Bihar Chief Minister Nitish Kumar and Deputy CM Sushil Kumar Modi have been accused by Lalu Yadav of being involved in Rs 1000-crore Srijan Scam. (PTI Photo)

Srijan Scam has embarrassed Nitish Kumar government of Bihar, with the opposition alleging direct involvement of the CM and his deputy Sushil Kumar Modi. The scam is about alleged transfer of government funds to an NGO Srijan Mahila Sahyog Samiti in Bihar’s district Bhagalpur. The NGO used to earn a high rate of interest on the government funds while keeping the principal amount intact. It is believed the ambit of the case may go beyond Bhagalpur to other districts of the state.

The NGO carried out this fraud for a period of 7 years between 2007 and 2014. Its operations were hit last year after the death of its founder Manorama Devi in February. Her son Amit Kumar and daughter-in-law Priya Kumar have been arrested.

What is the total worth of the scam?

Several reports peg the total worth of the scam to be over Rs 500-crore. According to IANS, the scam could be worth over Rs 1000-crore, while The Indian Express reported on August 15 that the scam is suspected to be worth over Rs 700 crore.

Modus Operandi

On August 14, Hindustan Times published the modus operandi of the scamsters unraveled by investigators probing into the case. According to the report, the NGO was working in cahoots with bankers and treasury officials to secretly divert government funds into its account and earn interest on the principal amount, while leaving it as it is. For this, the NGO used to write its account number on the reverse side of cheques issued by district treasuries to several government departments. The scamsters had also developed a system to generate fake e-statement of the bank to avoid getting caught. These fake statements were regularly sent to government offices for record keeping.

Moreover, the NGO also used to allegedly offer loans to people at very high rates of interest.

The NGO also prepared fake passbooks and escaped government audit between 2007-14, according to HT. The investigators have seized the laptop, which was used for running the fake banking software, printer, pen drives and alleged copies of bank e-statements. Nine people have also been arrested in connection with the case.

The details of the scam were exposed after officials seized the laptop from the possession of one of the accused.

The investigators are surprised as to how the NGO managed to carryout the fraud without getting noticed. Even the government departments failed to notice when fake e-statements continued to arrive despite no one asking for it. Bihar chief secretary Anjani Kumar Singh told HT that the fake e-statements didn’t even bear the signature of bank officials.

The investigators suspect the involvement of some government officials as well.

According to IE, the government funds were apparently transferred to Srijan’s accounts in Bhagalpur branch of Indian Bank and branches of Bank of Baroda.

A senior police officer explained the Modus Operandi to The Telegraph like this: When the district magistrate used to issue cheque to the bank concerned to transfer funds from the treasury, staff member in his office used to stamp a fake signature at the back of the cheque with instruction to deposit the money in the NGO’s account. The officer told the daily that when the DM issued a new cheque for government expenses, the money was sent back to the account of the district administration from Srijan’s account. This is how the DM’s cheque never bounced and no body noticed the fraud. Further, the NGO also used to print fake e-statements at its office and provide to the DM’s office when required.

Why Nitish Kumar and Sushil Kumar Modi are under fire from the opposition

Nitish Kumar has ruled the state since 2005, while Modi was the state finance minister for most of the time when the alleged fraud took place. RJD chief Lalu Prasad has demanded a CBI probe into the matter and demanded the resignation of Modi. A PIL demanding CBI probe into the case has also been filed in the Patna High Court by advocate Manibhushan Pratap Sengar.

Sengar has alleged that this is a scam worth over Rs 1000 crore and top politicians and officials may be involved in the scam.

On Thursday, Lalu leveled allegations against Kumar, BJP leaders Sushil Modi, Shahnawaz Hussain, Giriraj Kishore, Nishikant Dubey and Vipin Bihari. Lalu alleged that Nitish has joined hands with BJP to save himself from the probe into the scam.