EPFO Launches Probe Into Rs 1,000 Crore 'Fraud' Case In Mumbai, Staff Under Lens

The alleged fraud involved opening bogus accounts, transferring money, or resolving disputes with bankrupt businesses such as former Jet Airways, which afterwards moved to NCLT for an ownership change

The alleged scam was carried out at Mumbai's Kandivali office using the employment of former Jet Airways pilots and crew, including several expats, the report noted.

Employees’ Provident Fund Organisation (EPFO) has started a probe into possible fraud by its staff at a Mumbai suburban office that may have resulted in losses of up to Rs 1,000 crore for the retirement fund body, The Economic Times has reported.

According to the ET report, the alleged fraud involved opening bogus accounts, transferring money, or resolving disputes with bankrupt businesses such as former Jet Airways, which afterwards moved to National Company Law Tribunal (NCLT) for an ownership change, the report cites sources as saying.

Prabhakar Banasure, a member of EPFO’s central board of trustees, told ET, “We expect EPFO losses due to this particular fraud to mount up to Rs 1,000 crore, arising across rule violations and tax evasions,” while adding, “Offenders should be punished for doing injustice to members’ life savings and maligning this apex retirement body.”

As the vigilance department reviews documents, an internal investigation is being conducted to determine the precise amount of damages, according to officials. The EPFO central body will shortly get a final report, they added.

The alleged scam was carried out at Mumbai's Kandivali office using the employment of former Jet Airways pilots and crew, including several expats, ET report mentioned.

Before Jet was admitted to the NCLT for debt resolution, Machindra Bamne, a senior social security assistant at the Kandivali PF office, is said to have settled allegedly unlawful claims made by then-Jet employees, the report said.

Regional provident fund commissioner-1 RO, Kandivali East, wrote in an order dated August 18 that Bamne had "received illegal gratification from some members into his bank account for settlement of PF claims related to employees of M/s Jet Airways".

PF accounts of many pilots or crew members of Jet Airways were allegedly manipulated to siphon off funds, which reportedly benefited some EPFO officials working at the Kandivali office. "They were hand in gloves with select manipulators on the Jet side before the airline company went to NCLT," ET quoted Banasure as saying. "I have been raising this matter to competent authorities including EPF chairman."

The multi-crore fraud was carried out in 2019, but it expanded its reach in the course of the coronavirus pandemic, it said.