The shocking incident has sent alarm bells ringing across the entire EPFO, which is one of the world’s largest social security organisations.
In a shocking case of fraudulence at a Mumbai office of the Employees Provident Fund Organisation (EPFO), a group of employees allegedly siphoned off over Rs 21 crore from a common PF pool through illegal withdrawals, The Indian Express reported today.
The IE report, based on the details accessed from an ongoing internal investigation into the case, claimed that a 37-year-old clerk at EPFO’s Kandivali office, Chandan Kumar Sinha, was the mastermind behind the scam. He allegedly used as many as 817 bank accounts, mostly of migrant workers, to fraudulently claim PF amounting to Rs 21.5 crore on their behalf.
Moreover, 90 per cent of the money claimed by the nexus of employees has already been taken out of their accounts, according to sources quoted by The Indian Express, who added that the case will be transferred to the CBI as soon as the internal audit is complete.
Sinha is currently absconding and is among the five employees of the office who have been placed under suspension for their alleged involvement in the multi-crore scam.
The money that was withdrawn by the nexus belonged to the pooled fund of EPFO, which holds deposits made by registered organisations every month. The funds received in these pools are usually invested in government securities.
“No individual PF account has been misused (in the fraud). The money belonged to the pooled fund and it is a loss to EPFO not any individual. It is the equivalent of a bank robbery,” a senior official told The Indian Express.
While the fraud has been reported at one office, the shocking incident has sent alarm bells ringing across the entire EPFO, which is one of the world’s largest social security organisations, managing up to Rs 18 Lakh crore in savings of individuals.
Officials believe that the nexus managed to evade scrutiny between March 2021 and June 2021 as this was the time when the organisation had relaxed its norms and assigned multiple roles to employees involved in verification and approval to manage the high volume of withdrawals amid job losses and pay cuts due to the COVID-19 pandemic.
Also, they exploited key loopholes in the system using passwords and other access provided to them by senior officials who were working from home during the lockdown.
“The probe has found that a few section officers at the branch actively helped Sinha siphon funds. It is a bit embarrassing that some of our officials gave their passwords to him and did not bother to change it later. This is negligence,” the report quoted another senior official as saying.
With the organisation on its toes following the shocking case of fraudulence, it has directed all senior EPFO officers to check if the systems and processes in their domains are intact.
Besides, it has been decided to set up a provision where passwords of employees for accessing the EPFO system will be invalid after 15 days unless changed, and stop assigning multiple roles to an employee.
The EPFO has also written to banks for freezing the 817 bank accounts that received the fraudulent withdrawals — a little over Rs 2 crore have been tracked and recovered so far.