Scam: Cashew Processing Co-operatives siphoned off crores of rupees with blessings from Govt Authorities in Maharashtra


Is National Cooperative Development Corporation lending money to cooperatives and allowing them to siphon off crores of rupees.

Jansatyagrah’s investigation points out how bureaucrats helped Konkan-based cooperative to siphon off crores of rupees!

Transparency International’s recent study has already pointed out that India is the most corrupt country in Asia. The study pointed out how Indian citizens are forced to pay bribes while accessing public services. Government’s demonetization and GST implementation have failed to make India corruption-free. The recent series of scams involving business tycoons and bank officials have added fuel to the fire. However, more significant scams are still in the closet. The documents in possession of Jansatyagrah are sufficient enough to pull out one scam that can prove to be one of Maharashtra Government’s biggest scandals.

What’s it all about?

Back in the year 2000, the highest level of cashew nut production was recorded in Maharashtra. Thus, the state government sensed an urgent requirement to set up cashew nut processing units in various parts of the state, mostly in the Konkan region. Special schemes were launched by central and state government to offer soft loans to cashew units. Unfortunately, several small-scale industries have misused these schemes and have probably managed to siphon off crores with the help of government officials.

“Documents obtained using the RTI show how  ‘Sahyadri cashew processing and alcohol manufacturing co-operative Ltd.’ (Located at A.G Amboli, Tal- Sawantwadi, Dist Sindhudurg, Maharashtra state) has failed to repay the loan issued by National Cooperative Development Corporation (NCDC). The buck does not stop at non-payment of loan installment and recovery. The land against which the government issued loan has been mortgaged elsewhere as well,” said activist and senior advocate Virendra Ichalkaranjikar who happens to be the whistleblower in this case.

The total cost of the production unit’s construction was three crore seventy lakh rupees. Out of this amount, the NCDC’s loan amount is two crore twenty-two lakh rupees. The loan’s term is from 31-03-2012 to 2025. The co-operative was expected to repay Rs. 1, 22, 25, 000 (one crore twenty-two lakh and twenty-five thousand rupees) by June 2016. However, until the concerned period, they just managed to repay only eleven lakh rupees.

The co-operative is incurring losses since 2012.  ‘Sahyadri cashew processing and alcohol manufacturing co-operative Ltd.’ has mortgaged 160 Guntha land that it owns to the government as a guarantee against the loan. However, the 7/12 land record for the piece of land indicates that the concerned piece of land is also mortgaged with another bank against a loan. The concerned land is located in a rural part of Konkan region. According to real estate experts from the area, the value of the said land is not more than one crore sixty lakh rupees. This means the government won’t be able to recover its loan money even if it opts for confiscating and selling the entire land owned by the organization.

Another bemusing aspect pointed out by activist Ichalkaranjikar is that the co-operative owns 468 Guntha land, out of this, only 160 Guntha has been accepted as a guarantee against the loan by government officials. The question is, why did the officials take only 160 Guntha as a guarantee when they could have inevitably asked for more Guntha out of the available land?

Possible use of fake documents to acquire the loans from cooperative department and banks

“I communicated with the State Co-operative Department about this issue for the first time in 2016. My request for information was forwarded to the Directorate of Marketing, Maharashtra State (DOM) who in turn issued letters to the concerned district collector(s) and sought information. The astonishing part is that the office of District Collector of Sindhudurg did not have any information, audit reports for the concerned co-operative and its loan repayment status. They asked the Sahyadri cashew processing and alcohol manufacturing co-operative Ltd. to provide the documents and simply forwarded the same to the DOM office Pune.  As mentioned earlier, the same land has been mortgaged against a two crore five lakh rupees loan from Sindhudurg District Central Co-operative Bank. The land documents also show another loan of forty lakh rupees from the same bank. Land record available on District Collector of Sindhudurg’s website show both loans from Sindhudurg District Central Co-operative Bank, but does not suggest anywhere that part of the same land has been mortgaged with the government as a guarantee for the said two crore twenty-two lakh rupees loan from the state government/NCDC.  Overall, the loan amount on the said property is six crore fifteen lakh, while the value of the property is just around two crores,” said senior advocate Ichalkaranjikar while discussing the case details.

Where does the buck stop?

In November 2017, the NCDC (National Cooperative Development Corporation) claimed it has a zero level of NPAs. Activist Virendra Ichalkaranjikar recently wrote to the NCDC Delhi office informing them about the NPAs, but the organization just washed hands of their responsibility by saying the state government should look into the same.

Divisional Deputy Registrar, Co-operative Societies, Konkan Division, Special Auditors, Co-operative Societies (class-1), and Deputy Registrar, District Cooperative Societies, Ratnagiri / Sindhudurg have apparently failed to perform their duties according to the whistleblower.

From keeping track of the cost incurred for setting up the project, to monitoring its functioning, the officials mentioned above are expected to handle all the affairs along with the monitoring committee set up for this purpose. They must collect monthly, quarterly performance reports of the loan beneficiary co-operatives operating in their region and send the same to the Directorate of Marketing, Maharashtra State (DOM).

Bureaucrats acting as mute spectators

“I filed several RTI requests with various departments and found that neither of them has necessary financial records or performance reports for Sahyadri cashew processing and alcohol manufacturing co-operative Ltd. Neither do they have the minutes of meetings conducted by the monitoring committee and bureaucrats to discuss the cooperative’s monthly performance. My first information request was sent to the Maharashtra State Cooperative Ministry in 2016. This was forwarded to the Directorate of Marketing, Maharashtra State who in turn asked the Deputy Registrar, District Cooperative Societies, Ratnagiri / Sindhudurg to provide the necessary documents.  The Deputy Registrar reverted with information that was provided to them by Sahyadri cashew processing and alcohol manufacturing co-operative Ltd. Other than these, the Divisional Deputy Registrar, Co-operative Societies, Konkan Division, Special Auditors, Co-operative Societies (class-1), and Deputy Registrar, District Cooperative Societies, Ratnagiri / Sindhudurg do not have any other records to share. The situation is alarming, losses caused due to bureaucratic negligence is in crores. The state government has not even responded to my letters. I am not sure how they would recover such loans and if they really wish to,” said Ichalkaranjikar.

The bemusing part is that neither the National Cooperative Development Corporation nor the State Co-operative Department is showing any seriousness towards the case. Maharashtra state’s coffers are empty, and the chief minister had recently approached the World Bank for aid. Even in such situation, bureaucrats are not at all serious about recovering state’s money. They would probably wake-up once the activists approach the High Court with a petition.

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