Q&A: A D Nagpal, EPF funds
Aditi Phadnis / New Delhi September 19, 2010, 0:27 IST
A D Nagpal, the man who uncovered ‘lost’ EPF funds, tells Aditi Phadnis how he made the discovery...
In the past, before interest rates fell so drastically, the EPF Organisation (EPFO) used to earn as much as 16 per cent interest on its contributions. But the rate of interest would almost invariably be 12 per cent. The Comptroller and Auditor General had also pointed out this discrepancy In other words, everything that EPFO would earn was not always distributed to its contributors. This was because the finance ministry would always demur and say: “Don’t give more than 12 per cent interest”.
Actually, the first figure that I computed was wrong, for which I apologised to the CBT. The final correct figure was Rs 2,481 crore. But to answer your question, I have been a trade union man all my life. I began as a socialist and I continue to be a practising socialist. I have a lot of friends everywhere, as part of the trade union movement. It was a set of officials, whom I will not name, who alerted me to this fact. At first, no one believed me. There were times when my own resolve weakened. I spent three years repeatedly checking my figures and writing to the labour ministry (which supervises EPFO) and CBT, telling them we were Rs 2,481 crore-short. Still, no one believed me.
This is a delicate matter. Article 60 of the EPF Act says CBT can distribute the funds from the interest suspense account, but there must be no overdrawal. And as there is a single-entry system in place in EPFO, it debited Rs 2,481 crore from the interest suspense account way back in 1998, but did not credit it into individual accounts. So, after my persistent demand for a regional audit, they conducted it and found that Rs 720 crore in West Bengal, Rs 562 crore in Maharashtra and large sums of money in Chandigarh, Karnataka, etc, were debited from the interest suspense account but never distributed, because of the finance ministry fiat that no interest over 12 per cent be given out.
I must express my gratitude to Minister Mallikarjun Kharge and the secretary (labour), who finally accepted that they had made a mistake. Till May 31, before a full meeting of the CBT, they said a sum of Rs 158.7 crore was all that was there in the interest suspense account. But, again, I challenged them. Finally, on September 8, they called me and said my calculation was correct. But, they said, tell us what we should do now.
It was all a matter of who would take the credit. Here I was: I had fought on the issue for three years, working and reworking my figures, poring over them, adding them up again and again. And now, the minister wanted to be patted on the back, the secretary thought he deserved it… And, as for my colleagues from the unions, well, the less said the better...
Yes, but the employers (who are also members of CBT) didn’t want to acknowledge the existence of this money because they would have to pay more. And other unions opposed the payout because they thought it would reflect badly on them, for having allowed a fraud under their noses.
I was lavish in my praise of the minister and the secretary. After all, we did petition Oscar Fernandes several times and he didn’t act on our complaints. Employers said: “Give an extra one per cent as special bonus”. All of us rejected that. The minister was also generous. He said: “Nagpal, we know what efforts you have put in”.
What can I say? From 1992 till today, there has been a drastic reduction in the rate of interest. Funds in EPF used to earn 16 per cent, then 12 and then eight per cent. That can’t happen today. But the system has to be changed. It should be double-entry accounting. If you’ve debited an account and there is no figure beside it, this can give rise to more confusion.
Of course! I am a practising socialist. I am 77, I own no car, I live in a small house with Mr Purohit. My sons, who are well-settled in business, keep telling me to get a car. I don’t need one. I use public transport.
I reckon I have a few more years of active life. I want to devote them to my work as a socialist trade unionist.
SOURCE: BUSINESS STANDARD DT. 21.09.2010