More than Rs 120 million meant for dairy farmers has allegedly been siphoned off by employees of the state-owned Dairy Development Corporation (DDC). The money was diverted into personal bank accounts through a network of cooperatives and agricultural farms. The alleged fraud continued for years, with employees manipulating milk payment records and taking advantage of farmers who had little access to information about how their milk was tested and priced. The alleged scam raises serious questions about the financial controls and management of a government-owned corporation. According to the Central Investigation Bureau (CIB), DDC employees manipulated payment records and used intermediaries to collect money from farmers. The price of milk is calculated on the basis of its fat and Solid-Not-Fat (SNF) content. Employees allegedly withheld accurate test results, leaving farmers unaware of the quality assessment and the amount they were entitled to receive. They exploited this lack of information to demand a share of the payments. In one method, employees told farmers that they had increased the recorded fat content of their milk to secure higher payments. Farmers were then asked to return the additional amount. In another, employees allegedly claimed that milk supplied by a farmer had quality problems and needed to be mixed with milk from another supplier. They inflated the recorded quantity and demanded payment for the additional volume. Bhairabpur Buffalo Livestock Farm supplied 1,000 litres of milk, but employees allegedly added another 1,000 litres on paper and demanded payment for the additional quantity. Fearing that they might lose payment for their actual supply, the farmers agreed.
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The CIB identified 17 agricultural and livestock farms and cooperatives allegedly used to channel the money into accounts belonging to DDC employees and their associates. Laligurans Livestock Farm alone reportedly transferred Rs 44.2 million into employees' accounts. Ritesh Rai Yadav, a DDC employee, allegedly received Rs 27.8 million from different farms. Other employees and associates also received substantial amounts. The CIB has arrested eight suspects, including former General Manager Sanjiv Jha, and is preparing to submit its findings to court. Those accused must face the judicial process, and anyone found guilty should be punished under the law. The DDC case calls for scrutiny of other government-owned corporations and public enterprises. Employees handling public funds can misuse their positions when internal checks are weak and financial transactions go unchecked. Similar irregularities may be taking place in institutions that make payments to farmers, suppliers, contractors and service providers. Authorities should examine their accounts and payment procedures instead of waiting for complaints to expose possible fraud. The anti-graft body, the Commission for the Investigation of Abuse of Authority (CIAA), and the Office of the Auditor General should step up scrutiny of government-owned entities. Regular and independent audits should be conducted at fixed intervals. If possible, payments should be made directly to the actual suppliers. Farmers should receive payments commensurate with the quality of their milk. The procedures for assessing milk quality and determining the final price should also be made transparent.
Unusual bank transfers involving employees, their relatives and associated businesses must be investigated thoroughly. Those who report financial irregularities must be protected from retaliation. Existing financial rules must be enforced. Employees found guilty of diverting public funds should face disciplinary action and criminal prosecution. Senior officials should also be held accountable if their negligence or involvement allowed the fraud to continue. Without strong and sustained enforcement, financial rules will have no effect. Penalties must be strong enough to discourage employees in other public institutions from attempting similar schemes. Farmers supplying milk to the DDC are entitled to receive the full payments due to them. They should not have to return part of their earnings to employees to secure those payments. The government must investigate whether similar practices are taking place in other public enterprises, recover the misappropriated money and prosecute those responsible. The DDC is probably one of the government entities that enjoys considerable public trust because of its quality products. A few months ago, Prime Minister Balendra Shah further boosted its popularity by publicly consuming its products. The DDC, therefore, should not be allowed to fall into disrepute because of the actions of a few unscrupulous employees.
