Keonics probe uncovers Rs 120 crore worth bogus works

Bengaluru: An inquiry commission set up by the Siddaramaiah govt has uncovered Rs 120 crore worth of bogus and illegal works commissioned between 2018 and 2023 at Karnataka State Electronics Development Corporation (Keonics).
The Maheshwara Rao committee, tasked with scrutinising the corporation's operations since Nov 2022, made the disturbing discovery of 292 fraudulent or non-compliant projects.These projects were either entirely fake or failed to meet regulatory standards, raising serious questions about corruption and mismanagement within Keonics. The committee's findings suggest systemic failure, with potential collusion between officials and contractors to siphon off public funds.
Keonics chairman Sharath Bachegowda told TOI that these works were identified as either bogus or illegal, and payments to vendors remain pending. "We have identified 292 works valued at Rs 120 crore for which payments are yet to be disbursed," Bachegowda said. "Most vendors are awaiting payment for the fiscal year 2022-23."
The fraudulent activities have been categorised into four distinct types: The first involves deliberately breaking up projects to evade the Karnataka Transparency in Public Procurement (KTPP) Act's 4G exemption clause, which limits single work orders to Rs 1 crore. By fragmenting projects, perpetrators aimed to bypass this cap.
The second category concerns "overinflation", where the cost of specific electronics supplied to the govt was significantly inflated. Bachegowda explained: "For instance, if a particular requirement is worth Rs 20,000, it would be quoted at Rs 2 lakh and billed to the govt."
The third type of scam involves supplying lower-value specifications while billing for higher-value ones. For instance, if the govt ordered i5 computers, vendors would provide i3 computers but falsely report them as i5. Bachegowda said, "The most blatant scam involved vendors claiming to have supplied 50 computers while only 30 were actually provided."
Keonics is now in the process of engaging RITES consultants, a central govt undertaking, for a third-party evaluation of the 292 identified works and other related transactions. RITES is expected to complete its assessment within a month and submit a comprehensive report to Keonics. This report will be cross-referenced with details of the alleged bogus and illegal works.
"The final report will be presented to the govt soon. The Rao committee is currently focused on determining pricing discrepancies and inflation associated with these works," Bachegowda said adding that the investigation aims to uncover individuals in departments that obtained Keonics' services, Keonics officials, and vendors who indulged in fraudulent activities to recommend appropriate punitive measures.