Madhya Pradesh’s School Education Department, already facing scrutiny over the functioning and quality of government schools, has emerged as the department with the highest number of offices that were flagged in a state-wide probe into alleged financial irregularities involving government payments to the tune of Rs 648 crore.

The findings are part of an investigation by the State Financial Intelligence Cell (SFIC) into hundreds of crores in government payments that are suspected to be irregular, suspicious, fraudulent, duplicate or excessive.

SFIC has identified Rs 349 crore in irregular transfers and another Rs 299 crore in suspicious, irregular, fraudulent, duplicate or excess payments, all of which together amount to Rs 648 crore under scrutiny from 2023 till the present date.

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A senior official from the state’s Accounts and Treasury Department, however, explained, “The Rs 600 crore figure which has come to the fore is data collected from across the districts in bits and pieces and sent to the collectorate level. We have not officially communicated this figure to the finance department. These cases come under investigation after the system throws up an alert over a discrepancy in payments. It’s investigated, and only then can we say whether the amount was siphoned off or was a genuine transaction.”

Of the 187 Drawing and Disbursing Offices (DDOs) flagged across different government departments, 45 belong to school education — the highest from any department. Revenue follows with 43 and tribal affairs with 26 such offices. The state police accounts for 12 flagged DDOs, forest nine and health eight. Higher education and public works departments have five each, records show.

‘Money transferred into accounts of spouses’

The probe has separately identified around Rs 305 crore in 199 suspicious transactions involving transfers to private bank accounts linked to officials and employees, including accounts of wives and relatives in several cases. Another Rs 293 crore that was supposed to remain in Treasury Personal Deposit (PD) accounts was transferred to other bank accounts, according to the investigation details. Together, these two categories account for nearly Rs 600 crore.

The SFIC was constituted on May 9, 2023, under the Directorate of Treasuries and Accounts, to analyse data generated through the government’s treasury software and identify suspicious or potentially fraudulent payments. Unlike a conventional investigation that begins with a complaint against an individual, the SFIC starts with the payment data itself, looking for transactions and patterns that deviate from the normal government payment process.

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At the centre of this process is the Integrated Financial Management Information System (IFMIS), through which government payments are processed. Employee payments depend on several linked pieces of information, including the employee’s identity and code, salary entitlement, registered mobile number and bank-account details. The SFIC’s investigation has found vulnerabilities across these links.

‘A route for duplicate payments’

In one set of cases, duplicate employee codes meant the same employee could potentially appear as two separate records in the system, creating a route for duplicate payments. In others, DDO login passwords were shared with employees, potentially allowing transactions to be carried out using an authorised officer’s credentials. The investigation also found instances where registered mobile numbers were changed, potentially diverting OTPs, and cases where employee records were not adequately matched with the names attached to bank accounts, records show.

The investigation has resulted in recovery and reversal of a substantial amount, though a significant balance remains to be accounted for. The SFIC documents record Rs 56 crore recovered and Rs 164 crore in irregular transfers reversed, together amounting to around Rs 220 crore. Where the examination points to criminal wrongdoing, cases can move into criminal investigation.

A government official said, “FIRs have been registered against at least over 50 officials over the past three years before the relevant agencies.”

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The official said, “The government has since introduced additional safeguards, including system validation to prevent duplicate employee codes, restrictions on DDOs changing employees’ registered mobile numbers, system-based limits on salary and allowance payments, matching salary payments with an employee’s grade and prescribed salary, and mandatory two-factor authentication for system logins.”