The Rs 371-Crore Scam That Led To Chandrababu Naidu's Arrest: Explained

The Andhra Pradesh Crime Investigation Department has said former chief minister Nara Chandrababu Naidu is the prime mover, conspirator and beneficiary of the alleged Rs 371-crore scam in the skill development corporation. 

Andhra Pradesh CID chief N Sanjay said the Telugu Desam Party national president was arrested on Saturday morning as he is the prime accused in the case and there is a risk of him influencing the course of the investigation. 

'Inflated Project Cost'

In 2014, Andhra Pradesh had issued a government order stating that clusters of Siemens Centres of Excellence would be established across the state, with technology partners Siemens and Design Tech contributing 90% as grant-in-aid and the government giving only 10% of an allegedly inflated project cost of Rs 3,300 crore. 

A memorandum of understanding (MoU) was drawn up, but the 90% contribution by Siemens and Design Tech did not find a mention. The MoU was approved by both Chandrababu Naidu and TDP State President K Atchannaidu, who is also an accused in the case.

The CID has claimed that then minister Ganta Srinivas Rao was also involved in the conspiracy, and the Andhra Pradesh Skill Development Corporation was established after bypassing the council of ministers and deviating from rules. 

Shell Companies

"The Andhra Pradesh government released Rs 371 crore, a large part of which was siphoned off and only a small part was used to establish centres of excellence," CID chief N Sanjay said. The money was allegedly diverted through shell companies and fake invoices, and no actual delivery mentioned in the invoices was found during the investigation.

Mr Sanjay said Mr Naidu and other TDP leaders were among the beneficiaries of the misappropriated funds. 

"Though the probe began with the Andhra Pradesh Skill Development Corporation and the head of companies, the prime mover and principal conspirator in the case, who orchestrated the transfer of government funds to private entities via shell companies, is N Chandrababu Naidu," the additional DGP said. 

"He possesses exclusive knowledge of transactions leading to the issuance of government orders and signing of MoUs from time to time. This makes him the central figure of the investigation," he added.

Bureaucrats Had Objected

CID officials said senior IAS officers, including then chief secretary IYR Krishna Rao, principal finance secretary P V Ramesh and special secretary (finance) K.Sunitha, had made notings in files related to the corporation. They had objected to the advance release of funds to Design Tech and noted that this was being done on the instructions of then chief minister Chandrababu Naidu.

The CID is probing to find the final beneficiaries of the misappropriated funds, including cash holdings, recovered from accused like Vikas Vinayak Khanvilkar, the then managing director of Design Tech. The department said key documents have gone missing and they had to arrest Mr Naidu to interrogate him in custody and with other primary suspects. 

"The deep-rooted and serious economic offence makes custodial interrogation necessary. Being in an important position as the head of a political party and having occupied the office of the chief minister, there is a chance of Mr Naidu influencing the course of the investigation. He was the principal decision-maker in releasing money in advance from the government," said Mr Sanjay.

Siemens Distances Itself 

The Enforcement Directorate, Income Tax Department and the Goods and Services Tax Intelligence Wing have also investigated the case, according to a note shared by sources in the Andhra Pradesh government.

Siemens Industrial Software India Private Limited has carried out an internal investigation and distanced itself from the actions of its then managing director Suman Bose, saying he had acted without authorisation. 

Sources said Siemens had also received only Rs 58.8 crores out of Rs 371 crores paid to Design Tech by the skill development corporation. Soumyadri Shekhar Bose, also called Suman Bose, then MD of Siemens, and Khanvilkar of Design Tech MD of Design Tech, had allegedly siphoned off Rs 241 crore. Hawala channels were also allegedly used to send an undisclosed sum to Hyderabad and Pune.

The ED had, earlier this year, arrested Bose, Khanvilkar, Mukul Chandra Agarwal - ex-financial advisor and signatory for Skillar Enterprises India Pvt Ltd - and Suresh Goyal, a chartered accountant, in a money-laundering case related to the scam. The agency has also provisionally attached properties worth Rs 31.2 crore belonging to Design Tech.