CAG pulls up state film development corporation

The latest report by the Comptroller and Auditor General of India (CAG) has criticized the Maharashtra Film, Stage and Cultural Development Corporation Ltd (MSFSCDC) for financial irregularities in the production of the teleserial Superstar Dhamaka.

The company had entered into an agreement with Sony Entertainment Television (SET) to produce 13 star-studded episodes of the serial which were to be telecast by SET between June 2002 and February 2003. In return for the sales rights, MSFCFDC would have received Rs 12.78 crore from SET from June 2002.

However, the CAG report points out that a handwritten amendment was added to the original agreement stipulating that the money due from SET would be paid into an account jointly operated by NSFCDC's chief accounts officer and financial advisor and a private company called Montage. From this account, the CAG report points out, proprietor of Monatge, Shahab Ahmed, withdrew the Rs 3 crore deposited by SET.

The report also points out that the proprietor of Ahmed had withdrawn another Rs 1.5 crore from the same account that had been paid in by Garnet Paper Mills Limited (GPML). MSFCDC had entered into an agreement with GPML to finance 12 episodes of the Superstar Dhamaka to the extent of Rs 9 crore.

However, as MSFSDC produced only one episode of the programme, and it is stuck with a liability of paying Rs 4.50 crore to SET and GPML besides, service charges of RS 17.50 lakh to GPML.

The report also points out that MSFSDC had entered into an agreement with Montage to produce a cultural prgramme entitled Hum Ek Hain, where contrary to the agreement, MSFSDC paid Rs 1.80 crore for the production of the programme.

The CAG report also notes that the managing director of MSFSDC, authorised the Bank of Maharahstra to grant loans to Montage against the Rs 13.50 crore fixed deposits held by the company. Against his the firm got a loan of Rs 6.72 crore of which it only repaid RS 4.34 crore. The bank then encashed FDs worth RS 2.38 crore to make up the shortfall.

In the matter of telecast of HEH programme too, instead of Montage giving a guarantee of Rs 4 crore towards minimum guarantee of Rs 80 lakh per telecast, it was MSFSDC that gave the guarantee of Rs 4 crore to Prasar Bharati.

Subsequently, when the firm failed to make the payment, the Prasar Bharati invoked the bank guarantee. Of this amount too, Montage paid back only Rs 15 lakh. The rest remains unpaid, the CAG report noted.