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Another Scam? EPFO Staff Allegedly Misused Jet Airways’ Employees’ PF Accounts In Rs 1,000-Crore Fraud


Contents News/Article  Date:  24th August  2022 

Relating to which  Act:     The  Employees Provident Funds & Miscellaneous Provisions Act, 1952

Type:  Employees’ Provident Fund Organisation (EPFO) has initiated a probe into possible malfeasance by its staff at a Mumbai suburban office,

Pertains to  Establishments and Members  and EPFO  and information of general public 

Relevance of this news:   Karma Management Global Consulting Solutions Pvt. Ltd is in the business of  Payroll, Outsourcing, and Regulatory Compliances from its inception in 2004 and since then,  has brought in a lot of efficiencies and technological upgradations with experts on its roll, to ease the hassles of Payroll Processing, Temp Staffing On-boarding Management, Regulatory and Payroll compliances by providing customized solutions to all its elite clients.

Now Karma Global is also fully into labour compliances for nearly 18 years and is helping both establishments and workers for the fulfillment of obligations as per the laws of the land.  It has over 200 staff, both direct and indirect on its rolls and operates on a Pan India basis.  Recently, it has diversified into foreign shores as well, into countries like the US, UK, UAE, Canada, Philippines, and Asia for handling payroll, outsourcing, recruitment, and governance.

Karma Management is full-time in the work of Provident Fund and works closely with all the EPFOs located throughout the country.  The provident fund contributions are such that every month 12 percent of the basic salary + DA of every employee goes to the PF account. Out of which, 8.33 percent goes to his pension account and 3.67 percent goes to EPF every month. After accumulating this money deposited year after year in the pension account, he gets it as a pension after retirement. 

 Now the money of each member that is accumulated in EPFO earns interest and at the time of closure of membership, the member gets back his accumulated PF money with interest plus a monthly pension as per rules.  Karma Management is generating crores of contribution to the PF Treasury, month on month, and in this instance, there is a threat of malfeasance at EPFOs end which is disturbing.

 Subject:  Another Scam? EPFO Staff Allegedly Misused Jet Airways’ Employees’ PF Accounts In Rs 1,000-Crore Fraud

For greater details, appended below is the complete news item



Another Scam? EPFO Staff Allegedly Misused Jet Airways’ Employees’ PF Accounts In Rs 1,000-Crore Fraud

Barely three weeks after the EPFO was hit by a Ukraine-based cybersecurity researcher’s claim that 28 crore EPF  account holders’ data was leaked , a new fraud is coming to light.
Employees’ Provident Fund Organisation (EPFO) has initiated a probe into possible malfeasance by its staff at a Mumbai suburban office, which could involve estimated losses of up to Rs 1,000 crore for the retirement body, people familiar with the matter said.
The modus operandi is said to be creating bogus accounts and transferring funds or settling claims in defunct companies including erstwhile Jet Airways that later went into the National Company Law Tribunal (NCLT) for an ownership change, they said, as per the ET report.
“We expect EPFO losses due to this particular fraud to mount up to Rs 1,000 crore, arising across rule violations and tax evasions,” said Prabhakar Banasura, a member of EPFO’s central board of trustees. “Offenders should be punished for doing injustice to members’ life savings and maligning this apex retirement body,” he reportedly told ET.
An internal inquiry is underway to ascertain the actual quantum of losses as the vigilance department is examining past records, officials said. A final report will soon be submitted to the EPFO central body, they added.
The fraud was allegedly committed in Mumbai’s Kandivali office, using employments of the pilots and crew members of Jet Airways, including many ex-pats, people cited above said.
PF accounts of many pilots or crew members of Jet Airways were allegedly misused to siphon off funds, which allegedly benefited some EPFO officials working at the Kandivali office.
Jet Airways employees’ provident funds, according to the EPFO member, have reportedly been settled without complying with standard regulations. This has also resulted in losses to the exchequer as income tax is believed to have been evaded.
Also, EPFO’s Kandivali office was mired in another fraud case in February when the Central Bureau of Investigation (CBI) filed an FIR against eight EPFO employees who reportedly siphoned off Rs 21.5 crore via 817 migrant workers’ bank accounts
Machindra Bamne, the senior social security assistant of the Kandivali PF office, was reportedly suspended over the alleged settlement of illegal PF claims of then Jet employees before the airline was admitted to NCLT for debt resolution. 
Bamne was found to have “received illegal gratification from some members into his bank account for the settlement of PF claims related to employees of M/s Jet Airways”, regional provident fund commissioner-1 RO, Kandivali East, wrote in an order dated August 18.
“They were hand-in gloves with select manipulators on the Jet side before the airline company went to NCLT,” Banasure alleged. “I have been raising this matter to competent authorities including EPF chairman,” he added. “We have demanded a forensic audit of the whole episode,” Banasure added, as per ET.
Also, Nilesh Kapadia, another senior social security assistant who has also been dragged into the controversy, had already left the organization a few years ago, before the scam came out, people cited above said. Now it remains to be seen what further details come out in this massive EPFO fraud, which again raises the question of how safe is our money in EPF accounts.

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