Ghost employees and vanishing finances
26 January 2015
India, Jan. 26 — Drawing salaries in the name of workers who have never worked, and issuing subsidies to folks who died many years ago, are just a few of the many ways in which public servants steal from the state exchequer. Indian bureaucrats, some may argue, are second to none in devising newer methods of corruption. Irrespective of the legal definition of corruption practised by public servants, the de facto meaning is this: Get as much money and as many favours as possible for doing just regular work. However, be careful not to get arrested or lose your job (even though the latter is rare).As it is, the system of advice and consultation in corruption cases moves even slower than the snail. At the top, Government officials find excuses to sleep over the defaults. The more senior the officer, the more obstacles he can and does create to prevent any action being taken against him. Usually, the State Government sends a recommendation and then the politicians come to the rescue of the corrupt official. Then, the Union Government consults with the Union Public Service Commission, where half-a-dozen members go through the file. Sometimes, the file also travels to the Central Vigilance Commission, the Law Ministry, and even to the Prime Minister’s Office.
The corrupt have found innovative ways to loot and defraud the Government, apart from extracting money from the public for doing work that should have been done in the normal course of things. The latest trick these days is to draw salary against non-existtent or ghost employees. It is reportedly happening right under the nose of the Government in Delhi. In 2009, the Delhi Government had informed the High Court that the Municipal Corporation of Delhi had suffered a loss of Rs500 crore in five years because it was paying salaries to hundreds of ghost employees.
A media report in November 2009 exposed this malady. The Municipal Corporation of Delhi had 22,853 gardeners and sweepers, all ghost employees, on its payrolls. And their salaries were being drawn on a regular basis, even though they were not actually working. But few people learn from past mistakes. In December 2013, media reports said that Delhi’s Chief Vigilance Officer had complained to the Anti-Corruption Branch that 85 employees had been given permanent jobs at the MCD, even though they had not worked for a day at the corporation. At that time, a new scheme had been introduced, which said that any safai karamchari who had worked for even a day at the MCD between 1994 and 2010, would be regularised.
Reportedly, punitive action in this case has only been taken against an Assistant Sanitary Inspector who was in charge of marking attendance. Few others have been subjected to departmental inquiries and given minor penalties. But all of them have been shielded from criminal liability. In fact, the liability should have been fixed at a much higher level for poor supervision.
The Delhi Development Authority first reported in August 2014 that it had 2,200 ghost employees. Later, it said that there were 1,600 unaccounted-for employees. No Government has taken any step to dismiss those involved in this scam, and no action has been taken against the head of any organisation or department for the colossal losses that the State has endured.
Haryana takes the cake in the matter. According to a media report about Mewat district, Hatti, Ibrahim and Hurmat of Dhana village, are all dead. The first two passed away in 2001 and the third in 2006. But, according to the Haryana Horticulture Department, all three men applied for, and received, subsidy under the National Mission on Micro Irrigation, in 2011.
“When we went to the district horticulture department office to claim subsidy in 2013, we were told that the subsidy in my father’s name had been released in 2011”, Ibrahim’s son Javed, also a farmer in Dhana, said. “My father Ibrahim died in 2001 at the age of 75. The department claimed that he received subsidy of Rs1.48 lakh”, he added.
Official records also show that Hatti ‘claimed’ the subsidy in 2011. But his nephew, Ali Mohammad, has a death certificate that shows Hatti was dead by then. This problem exists in all States and at the Central level as well. Notably, we don’t hear of such complaints in the private sector.
For the public sector, this is not a problem that cannot be solved. A fraud is not possible without the connivance of employees at all levels. First, the details of all the employees – their names, addresses and bank account numbers – should be made public and also updated every month. Currently, even this primary base is riddled with errors and often outdated.
Second, payrolls should be prepared only after the approval of the head of the department. There should be certification that the employee is alive and working. Amendments to payrolls should be done only after the approval of the head of the department. Employees who have retired or whose service has been terminated, should be removed from the list promptly, and the accounts department must also be intimated of the development.
The general principle of good financial control is that no single person should be able to add a new employee to the payroll, set wages, enter time etc. A biometric system should be introduced in all departments. There should be a monthly reconciliation between the payroll ledger and the employee list with the human resource department. Regular auditing should be done by someone outside the payroll department, and even the auditor should be changed periodically.
The payroll accounting function should be independent of the general ledger function, as well as auditing. Finally, accounts should be audited on a regular basis. At least annually, the master HR payroll records should be reconciled with the computer generated payroll record, to conduct the monthly audit, as well as appropriate identification.
Clear responsibility should be fixed on departmental heads for any lapse. Departmental heads should also verify the work done personally, instead of just depending on reports. It should be made clear that if any wrong payment is made, it will have to be made good by all the people, in the chain. The above action should be apart from the registration of police cases, of frauds and cheating. It will result in people being careful and doing their jobs well.
This will not be a comprehensive solution to all problems for all time to come, as crooks are capable of finding newer methods of stealing from the Government. The Government will have to change its strategies and laws with the change of times. It is vital to strike hard at this problem besieging the country.