JCI CMD's role under scanner

Senior officials and employees of Jute Corporation of India (JCI) have levelled charges of impropriety against its Chairman and Managing Director (CMD), R C Tewari, on the issues relating to purchase of raw jute under minimum support price (MSP) mechanism and commercial purchase from markets.

A confidential note prepared by the employees of JCI and titled "Note on the motivated move of the CMD, JCI since his joining the Corporation in April 2005" has been sent to the Ministry of Textiles ( MoT) for necessary action.

The note said, due to the "whimsical and motivated decision of the JCI CMD, the Corporation had to incur a loss of around Rs 17 crore in 2005-06 and around Rs 50 crore in 2006-07. The fledging JCI is already saddled with the problem of meeting overhead costs of around Rs 35 crore." JCI currently has 1800 employees.

The MoT, sources said, is aware of the development and may soon take a decision on Tewari's future and the functioning of the JCI. Sources pointed out, in all probabilities an inquiry might be initiated to find out the truth behind the charges before taking any action against him.

Saugata Roy, an MLA from West Bengal, has written to the MoT against JCI's functioning regarding MSP operations and commercial purchases, raising fingers at Tewari's functioning.

When contacted by Business Standard, Tewari, who was aware of the confidential note sent in-house against his operations said: "All I can say is that I am in favour of jute growers." Sources close to Tewari said, the CMD was gearing up to provide arguments to the MoT on his defence if he was called for any explanation.

Speaking to Business Standard, Sudripto Roy, Joint Secretary, MoT said: "We have received the complaint. The matter is being looked into. If the allegations are found valid and with base then necessary and appropriate action will be taken against the CMD JCI."

The charges levelled against Tewari are divided into two crop seasons 2005-06 and 2006-07. In 2005-06, the note said: a) CMD JCI had 'illegally' entered into contracts with an intention to make raw jute rates in the market volatile. None of the contracts, however, were executed by the JCI". In support of the argument, instances have been produced in the note.

b) CMD JCI has been allegedly charged with manipulating raw jute prices in Future Trading in NCME (Ahmedabad), which caused "an all round hoarding of jute by middlemen in the trade". As an effect, supply of jute became poor in spite of sufficient stocks held in the hands of sellers during the crop year."

c) "The JCI had suppressed the factual position during the year on procurement. While the Corporation had purchased 2.65 lakh tonnes of raw jute during the crop year, it had stated a position of 2 lakh tonnes. The concealed portion of 65,000 tonnes was sold to private traders at a price of Rs 1330 per quintal against the going rate Rs 1530 per quintal thereby making a loss for the Corporation. The question, therefore, was why did JCI CMD allow the material to be sold at a lower price incurring losses for the Corporation.?".

For 2006-07 the charges against Tewari are a) "171 JCI centres spreading over the seven jute growing states of West Bengal, Bihar, Orissa, Assam, Tripura, Meghalaya and Andhra Pradesh were asked to procure jute at 'throwaway' prices offered by sellers or even by paying Rs 100 more than the prevailing market rates. Written instructions were also issued to some Centres that even by making financial losses, the quantum of purchase had to be increased."

b) "CMD JCI had gone to the extent of allegedly suppressing the fact of purchase made under Commercial and Price Support operations to the MoT and the Jute Commissioner's Office (JCO) projecting that around 4 lakh quintals had been procured under MSP operation during the year, while the real figure was on the contrary and much lower in the region of 20,057 quintals."

c) CMD JCI has been accused of "entering into alleged improper contracts with private mill owners where the latter has been obliged at the cost of the Corporation's losses."

Instances have been provided in the note where two private mills and their owners have been categorically named where sale contracts of Rs 9 crore was entered into and subsequently violated.

Sources in the JCI, however, pointed out that to recover the losses, legal notices had recently been sent to the two private mill owners asking them to fulfil the contracts, failing which penal action might be initiated against them. Records reveal that the JCI had lost about Rs 15 crore on account of the two contracts with private mill-owners.