Rs 1,000 cr Scam In EPFO

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What has happened?

Retirement fund body Employees’ Provident Fund Organisation (EPFO) has started an investigation into possible wrongdoing by its staff at a Mumbai suburban office,
Which could involve estimated losses of up to Rs 1,000 crore for the organisation.
The fraud was allegedly committed in Mumbai’s Kandivali office.

Employees’ Provident Fund (EPF) is a retirement benefit scheme maintained by the Employees’ Provident Fund Organization (EPFO).
The employee and the employer contribute to the EPF scheme on monthly basis in equal proportions of 12% of the basic salary and dearness allowance.
Out of the employer’s contribution, 33% is directed towards the Employee Pension Scheme.

The modus operandi is believed to be creating fake accounts and transferring funds or settling claims in defunct firms,
Such as cash-strapped Jet Airways which later went into the National Company Law Tribunal (NCLT) for transfer of ownership.
It was done by using the employments of then pilots and crew members of Jet Airways, including many expats.

The multi-crore fraud was carried out in 2019, but it expanded its reach in the course of the coronavirus pandemic, it said.
According to the EPFO member, Jet Airways employee provident funds were distributed without following the norm.
Due to income tax evasion, this has also cost the exchequer money.

Before Jet Airways was admitted to the National Company Law Tribunal (NCLT) for debt resolution, Machindra Bamne, senior social security assistant of Kandivali PF office,
Was reported to have been suspended over the alleged settlement of illegal PF claims of the airline’s then employees.
In an order dated August 18, regional provident fund commissioner-1 RO, Kandivali East, said that Bamne was found to have “received illegal gratification from some members into his bank account for settlement of PF claims related to employees of Jet Airways”.
Another senior social security assistant, Nilesh Kapadia, was also found allegedly involved in the scam.
He, however, left the organisation a few years ago, before the scam came out.

“We expect EPFO losses due to this particular fraud to mount to up to Rs 1,000 crore, arising due to violation of rules and tax evasions,” Prabhakar Banasure, a member of EPFO’s central board of trustees,
Highlighting that “offenders should be punished for doing injustice to members’ life savings and maligning this apex retirement body.”
Officials mentioned that an internal investigation is underway and the vigilance department is scrutinising past records to determine the actual quantum of losses.
Plus, a final report will soon be submitted to the EPFO central body.

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