AP Skill Development Scam: How Naidu doled out Rs 371 Cr to private entities without any work

Vijayawada: Former Andhra Pradesh chief minister and TDP supremo Nara Chandrababu Naidu played a key role in Rs 371 crore Andhra Pradesh Skill Development Scam.

"Prime accused Nara Chandrababu Babu Naidu is the lead behind the skill development scam. He is the principal decision-maker in releasing funds. Custodial interrogation is necessary," Additional DG CID N Sanjay told media after arresting Naidu'

Naidu is being brought to Vijayawada by road. He will be produced in the ACB court, Vijayawada by today evening. Skill Development Corporation involving approximately Rs. 550

It pertains to setting up clusters for Centers of Excellence (CoEs) in Andhra Pradesh, with a total estimated project value of Rs. 3300 Crores. The alleged fraud has caused Rs 300 crore loss to the state exchequer.

Naidu is the prime accused in the scam. He and his Telugu Desam Party misappropriated huge funds. "He is the former chief Minister of AP and his influence over the witnesses and other accused has come on record. His arrest is compulsory because of his position. It is visible that he is trying to thwart further investigation and possible tampering of evidence," said the CID official.

What are the irregularities?

1. Even before any private entity could spend any amount, the GoAP/APSSDC released an advance of Rs. 371 Crore without any documents.

2. Most of the money advanced by the government was diverted to shell companies through fake invoices, with no actual delivery or sale of the items mentioned in the invoices.

3. A portion of the funds was used to create the CoE clusters, a departure from the official procedure, while the rest was routed through Shell companies.

What’s Naidu’s role?

According to the CID officials, Nara Chandrababu Naidu is considered the principal conspirator behind the scam, orchestrating the transfer of public funds to private entities via shell companies, resulting in a loss to the public exchequer and private gains.

He possesses exclusive knowledge of the transactions leading to the issuance of government orders and memoranda of understanding, making him a central figure in the investigation.

"The ultimate use of the misappropriated funds, including cash holdings with individuals like Vikas Khanvilkar, requires further examination. Key documents related to the case have gone missing. Naidu and other individuals are primary suspects," said CID Addl DG Sanjay.

CID is now focusing on locating the misappropriated funds. They are saying that custodial interrogation of Chandrababu Naidu is necessary to unravel the conspiracy. The material including statements of public officials recorded U/s164 CrPC points to the involvement of Naidu as the principal decision maker to release the money in advance.

Charges carry more than 10 years imprisonment

"The charges in this case carry penalties of more than 10 years of imprisonment, and given the deep-rooted conspiracy, custodial interrogation is deemed necessary to uncover all aspects of the financial fraud," said the CID.

The role of the common player in this case and associated investigation more particularly the complicity of Naidu is required to be further elicited by the CID during their further investigation. For which, custodial investigation is deemed necessary.

"In this case, the other agencies ED & GST have already investigated. Since it is deep rooted economic offence, a thorough and deep investigation is done by duly following all the criminal procedures. All the laws and subject matters are deeply examined and the relevant material will be placed before the competent court," said CID.

Further, the CID teams have also taken into custody Naidu's son Nara Lokesh for his involvement in the skill development scam. "We would also look into his involvement in Fibre Net Corporation and Amaravati Inner Ring Road Project scam," said the CID official.

What is the scam?

The scam is rooted in the formation of the Andhra Pradesh State Skill Development Corporation (APSSDC) in 2014, aimed at training unemployed youth and fostering ties with educational institutes near industries like Kia in the Anantapur district. The project was to be executed by APSSDC in partnership with a consortium comprising Siemens, Industry Software India Ltd., and Design Tech Systems Pvt Ltd. Siemens was tasked with establishing six centers of excellence.

During Chandrababu Naidu's tenure, the Andhra Pradesh state government entered into a Memorandum of Understanding (MoU) with German engineering giant Siemens. It is alleged that a whopping Rs 371 crore was disbursed in five installments within a mere three months, even though Siemens had not invested any funds into the project.

The MoU stipulated that the Andhra Pradesh Government was responsible for contributing 10 percent of the total project cost of Rs 3,356 crore. Notably, no note files were signed by the then-principal secretary, finance, and the then-chief secretary, raising questions about transparency. Reports suggest attempts were made to destroy critical documentary evidence linked to the scandal.

Diverted to shell companies

According to the Enforcement Directorate's investigation, the Andhra Pradesh government violated established norms by releasing Rs 371 crore without a tendering process. Rs 241 crore was allegedly diverted to various shell companies, including Allied Computers, Skillers India Pvt Ltd, Knowledge Podium, Cadence Partners, and ETA Greens, without any tangible returns for skill development.

On March 4, 2023, the Enforcement Directorate arrested key figures including Soumyadri Shekhar Bose, Vikas Vinayak Khanvalkar, Mukul Chandra Agarwal, and Suresh Goyal, in connection with the case. Central concerns revolve around the bypassing of established government procedures, swift fund approvals, and a lack of a clear contractual basis for fund releases.

Over 70 transactions involving these funds reportedly passed through shell companies, exacerbating the complexity of the case. Whistleblowers had previously reported the skill development scam to the Anti-Corruption Bureau (ACB), and similar warnings were issued in 2018. Initial investigations into these claims were inconclusive, and notefiles linked to the project were allegedly destroyed.