Srijan Scam Decoded: How the Money Was Stolen and Other Questions

The Rs 700 crore Srijan scam has taken Bihar by storm.

(Photo: Harsh Sahani/The Quint)

The Rs 700 crore Srijan scam has taken Bihar by storm even as the ripples caused by Chief Minister Nitish Kumar dissolving the Grand Alliance are yet to settle. While Lalu Prasad Yadav and his party, the RJD, have emboldened the demand for Kumar’s resignation, the scam seems to have gone on for over a decade and across two governments.

What Is the Srijan Scam?

The scam is centred around Srijan Mahila Vikas Sahyog Samiti, an NGO-based in Bhagalpur, that provided vocational training to women. It has been accused of directly stealing funds from the Bhagalpur administration’s accounts for various welfare schemes. This alleged pilfering happened with the aid and support of government officials, bank employees and Srijan’s own staff, reports The Indian Express.

How the Scam Was Carried Out

The scam was carried out through direct deposit of government funds into the accounts of the NGO, either through fake third-party endorsements or via forged cheques.

Called the “sweep method” by Bhagalpur SSP Manoj Kumar, the fake endorsements method includes transfer of funds from the state to the Bhagalpur administration. The bank would then get the administration to make a fake endorsement on the back of a cheque to deposit it to Srijan.

In the second method, a duplicate cheque series was released for a valid government account that was handed to Srijan. The NGO would then forge the District Magistrate’s signature to transfer the funds into its own account, according toThe Indian Express.

The scam also involved government employees. Mahesh Mandal, an accused in the scam who died in a Bhagalpur hospital on Saturday, was a clerk at the government's welfare department.

Mandal reportedly facilitated the pilfering of funds by providing original bank statements to Manorama Devi, the Founder Secretary of the NGO at the heart of scam.

How Did the Scam Come to Light?

The scam came to light after a government cheque of Rs 270 crore bounced on 4 August. The cheque was meant to be paid to farmers in lieu of their land for a power plant. An internal inquiry was conducted and the District Magistrate discovered that the government account did not have enough funds.

Further investigation revealed that whenever a government cheque was deposited at one of the two banks involved in the scam – Indian Bank’s Patal Babu Road branch and Bank of Baroda’s Ghanta Ghar branch – a bank employee or a clerk would inform Manorama Devi. The NGO would then deposit the same amount into the government account so the cheque does not bounce.

Since Manorama Devi’s death in February, her daughter-in-law Priya Kumar took over. The cheques began bouncing after this transition. Priya and her husband Amit are now on the run, reports The Indian Express.

RJD Intensifies Demands for Nitish's Resignation

On 18 August, the Nitish Kumar-led Bihar government ordered a CBI probe into the Rs 700-crore scam. The probe was reportedly ordered after nine FIRs and 12 arrests in the case.

On Monday, Rabri Devi joined in her husband Lalu Prasad Yadav’s calls for Kumar’s resignation and imprisonment. The RJD chief had said his party would intensify its agitation to demand Kumar’s resignation.

The former chief minister said he strongly suspected that the fear of Srijan scam made Kumar a 'paltu ram' (political turncoat) and form a new government with the Bharatiya Janata Party.

He said government funds were transferred to private accounts between 2005 and 2013 when BJP leader Sushil Kumar Modi was finance minister and deputy chief minister and Nitish Kumar the chief minister.

Lalu’s son, and the Deputy CM of Bihar not long ago, Tejashwi questioned the delay by Kumar in recommending a CBI probe, in view of his "repeated claims of zero tolerance against corruption."

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