2 January 2019

Dear Shri Arun Singh Sir,

Member, Enquiry Committee
(Constituted to enquire matters of
corruption in Medha dairy, JMF)
Office of the Lokayukta Jharkhand
Subject: Additional Information sought by you regarding matters of corruption in
Medha dairy, JMF as per our meeting on 21.12.2018 at the office of Hon’ble Lokayukta
Jharkhand
As per our discussion on 21.12.2018 at the office of Hon’ble Lokayukta Jharkhand,
and as desired by you, I herewith give pointwise additional information regarding
corruption in Jharkhand Milk Federation (JMF) based on the documentary evidences
already submitted to you in the said meeting:

1) Three pages having total 96 questions on which basis the critical information
from JMF can be sought to investigate the suspected corruption in JMF have
been submitted to you and also being attached with this letter (Attached-1).

2) Aasma Dairy Scam: Shri Sangram Choudhary, Chairman JMF with the help of
Former MD Shri BS Khanna jointly made a decision to supply surplus milk of
Medha dairy to Aasma dairy in Hajipur, Bihar. An agreement was signed
between Medha dairy and Aasma dairy for conversion of milk into milk powder
and ghee. It was decided that Aasma dairy will convert the milk received from
Medha dairy into powder and ghee and send the converted commodities to
Medha dairy. For this, Medha dairy pays conversion charges to Aasma dairy.

After some months it happened that Medha dairy was sending regularly around
50000 litres of milk per week worth around rupees Twenty Lakh per week to
Aasma dairy but Aasma dairy was not sending back anything in return. After
few more months, the amount piled upto around FIVE CRORE RUPEES and
then it came to notice that the owner of Aasma dairy has fled and has turned a
defaulter. The matter is known to the top management as this information is
also captured in quarterly audits as well as weekly reports. In this act of felony,
the Chairman and ex-MD of JMF had intentionally extended working capital
advantage of around FIVE CRORE RUPEES to Aasma dairy in mutually private
beneficial terms. Public money was used for private gains in this case.

This can be verified through comparing the statement of date wise milk
(quantity, fat, SNF) sent for conversion by Medha dairy to Aasma dairy and date
wise milk powder, ghee or money received from Aasma dairy to Medha dairy.
The matter was mischievously settled after payment of some portion of the total
amount and adjusting the balance under several false heads. Entire burden of

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 loss due to this scam may have been passed to the farmers and to state’s
treasury.

The matter becomes very clear considering the fact that the ex-MD of JMF had
around 40 years of experience in dairy sector and the Chairman of JMF has
about 35 years of experience in dairy sector. It is highly unlikely that these two
powerful people who are so well connected in the entire dairy industry in India
were unaware about the defaulting character of Aasma dairy.

3) Sales outstanding scam: Almost same procedure as adopted for Aasma dairy
scam, was also adopted to execute a scam in the recording of sales
outstanding. JMF has willingly given milk to several distributors/agents/vendors
on credit basis without any security or payment. The supply of milk on credit
basis has been done under full consciousness and verbal approvals of ex-MD
JMF Sh. BS Khanna. Several of these agents have either fled or have turned
defaulters. Some instances are now sub-judice in court and there may be
instances where court case has even not been filed. This is an example of
using public money to extend favours to private individuals for personal mutual
gains. Almost around rupees two crores are sales outstanding in the market.

4) Diesel scam: As the Hub Incharge in Koderma dairy, I found that there was a
huge financial scam of diesel purchase and consumption at Koderma which has
happened before I joined. The executer of this scam was (1) Shri Prashant Bera
Dy. Manager, JMF (presently posted at Latehar dairy), (2) Shri Manoj Solanki
Former Head (Plant & Project) JMF (presently posted at NDDB, Mumbai) and
(3) Shri BS Khanna Former MD, JMF. These three people collectively made
financial fraud of around Rs.5500000 (Fifty five Lakhs rupees) in diesel
purchase (Around 81500 litre of diesel) in Koderma hub from 2014-2017. These
three suspects may have individually as well as jointly enjoyed the public
money for personal gains. Sh. Prashant Bera intentionally did not maintain any
proper record of diesel purchase & consumption during his tenure (2014-17).

There is a standard operating procedure in almost all dairies in India to maintain

diesel purchase and its consumption in valid log sheet register duly signed by
working operator and shift incharge on daily basis without fail. Even in JMF,
other dairies are doing it and I started the same system strictly for recording the
purchase and consumption at Koderma after I joined in February 2018. But this
record was not maintained by Sh. Bera. He submitted diesel bills without valid
logsheet to JMF Ranchi for payment. It is matter of surprise that Manoj Solanki
also blindly recommended the bills for payment without any supporting log
sheets. It is a matter of great surprise that BS Khanna who had 40 years of
experience in dairy sector also approved the bills for payment.

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 It is believed that a detailed investigation of theoretical (ideal) consumption and
actual consumption of diesel will bring out the truth that so many litres of diesel
may not have been received by Medha dairy or may not have been supplied by
the vendor but total payment was made to the vendor with an intention to
receive kickbacks.

I have submitted you the sample of valid log sheet during our meeting. And
also submitted the copies of “Farji” (forged) log sheet prepared by Sh. Prashant
Bera after I raised this issue. When I had made complaint to present MD Sh.
AC Sinha, he appointed Sh. Narendra Sharma Ex General Manager JMF to
investigate the matter. He investigated the matter on 11/08/2018 but did not
disclose the report of the same to me. Even after my frequent requests to MD,
no response has been made. I hereby request you to kindly go through the
enquiry report of Sh. Narendra Sharma regarding diesel scam. This proves that
there is huge financial fraud made by Sh. Prashant Bera, Manoj Solanki and BS
Khanna. I request you to investigate the same matter at Ranchi (Ormanjhi and
Hotwar dairies), Deoghar and Latehar dairies also.

5) Citric Acid scam: Almost same procedure as adopted for Diesel scam, was
also adopted to execute a scam in the purchase and recording of citric acid. To
make paneer from milk there is a need of citric acid which is an expensive salt.
Unnecessary indent and purchase of citric acid was done and also payment
was made to the parties. The plant staff showed heavy consumption of citric
acid which may be investigated through the date wise purchase of citric acid,
date wise consumption of citric acid, date wise production of paneer and date
wise sale of paneer.

It is believed that a detailed investigation of theoretical (ideal) consumption and

actual consumption of citric acid will bring out the truth that so much citric acid
may not have been received by Medha dairy or may not have been supplied by
the vendor but total payment was made to the vendor with an intention to
receive kickbacks.

6) Boiler and Cream separator scam: Shri Sangram Choudhary, Chairman JMF
with the help of Former MD BS Khanna and Manoj Solanki unnecessary
purchased (1) Three Husk briquette boilers worth Rs. 24,42000 (Twenty four
lakh forty two thousand rupees) and (2) GEA cream seperators from German
company worth Rs.47,81929 (Forty Seven lakhs eighty one thousand rupees
approx). The three husk briquette boilers were purchased in November-
December 2015. Two of them are still lying idle at Koderma and Latehar and
one of them has been recently installed in Deoghar after I raised the issue.
Generally, now a days this technology of husk briquette boilers is not popular as

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 it causes disposable waster as well as air pollution. If there was necessity, then
these should have been installed in last three years. If there was necessity,
then out dated technology should not have been purchased. It is clear that
these items were purchased without necessity and only with an intention to
extract pecuniary advantage out of this purchase. Public money was put for
unnecessary expenditure for personal gains.

Similarly, there was also no need to purchase the cream separators but to take
huge commission from supplying companies the above mentioned machineries
are purchased. JMF purchased cream separators from GEA company and
selected the same without any public tender. The capacity of GEA cream
separator purchased does not match with the capacity of dairy plant. Moreover,
since cream separators were purchased of high capacity, but there was no
arrangement made to handle the separated cream. For example, in Koderma
there is no facility to make Ghee and there is no supply of Full Cream Milk (with
6% fat and 9% SNF). Since there is no Ghee making facility and no disposal in
Full Cream Milk, no body thought that what would be done after separating so
much cream through high capacity GEA separators. GEA company also do not
have any local after-sales service support in Bihar/Jharkhand.

It is clear that JMF gave a purchase order worth above FORTY SEVEN LAKH
RUPEES to GEA only with a determined intention to extend favours to GEA
company. The kickbacks from this purchase may have been shared between
Sangram Choudhary, BS Khanna and Manoj Solanki. There may also be
unnecessary purchase of other equipments and items such as skid mount
chiller which you will find after thorough investigation.

7) Milk Cans Scam: There was no record available at JMF regarding purchase of
SS/Aluminum cans (40 lt, 20 lt, 10 lt and 5 lt) and distribution to Koderma,
Deoghar, Latehar, Ranchi and Lohardaga dairy hub. In Koderma we had
received total 220 cans of 40 lt. based on gate entry register. When verified in
my hub, it is found that there are 337 cans are running in Koderma hub area.
This proved that there is misappropriation in purchase and distribution of milk
cans in JMF. The documentary evidences are already submitted to you. Please
note the office circular of JMF dated 12.08.2014 (submitted to you) where it is
clearly mentioned that before distribution of milk cans, it is mandatory to take
Rs. 1000 per can as security deposit from the farmer / dudhmitra and deposit
the same in bank account of JMF. But several milk procurement staff have
taken the deposit from dudhmitra of respective MPP (milk pooling point) but not
deposited in the bank account of JMF from 2014 till today. This money from the
poor farmers have been enjoyed by the staff of JMF under the silent approval of
their bosses. I request you to verify the date wise number of cans purchased,

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 date wise no. of cans distributed / issued and date wise amount deposited
against the security deposit. I believe the collective corruption made by milk
procurement and purchase department will come to surface after a through
enquiry.

8) Milk Crates Scam: More than 15000 milk crates are stolen (sold the milk with
crate without challan and gate pass in open market) from Hotwar dairy Ranchi. I
have submitted the proof of 10000 crates missing from Hotwar dairy and 4000
crates with milk are stolen from Koderma dairy. I have submitted all the details
to you. There is huge corruption of lakhs of rupees in milk stealing by crate and
through milk tankers. I have given the press clippings of the same.

This can be verified through comparing the date wise total crates purchased
and date wise total crates in stock (in plant, in store and issued to parties/
agents). Shortage of crates give a clear indication that the crates were stolen/
sold. The matter is known to the top management as this information is also
captured in annual audits, half yearly audits as well as quarterly audits.

Generally, it almost all dairies in India have a very strict system to monitor crate
issue and receipt. It is a matter of great surprise that why so much experienced
people in top management did not pay the required attention in Medha dairy.
There remains no doubt that this was done intentionally so that milk can be sold
to vendors without valid challan and the money can be received in private
pockets. Generally, in dairy sector it is a system that milk crates being capital
items, must be recorded in assets book and even if it is broken, they have to be
accounted under a separate head and kept at a separate place in store.

9) Tanker milk transportation scam: The milk is transported from villages to

Medha dairy as well from Medha dairy to other dairies such as Aasma dairy,
DailyPlus dairy etc in milk tankers. During this route, some quantity of milk is
stolen by a syndicate of people and sold in open market. Water of equal
quantity is mixed again in tanker to maintain the total volume.

On arrival of tanker in dairy plant, the quantity is again checked and found to be
the same or with slight difference. The staff who checks the quality (fat & SNF)
is bribed by the syndicate to give the receipt of same quality (fat & SNF) as it is
mentioned in the challan. In this manner, the money of farmers milk is enjoyed
by private individuals causing loss to the government and the farmers.

If any difference is caught, then it is loaded on transporter for sometime and

later gradually waived off. Again, this causes loss to government and farmers.
All of this happens under silent approval and full consciousness of Shri Jaivev

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 Biswas Head of P&I department who seems to be a part of this syndicate. This
scam can be verified through comparing the month wise value of milk payment
made to farmers and month wise value of milk received in the dairy plant.

10) Recruitment of employees and consultants: There was misappropriation and

corruption in recruitments of employees in JMF. I have given the email of Sh.
Manish Mishra Head (Hr & Administration) addressed to Chairman of NDDB in
Sh Manish Mishra clearly given his statement regarding misappropriation. You
also heard the audio clip of Sh.Manish Mishra in which he explained how
corruption and misappropriation was made by Jaidev Biswas Head (HR),
Narendra Sharma Former GM, JMF and BS Khanna.

Some employees such as Shri Vikrant Kumar (P&I department) and Shri Uma
Shanker (Plant & production department) have been recruited clearly violating
the rules. Shri Uma Shanker never applied to JMF for any vacancy but he has
been recruited since he was recommended by Shri Sangram Chaudhary,
Chairman JMF. Similarly, Shri Vikrant Kumar could not pass in the interview
process, but was recruited because he was recommended by Shri Milan Mishra
who was a close aide of Shri BS Khanna, ex-MD JMF. The ex-MD JMF also
appointed several consultants at his pleasure on fat payment terms. It is
believed that this was done only to extract private benefits from them such as
Shri Milton Srivastava, m/s Bhadra Associates, Cravants, Lexicon etc.

It is my humble request to conduct a detailed investigation over these and other

issues of corruption in Medha dairy, JMF and bring the culprits to justice.

Regards,
Abhay J Muley

Vivek Society, Nath Plots, Khamgaon

District: Buldhana, Maharashtra - 444303
Mobile: 9423692006 / 7057575756

Attachments:
1. Questions and documents to seek from JMF to investigate the corruption
and scam in Medha dairy JMF

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