The Vigilance and Enforcement department of the Andhra Pradesh government on Friday announced that it had unearthed a major scam in procurement of medicines and other items worth over Rs 975 crore in Employment State Insurance hospitals in the state by the Insurance Medical Services (IMS) directorate in the last five years.
Holding three former directors of the IMS responsible for the scam, the V&E department’s inquiry report also pointed an accusing finger at senior Telugu Desam Party lawmaker and former labour minister Kinjarapu Atchannaidu for issuing orders for procurement of medical equipment from a particular company without calling for tenders.
The ESI, is a central government scheme and is being implemented in states for providing subsidised treatment to employees working in industrial and services sectors who earn a salary less than Rs 21,000 per month. The employers and employees of the relevant sectors contribute their share of 3.25 per cent and 0.75 per cent of their salaries respectively to the ESI scheme.
It has been implemented in Andhra Pradesh by the directorate of IMS through four ESI hospitals, three ESI diagnostic centres and 78 ESI dispensaries spread across the state. The expenditure for the scheme is shared by the state and central governments in a ratio of 1:7. While the state government bears the entire expenditure initially, the Centre reimburses its share subsequently.
In its inquiry report, the V&E department pointed out that three officials – Dr B Ravi Kumar, C K Ramesh Kumar and G Vijaya Kumar who worked as directors of IMS between 2014 and 2019 had placed purchase orders for procurement of drugs, medical equipment, surgical items, lab kits and furniture worth Rs 975.79 crore by violating procedures and guidelines.
The purchases were made without constituting drug procurement committee and without calling for open tenders, causing huge loss to the government exchequer. It said the directors had procured most of the drugs under non-rate contract instead of rate contract.
The inquiry report said the total budget allocation for the purchase of drugs, medicines and other material during their tenure of the directors was Rs 293.51 crore, but they had made purchases worth Rs 698.36 crore by violating procedures.
For instance, they had procured drugs worth Rs 89.58 crore from certain firms without calling for tenders by paying 132 per cent excess than what they could have got from rate contract firms at a price of Rs 38.56 crore.
The inquiry also revealed how the IMS directors had purchased lab kits, lab equipment, surgical items and furniture required for ESI hospitals from select companies on nomination basis without calling for open tenders.
One of these firms, Tele Health Services Pvt Ltd, was given the contract based on the recommendation from K Atchannaidu, who was then labour and employment minister in the Chandrababu Naidu government.
“Based on a letter written by Atchannaidu, one of the directors Ramesh Kumar issued a work order to Tele Health Services on nomination basis without calling for open tenders. The company was supposed to provide toll free services and Electro-Cardio Gram (ECG) services. The patients were charged Rs 480 per ECG, while it would have cost a maximum of Rs 200 per ECG in other hospitals,” the vigilance report said.
YSR Trade Union Congress president P Gautam Reddy demanded immediate arrest of Atchannaidu for his involvement in the ESI scam. “The TDP MLA has looted the hard-earned money of industrial labourers. The government should conduct a deeper inquiry into the scam and prosecute Atchannaidu to expose other bigwigs who were involved in the scam,” he said.
Reacting to the V&E report on the ESI scam, the TDP legislator said he had not recommended any specific firm for provision of services to the ESI hospitals. “The Tele Health Services had already been operating in Telangana and I only wrote to the IMS directors to implement a similar facility in Andhra Pradesh. This was based on the Central government directions,” Atchannaidu said.
