Several crores of Employees’ Provident Fund (EPF) savings have been drained out through fraudulent withdrawals at a regional office in Mumbai, as a result of officials of the Employees’ Provident Fund Organisation (EPFO) acting in connivance.
By Wednesday, Rs 37 crore of such withdrawals, most of which are learnt to have been partial withdrawal claims from EPF, had come to light, as per sources aware of the development.
Four officials have been suspended so far and an audit team of the EPFO has been dispatched to scrutinise transaction records at the regional EPF office in Kandivali. EPFO has confirmed that administrative and criminal action has been launched in the matter, along with efforts to recover the funds.
A source close to the development said the fraud also involved preparing fake claim requests against EPF accounts where no fresh contributions have been made for a prolonged period, possibly because the employee had gone abroad or changed jobs without consolidating their EPF accounts.
“About 25%-30% of the balances in the affected accounts were withdrawn and transferred out through the NEFT banking system. This was facilitated by junior and clerical level officers, including social security assistants, acting in concert to process the withdrawal claims,” the person explained.
EPF offices in the Mumbai region have tightened withdrawal processes, citing these fraud cases and issued an advisory to avoid fresh malfeasance in the settlement of claims, amid concerns that the same modus operandi may have been replicated in other PF offices.
‘Balances safe’
Responding to The Hindu’s detailed queries on the matter, Central PF Commissioner Sunil Barthwal’s office conceded an internal probe has found balances have been withdrawn from ‘non-existent accounts’, stressing that ‘the EPF balance in the account of any member is not fraudulently withdrawn and balances of EPF members are safe’.
“However, internal inquiry has revealed that some unscrupulous officials have entered frivolous credits by creating non-existent accounts which do not pertain to any EPF member and withdrawn such frivolous balances,” it said.
The EPFO chief’s office also elaborated on its reliance on IT-enabled systems to validate members’ identities and process claims with ‘adequate checks and balances’.
While it did not dispute The Hindu’s question about Rs 37 crore of the EPFO corpus being siphoned out, the CPFC’s office said: “The quantum of such withdrawals of frivolous credits from non-existent account is being ascertained.”
“Suitable administrative and criminal action has been initiated against such unscrupulous officials / persons and necessary action initiated for recovery of the withdrawals of frivolous credits,” it said.
“Considering the sensitivity of the issue involved, any publication which may lead to panic amongst the EPF subscribers may please be avoided since most of them are in low-income group,” Mr Barthwal’s office added.
Advisory issues
“Certain instances have been reported in past where fraud has been committed in connivance either with staff from EPFO or outsiders,” Regional PF Commissioner Ganesh Kumar of a zonal EPF office in Mumbai said in an advisory dated July 29, adding that senior officers must remain vigilant about their sections and conduct ‘surprise checks’.
To prevent a recurrence of such frauds, no staff should have overlapping roles at different stages of the claim settlement process, and strict action must be taken if any staffer is found using others’ user id and password, the advisory had suggested.
