Citizens' Issues
HPCL’s Delhi office lists Rs19 crore expenses on gifts, flowers, jewellery, a lot of it on parliamentarians

Much of this apparently unaccounted expenditure has been incurred on visits of parliamentary committee members, who are in fact forbidden by protocol from receiving gifts

At a time when Hindustan Petroleum is said to have a lot of money blocked in dues from airlines and other big businesses, it looks like the oil distributor is spending a lot on some inexplicable items.

Ledger entries for Hindustan Petroleum's Delhi coordination office account reveal that the Navratna company has spent substantial amounts on hotel bills, gifts, flowers and jewellery. Since 2006, about Rs19 crore has been spent on such items. In 2010-11 alone, the company's Delhi office spent some Rs1.28 crore on this account.

Repeated phone calls and an email message to the HPCL spokesperson did not yield any response.

A major part of the expenses are attributed to visits by member of parliamentary committees. According to parliament rules, such committee members are entitled to stay at government guest houses and they are paid travel and other allowances, so it is unclear why HPCL, a public sector unit, is bearing the expenses of these members.

Apart from travel and accommodation expenses, the HPCL office also lists expenses on gifts, shawls, mementoes and lunch for these committee members.

In 2010-11, expenses on such gifts totalled Rs51,510 and some shawls were bought at a cost of Rs7,396, as per entries on 17 and 27 January 2011.

There are also other entries like Rs93,000 worth of mementoes for parliamentary members on 12 January 2011 and Rs12,040 for "parliamentary committee expenses" on 11 Februray 2011. In fact, protocol forbids giving or receiving of such gifts by parliamentarians.

Another large amount has been paid for taxi bills and the money is debited against the names of various individuals. More than Rs1 lakh was paid towards the stay of some executive at Mumbai's Trident Hotel in 2009.

Ravi Srivastava, former sales manager, HPCL, who lost his job after blowing the whistle on the adulterant marker case (read, "Hindustan Petroleum whistleblowers not reinstated even a year after HC order), has alleged that it is likely the expenses shown have been appropriated by some HPCL staff.

"Some of the names against which expenses are mentioned are employees of HPCL. Why do you want to pay money to your own employees outside their salary," Mr Srivastava asked.

He said this was an indication that money was being swindled after showing some bogus expenditure entries on paper. "And why should a PSU gift shawls and mementoes to members of expert committees, when they are subsidised by the government itself," he said.

Mr Srivastava believed that such swindling was possible at the Delhi office as there are no checks on expenses there. "In HPCL's other offices, accounts have to be audited, and there is strict surveillance. So the people who want to make some additional money do it through the Delhi office where such expenditure is not checked."

User

COMMENTS

ANIL

6 years ago

This is happening everywhere ... these expert commitee members stay at 5* delux hotels, team of sr managers are camping in the lobby of the hotel from Oil PSU armed with - with cars/money/gifts etc ... while these parlimentarians are having a BALL ... check out any time ...

REPLY

ravi srivastava

In Reply to ANIL 6 years ago

do gather some courage like me and speak it out tes you may get sacked in the process like me

a v moorthi

6 years ago

this is nothing new. many PSB's hold their monthly board meetings alternatively outside their Head Quarters in locales like beach resorts, hill resorts etc, when for a one day meet the participants enjoy fully paid 5 star hospitality for no less than 3 days. what is the need for all these when video conferencing facilities are available. Similarly OL meets of PSU's are a big waste.

REPLY

A Banerjee

In Reply to a v moorthi 6 years ago

Yes, that is true. When I was Director (Fin) in an economis ministry in the late 80s, the situation was similarly filthy. The private entertainment expenses of the top bureaucratys of the ministry, including the celebration of wedding of their children and furnishing of their houses apart, even regular private travels in their family had to be taken care of the PSUs. Not only that, every PSU must keep crores of rupees apart for keeping union leaders in good humour and real royal style in 5-star hotels at the time of their private travels and union-related pleasure trips. The same system goes on. In fact, one IAS officer candidly admitted with pride that the PSUs had been conceived essentially for the upkeep of that class of bureaucrats and for providing every conceivable amenity to them and their families. The story is too lathe indeed.

ravi srivastava

In Reply to a v moorthi 6 years ago

Nothing new , but every body in oil sector is a party to this loot and no one ever exposed it

The joy of losing: Is there an inner satisfaction that some people get by throwing good money away?

To understand why people know that they will lose their money and still persist, a number of factors come into play—economical, psychological and sociological

There has to be a reason behind why a larger number of otherwise intelligent and well-informed people are increasingly investing in many of these get-rich-quick schemes like Speak Asia and similar Ponzi/MLM (multi-level marketing) scams. In various conversations that we have had with people impacted by these scandals, after the whole scam had blown over, the attitude and explanation has always been the same—we knew it was too good to be true, we suspected that it would not really work out, but we still went ahead and invested in what we knew was going to be a losing proposition. Now they want the government to bail them out and put a stop to this.
 
There was no single category that did not fall for this sort of an otherwise openly visible disaster. Before the scam blew up, these very same people would extol the virtues of whatever scheme they were pushing, often organising events, meetings and such stuff. Once there was absolutely no hope, then and only then would they form groups to approach the authorities, and try to get their money back.
 
But if the government was able to somehow block all fiscal scams, people would still go to whichever rat-hole required and still invest in these rackets. And continue to get taken for a ride.

Las Vegas and Macau, for example, stand as vivid testimony to this simple fact. Behind all the brightly lit "legit" casinos and theme hotels, you will still find, in the back-lanes and dark corners, a new financial scam and hustle every day. And they are never short of takers.
 
As is well known, casinos will also use technology to render advances to people who need more cash to gamble with, after analysing their credibility and fiscal worth. This is how it works —if a gambler has exhausted all other options of raising cash to gamble, which means he had maxed his plastic, bank account and even pawned his wristwatch and jewellery, but he still wanted to gamble, then he heads for these "special" ATM-like machines, where he feeds in his personal data. Within minutes if not seconds, depending on a variety of parameters, the machine tells him how much he can get as an advance in cash, and at what premium.
 
Typically, the premium charged would be between 10% and 20%. But if the person had very low financial credibility, then the premium on his advance could be as high as 60% or 70%. In other words, for an advance of say $100, the gambler got $30 or $40, and the entities underwriting the payout would get the rest. With this money, the gambler was going to go back to whatever scam he was gambling on—and certainly lose, again.
 
Rich or poor, everybody loses when they go to a casino—it is just that the poorer people seemed to have the odds stacked against them in a higher ratio than the high rollers.
 
To try and explain this phenomenon, of people knowing that they would lose their money and still persisting, at one time all you needed was an above average understanding of economics, psychology and sociology.
 
1)  On the economics aspect, the brighter the person, the more the chances of being blindsided by an "I am smarter than others and can therefore beat the scamster at his own game" approach. This has often been proven with empirical evidence to support such a view - that knowledge of the real economics of a gamble or a scam will seldom, if ever, prevent people from having one more flutter. People from companies which worked in the technology of the casino business, for example, were totally banned from going anywhere near the gaming tables—because the casino operators knew that they would lose, and that in turn would endanger the casino itself.
 
2)  On the psychology aspect, there appears to be this bravado, which involves showing off your risk-taking capabilities to the rest of the world. In such cases, even people who lost their shirt and more, would return with wild stories of imaginary victories and winnings. This, in turn, would provoke and prod more people from that person's peer group to try to do the same, and in time, it becomes a vicious circle. In addition, in times of recession, it was seen that people went in for gambling for not just the long-shot winning chance, but also for the feel-good that it gave them—as long as they didn't tell people they had lost.
 
3) On the sociological aspect, many theories abound, the one I liked best which related to the Indian context goes like this—most Indians feel that they are being shafted by the "system" anyways, so a wild risk of the Speak Asia sort, especially if it is accompanied by the joys of being associated with a huge ad campaign and the resultant hype, is not exactly a bad idea. At Rs11,000 a pop, this makes sense at a level where a misadventure at an ATM of Rs10,000-Rs20,000 leaves the average middle class Indian with no recourse to any sort of review.
 
Another very 'Indian' aspect of such scams is the subtle pressure from people who are, shall we say, in a position to influence such an investment. Take a hypothetical scenario-if an official from a government department with whom you have to go through regular "dealings", suggests that you should buy a membership in a financial scheme being run and pushed by his dear spouse, then, would you refuse?
 
Scams like these have been taking place since time immemorial. The only difference now is that with the spread of the Internet and the ease with which funds can be remitted abroad, the scale is massive, and it really scales up rapidly at very low entry costs. Laws may or may not be tardy in this context—what law do you use when people give money on the basis of an Internet account with a password and some basic databases? But the fact remains that one country's loss is another country's gain. The country where the stolen money or goods land up has a totally different outlook-for them, it is like a jackpot, more investments into their country for doing nothing. Besides, the crime was committed elsewhere, so why would they be worried?
 
Which leaves, at the end of the day, only an attentive and awake media.
 
Some people have congratulated Moneylife for their role in busting the Speak Asia scam. Most people do not know the background. Of the legal notices, the veiled threats, the effort involved in notching issues up to the highest levels in government. And most of all, in seeking out people who were or are "panellists", and getting them to speak their minds out, as well as reveal some facts. And the knowledge that there will be yet another, bigger, worse scam waiting in the wings, again.
 
On IDs and issues related to privacy

Some bare data on the biometrics (read a document like a US visa) including facial recognition of the person, can give a very good idea of the other possessions he or she has, and most of all the data on other family members and friends who could be held responsible for loans taken by this person. These other people could be held responsible because they may have stood guarantee for something else, which could be used in this case, or they could simply be pressurised to part with their possessions and assets in settlement.
 
This is one of the bigger dangers some of us envisage with the UIDAI/Aadhaar number scheme. At the click of a keyboard, a person's full background is available to all sorts of entities, including such financial scamsters who will then prey on the aspects of a person's mind as listed above. And subsequently have access to all assets and belongings of not just that person who was tricked into taking a loan to lose the money, but also of his close family and friends.
 
Don't believe it?
 
I worked in this industry, for US companies, which had the technology to tag people or switch off by remote the engines of cars belonging to those who owed them money. They had the technology and wherewithal to use all sorts of methods to seize their assets as well as freeze their bank accounts and put a lien on whatever future earnings they may be capable of. These companies, in some case "respectable" listed companies, literally made a person go into debt, and then took everything and more away, and the technology for these was to quite some extent made and operated from India.
 
Do we see the same happening in India soon? Put it this way, in a linked article on the state of affairs at UIDAI/Aadhaar, this writer more than said the same thing—and mainly because behind the veil, and through the grapevine, he has ample reason to believe that he sees the same US companies now "supplying technology" to UIDAI/Aadhaar.

User

Dual pricing of diesel: The FM may point a finger at passenger car owners, but four fingers point elsewhere

Is it only automobile owners who are responsible for misusing subsidised diesel for private vehicles? No, they aren't. But it would help to pull the chain on those who do, every now and then

This happens every six months or so. A cabinet minister (take your pick) makes an announcement about the misuse of diesel subsidies by owners of luxury cars. At one time, they would add German brand names like BMW, Audi and Mercedes Benz, but now they choose to often remain brand neutral. (Those summer trips to Germany can work wonders.)

Such statements immediately send the public relations people in the automobile industry into a huddle, the mainstream motoring media into a frenzy, and after all this-usually-nothing happens. Obviously, it will be absolutely next to impossible to administer a dual-pricing strategy for high speed diesel (HSD) sold through retail outlets. The stock market reacts accordingly, and shares of automobile manufacturers making diesel cars tank, then quietly recover in a few days.

But what is the real story?

Head out to any filling station. Correction, head out to a filling station owned and operated by a good friend, who will tell you the truth. Ask him, especially if his filling station is not in the urban metro cities, what percentage of his diesel sales go to motor vehicles, and where the rest goes.

Do not be surprised if he tells you that over 75% goes to what is informally known as the generator, residential, office and factory segment. Often in lots of 500-1,000 litres taken at one go, transported in everything from 225-litre drums mounted on donkey carts to home-grown tankers mounted on small trucks or towed by tractors. The oil companies like it-they have sales targets to meet, and incremental sales are always welcome. Like, create chaos at a toll booth centre, and reap higher fuel sales at filling stations up the road.

Higher diesel sales are directly linked to the fact that India shining and slipping is regardless of anything else going through this great manufacturing and commercial boom. All of them, as well as the personal residences (masquerading as "guest houses") of the people who run these great symbols of liberalisation, require huge big diesel generation sets. These diesel gensets in turn require large quantities of diesel. Leave everything else aside, there is a micro power generation capacity in India, most of which runs on HSD, meant for the automobile and agricultural sector. Renewable energy is mostly for the seminars and conferences and tax exemptions for HNIs.

The diesel subsidy provides genteel support to all these sectors. As well as to all government offices, banks, mobile phone towers, even the residences of the same cabinet ministers and their families and friends, and contact persons and staff, and the whole lot of them, including the media. Do you think they will want this subsidy withdrawn? Not at all.

But the issue is not as unresolvable as it is made out to be. Here are some simple solutions, which can be implemented tomorrow, if there is a will.

1) An annual "loading" on the insurance premium of all diesel-operated private cars, equal to the approximate subsidy for 50,000 km operation per annum, at the time of renewing the insurance premium. This is to be passed on by the insurance companies in toto to the finance ministry, along with service tax.

2) There must be a closer look at the audited accounts of larger taxpayers and their industries/commercial establishments. All expenses for diesel, for any reason whatsoever, should be taxed at the rate of subsidy that they enjoyed, and passed on in toto to the finance ministry, again along with service tax.
 
3) If possible, implementation of the law that sales of fuel from filling stations should only be into fuel tanks of motor vehicles. Forget it, this won't work, they have to work their own gen sets too. The huge IOC corporate office near my house in South Delhi, has some of the biggest gen sets in the country, and it seems that they also get their (subsidised) diesel from an IOC filling station next door, called "Centre-Half", owned by a famous hockey player.

At the end of the day, if the government is really serious about removing the misuse of the diesel subsidy, it will have to look within first. I would be very keen to know where the diesel required for running the gen sets, if any, at Parliament House comes from.

User

COMMENTS

Rajiv Chawla

6 years ago

The facts: On 24th June, 2011, the central government reduced customs duty on petroleum products to only 2.5% from 7.5%, resulting in an annual revenue loss of Rs.49,000 crore to the Central govt.

Excise duty on diesel was also reduced from Rs4.60 per litre to only Rs2 per litre.

85% of our precious and scarce foreign currency reserves are spent on Oil imports.

India bears oil subsidy to the tune of Rs.1.5lac crores annually.

Corruption, seepage, siphoning and misutilisation increases with dual pricing systems. For example, Kerosene at PDS for BPL is Rs.5/- litre agains Rs.28 in open market. Hence, the massive leakage.

Corrections in PDS are extremely important while dual pricing results in just the opposite

REPLY

malq

In Reply to Rajiv Chawla 6 years ago

Very valid points, Rajiv Chawla, and thank you for writing in. Wastage as well as the proceeds and benefits of wastage are part of the old industry scam in India.

rgds/VM

Raj Khalid

6 years ago

Actually I do not think there is any subsidy. Just find out how much demurage is paid by the State owned oil companies while VLCCs wait to discharge crude, see how much is stolen and "lost". We know that an Maharashtra Govt. officer was burnt by the diesel mafia. We are subsiding Govt inefficieny and losses. If the USA can sell petrol at about one dollar a litre and make a profit why can't we?

dev

6 years ago

OK agreed the culprit is the misuse
by DG sets. But pray why are they
(DG sets) there in the first place. Failure of Government to supply uniterrupted power. The ball is in your court Mr. PM

REPLY

malq

In Reply to dev 6 years ago

Due to the subsidised price of diesel as well as availability of cheaper stolen diesel, running gensets sometimes cost less than linking up to the grid. Humbly submitted.

But you do have a point, dev, and thank you for writing in.

tejas

6 years ago

dear veeresh,

the govt officials are just trying to twist the issues over here. Diesal is NOT SUBSIDISED in india if you count the various taxes taken by central & state govts. In US Petrol which is costlier to make than Diesal ,costs around Rs 42 per lit currently.
Govts do not want to reduce their taxes and just ask the oil companies to share burden. Also final costs of oil etc is higher because of non transparent costs of oil companies.
Rather than simplifying the market, they want to increase taxes on diesal vehicles which is plain cheating

tejas

Rajiv Chawla

6 years ago

Diesel subsidy is surely not meant for high-end cars & SUVs. However, govt should NOT introduce differential/ dual pricing system, as it would give additional tool to be misused by many Fuel Station owners and add to corruption and siphoning, as we see in our PDS. The price of diesel should be the same for all.
However, the diesel subsidy can be easily offset by higher Excise Duty on the segment from which govt. wants to withdraw diesel subsidy. Say, an additional Excise Duty of 4% on a diesel car worth Rs. 10 lacs gives Rs.40,000/- upfront extra to the exchequer. This should more than offset the diesel subsidy used by the owner in the lifespan on the vehicle. In any case, many car manufacturers keep prices of Diesel versions a bit higher than Petrol models, while consumers happily pay that bit extra to save money in long run, which incidentally, comes from the subsidy on diesel which is Public money. Extra upfront excise to offset the diesel subsid shall also give consumer a choice whether to opt for one time extra payment to govt. or buy a petrol version.

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