New Delhi: Former Union finance secretary Arvind Mayaram, whose residences were raided by the Central Bureau of Investigation (CBI) Thursday, is accused of illegally granting an extension to a UK-based company for supplying exclusive colour shift security thread for Indian banknotes. In its First Information Report (FIR) lodged on 10 January 2023, the CBI accuses Mayaram, who’s currently the principal economic advisor to Rajasthan Chief Minister Ashok Gehlot, of illegally granting a three-year extension for security thread to De La Rue International in 2012 for kickbacks.
A security thread is a feature that many banknotes have as protection against counterfeiting. It consists of a thin ribbon that is threaded through the note’s paper.
The FIR, which ThePrint has accessed, accuses Mayaram, a 1978-batch retired IAS officer, of cheating, criminal conspiracy, and corruption, for allegedly having granted the extension despite the fact that the company’s contract had expired.
Before he was appointed the finance secretary in 2014, Mayaram was the economic affairs secretary, a charge he held since 2012. He retired in October 2015.
Although the FIR was registered only three days ago, the CBI had initiated a preliminary inquiry into the case in February 2017 on the basis of a complaint by Raj Kumar, joint secretary and chief vigilance officer, the Department of Economic Affairs, which is under the Ministry of Finance.
Apart from Mayaram, the FIR also accuses some unidentified officials of the finance ministry, the Reserve Bank of India (RBI), and De La Rue, of being involved in the case.
“Enquiry has prima facie revealed that Arvind Mayaram had provided undue favours to De La Rue by the way of granting illegal extension to its contract when he was finance secretary. This resulted in undue wrongful gain to the company and corresponding wrongful loss to the government exchequer,” a CBI officer told ThePrint.
The officer added that the extension was given without clearance from either the Ministries of Home Affairs or Finance, the FIR said.
This isn’t the only alleged irregularity under the scanner. Sources in the CBI said that De La Rue also misled the government about its credentials to get the contract in the early 2000s — something that Mayaram has been accused of having “overlooked”.
Additionally, the Department of Personnel and Training (DoPT) had sent a show cause notice asking Mayaram to explain how these extensions were given, official sources said.
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‘Company lied about its patent to bag contract’
According to sources in the agency, the 2017 inquiry revealed that Mayaram and others favoured the British company without checking their credentials.
The sources told ThePrint that in 2002, De La Rue made false claims of holding a patent of an exclusive “India-specific green and blue colour shift clear text MRT machine-readable security thread” for use in Indian banknote paper.
The company also claimed that it held exclusive manufacturing rights for the security thread, following which an “Exclusivity Agreement was signed by RBI with De Le Rue on 4 September 2004”, they said.
However, during its 2017 inquiry, the CBI found that at the time of the presentation in 2002 and their selection in 2004, the company didn’t have any patent for their colour shift thread.
Despite this, in 2004, the government entered into an agreement with De La Rue International for the supply of the thread for banknotes for a five-year period, the FIR says.
The contract agreement was subsequently extended four times till 31 December 2015.
“Then Finance Minister on 17 July 2004 authorised the RBI for entering into an Exclusivity Agreement with the suppliers of exclusive security features on behalf of the government of India,” the FIR says. “Therefore, a sub-committee headed by P.K. Biswas, executive director, RBI, was constituted to go through all aspects of exclusivity of three security features formed for Indian banknote papers and also to go into the details of prices.”
Biswas signed the contract without verifying De La Rue’s patent claims, a CBI source told ThePrint. “Moreover, our enquiry has also revealed that the contract agreement did not have any termination clause,” the source added.
RBI and Security Printing and Minting Corporation of India Limited (SPMCIL) submitted reports about De La Rue’s lack of patents to the Mayaram on 17 April 2006 and 20 September 2007, respectively. SPMCIL is the government company that’s responsible for the printing and minting activities of the Indian government.
Mayaram, however, ignored these reports and didn’t apprise the then finance minister about them, the CBI source said.
Illegal ‘extension’
According to the CBI, the preliminary inquiry revealed that De La Rue’s contract was extended from time to time until 31 December 2012 despite the fact that it didn’t hold a patent.
“On 10 May 2013, the matter was brought to the notice of Arvind Mayaram, as Secretary, Economic Affairs that the contract agreement with De La Rue had expired on 31 December 2012, therefore extension cannot be granted legally,” the FIR said.
Even this was ignored, a CBI source said.
On 23 June 2013, Mayaram approved another extension for three years, the FIR says.
“He also overruled the fact that (an) extension cannot be granted without obtaining mandatory security clearance from MHA,” the source said.
“Mayaram also did not take the approval of the Finance Minister for instance (sic) whereas the previous three extensions — from 4 September 2009 to 30 June 2011, from 1 July 2011 to 31 December 2011 and from 1 January 2012 to 31 December 2012 — were approved by the finance minister,” the FIR said.
The FIR also claimed that Anil Raghbeer, a signatory of the contract Agreement from De La Rue, received Rs 8.2 crore from offshore entities, apart from the remuneration paid by De La Rue in 2011. Raghubeer is believed to be an employee of De La Rue.
“We are investigating the case further and raids are being conducted across several locations in connection with the case,” the CBI source quoted above.
(Edited by Uttara Ramaswamy)
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