irregularities, leading to its eventual shutdown. The Wire has extensively covered the suffering, including claims of deaths by suicide by the families of HPCL employees in Assam due to the financial crisis its two units found themselves in.  

Also read: Assam: As Two Debt-Ridden Paper Mills Go Under the Hammer, Workers’ Worries Multiply

On February 22, 2017, the then joint secretary at the heavy industries ministry, Bhaskar Jyoti Mahanta (now director general of police in Assam), wrote to the CBI, asking it to investigate the matter. However, by then – and in fact four years before that, in October 2013 – Banerjee had resigned from his post and moved to Konkan Railway as director of finance. He joined the Indian Railways Finance Corporation in October 2019 from Konkan Railway.     

On September 26, The Wire asked V.K. Tripathi, chairperson of the Railway Board, how the Railways’ vigilance department had cleared  Banerjee for a position that involves taking sensitive financial decisions on behalf of the ministry – including the authority to withdraw foreign exchange from the Reserve Bank of India  – in spite of a pending CBI inquiry against him for financial bungling. Tripathi has not responded.

Also unanswered were queries sent on September 30 to Chandra Vir Raman, principal executive director of vigilance – including the grounds on which his department decided to go against the CVC’s guidelines in clearing Banerjee for a full term after probation, especially given the fact that the CBI FIR was filed seven months before Banerjee’s probation period had ended.

‘Wasn’t informed’: Banerjee

When The Wire contacted Banerjee on September 26 with a copy of the CBI FIR on which the date of filing is clearly stated, he said that since he himself was ‘not informed’ about the CBI FIR at the time, he did not inform the ministry about it.

It came to notice only after a few months of the completion of (the) probationary period. It has been reliably learnt that the case has since come to an official closure after a detailed investigation by the CBI,” he told this correspondent in an email.

Though Banerjee denied any knowledge of the CBI FIR at the time it was filed, the case – including the names of the HPCL officers involved – was widely reported in the media at the time. A sample of a PTI report then, naming him as an accused, can be read here.

As per rules, Banerjee was supposed to mention this FIR while filing a report on completion of his probationary period at the IRFC. Additionally, the railway vigilance department was supposed to conduct its own background check on Banerjee’s conduct and file a report to the chairperson of the Railway Board. That report had to then be forwarded to the ministry for approval of the Union railway minister, which, in this case, was Piyush Goyal at the time.

Vigilance directorate under fire from finance ministry

Aside from the CBI FIR, the vigilance directorate of the Railways had also not taken cognisance of the fact that the CVC had flagged the financial bungling at HPCL to the heavy industries ministry as far back as 2016 (CVC case no 011/HVI/007 dated 23.09.2016).

Sources in the heavy industries ministry confirmed to The Wire that Mahanta’s letter to the CBI in 2017 had cited the CVC complaint stating that inflated rates for bamboo were decided for both the HPCL mills in Assam at a meeting “attended by Amitabh Banerjee, director (finance)” aside from some other senior officials of the Corporation, including “S.N. Bhattacharya, director (operations).”

The railway vigilance directorate’s decision to clear Banerjee despite a pending charge figured indirectly in a note filed by a panel headed by Sanjeev Sanyal, then the principal economic advisor to the Narendra Modi government, in September 2021.

Sanyal noted that though the railways has the largest vigilance department in the Union government, it has barely followed CVC guidelines. Strongly recommending that the railways follow those guidelines, Sanyal’s note raised questions “on the legality of the decisions made in the past and pending cases of the Vigilance Directorate relating to allegations of corruption and other irregularities involving thousands of employees, including senior officers, in the past.”  

Interestingly, Banerjee was appointed by the ACC a month before the PMO issued instructions to all ministries to weed out ‘dishonest officers’ from Union government departments. 

Accusations during tenure at IRFC

Barely eight months after the the railway board cleared Banerjee and he was regularised, a case was registered at the vigilance directorate to probe financial discrepancies at the PSU on as many as 30 counts against ‘IRFC employees’ including Banerjee, company sources told The Wire.

An RTI applicant, who has requested that his name be withheld, asked the vigilance directorate of the railways whether any complaint was registered against IRFC employees including CMD Amitabh Banerjee, from June 2021 onwards.

The March 5, 2022 reply by Sunil Kumar Singh, director in charge of vigilance of the Railway Board, said somewhat cryptically:

“Yes, complaint is registered against employees of IRFC. Further, prescribed information sought for cannot be provided as the case is still ongoing and under submission to higher authorities thus it may impede the process of investigation.” 

According to ministry sources privy to the pending vigilance inquiry against Banerjee, the allegations are also against Banerjee, and include “spending around $ 27,000 of  as ‘entertainment allowance’ to buy expensive watches, mobile phones, laptops, gold coins, expensive shawls, etc.”

The sources told The Wire that though Banerjee had stated that those were “gifts” meant for clients he was to meet during an official foreign trip, but sources questioned the rationale for the purchases because the clients for whom the ‘gifts’ were intended “want to invest in India and make profits. There has never been any need for the IRFC to bribe clients to give loans to the Union government in lieu of an interest in private entities to build wagons, rolling stocks, etc.,” one source said.

On asked about the allegations, Banerjee told this correspondent, “No such charges as per my information”, urging The Wire to “desist from (publishing) misinformation and willful canards spread by vested interests.” 

In April 2022, taking serious note of the ongoing inquiry, the office of the Union cabinet secretary refused to clear Banerjee’s business trip to Singapore. Sources in the government told The Wire, “On cabinet secretary’s refusal to clear his trip to represent the government of India, the Ministry of Railways had to then send two junior officers on that trip.” 

Sources at the railway ministry confirmed this.

“A note to that effect was written to the ministry by the cabinet secretary’s office, forcing it to send two junior officers – Shelly Verma (director of finance of the Indian Railways Finance Commission) and Ajit Srivastava (a Railway Board Officer) – on that official tour to carry out market study/survey and meet investors while the country is facing global crises due to the Ukraine war, etc.,” a source said.

A source added, “Aside from Banerjee, the cabinet secretary’s office also refused to clear the name of another senior official who was to accompany him based on a technicality.”  

Other vigilance allegations against Banerjee include staying with his family at the IRFC guest house in Green Partk for a long period and getting the company to pay for a more expensive 10-year British visa  on his personal passport despite having around a year to go in service.