The scam has offered Lalu Prasad an opportunity to point fingers at Nitish Kumar and Sushil Kumar Modi.
Satyavrat Mishra reports.
It was late in the evening on August 8.
Bihar Chief Minister Nitish Kumar and his entourage of officials had just concluded a series of review meetings of various departments.
As Chanchal Kumar, the principal secretary to the chief minister, was finalising the agenda for the next day, he received a call from Bhagalpur District Magistrate Adesh Titarmare.
Titarmare sounded calm, but the anxiety beneath his voice was palpable.
The official told his senior that there were some discrepancies in the bank accounts of the district treasury, and that funds meant for development might have been diverted.
Chief Minister Kumar, who was on his way home to retire for the night, was immediately informed.
Kumar ordered the official to investigate the matter thoroughly and submit a detailed report by morning.
The next day, as the chief minister was on his way to a function to mark Earth Day, he received a call from Chanchal Kumar.
As the phone call continued, the expression on Kumar's face changed drastically.
The official on the other side confirmed that his suspicions were right and Rs 250 crore (Rs 2.5 billion) had been embezzled.
A stung Kumar ordered the Bihar police's economic offence unit (EOU) to swing into action.
At the function, he announced, 'An irregularity of Rs 250 crore in public fund has come to light in Bhagalpur. I have ordered the officials to look into it.'
Within hours, a five-member team headed by Inspector General (EOU) J S Gangwar landed in Bhagalpur by a special chartered flight to 'assist' in the ongoing investigation.
It soon became evident that government funds under various schemes were siphoned off to a bank account of a non-government organisation (NGO) called Srijan Mahila Vikas Samiti.
When the team briefed senior officials of the state bureaucracy in the evening, the scale of the embezzlement stunned everyone.
"It became clear that it was not a simple matter. It was a scam," said a senior official.
At the centre of this scam is the Srijan Mahila Vikas Sahyog Samiti.
It was established as a self-help group in 1996 by one Manorama Devi along with 10 other women at Sabour, around 10 kms from Bhagalpur, with an initial capital of Rs 10,000.
However, the clout of the group grew with time. Local politicians and senior officials of the district administration became frequent visitors at events organised by the NGO.
According to documents this correspondent accessed, Srijan was given a government building on lease to train women members on 'verbal orders' from the then DM of Bhagalpur in 2004.
The building was given on lease of 30 years to the NGO at a rent of just Rs 2,400 annually.
K P Ramaiah, the then DM, on December 18, 2003, wrote a letter to his staff to 'promote' Srijan by depositing government funds into the NGO's bank account which was completely against the rules.
Ramaiah, a 1986 batch IAS officer from Andhra Pradesh, later quit the service and joined the Janata Dal-United in 2014.
He was fielded by Nitish Kumar against Meira Kumar from Sasaram in the general election in 2014. However, he lost the election and finished off third in the vote tally.
Ramaiah is currently serving as a member of the Bihar Land Tribunal, enjoying the salary and rank of a minister for state.
Given the political and administrative patronage, Srijan continued to prosper, and with all the public money in her pockets, Manorama Devi emerged as the biggest loan shark in the district.
Between 2003 and 2014, Srijan grew rapidly, spreading its work across 16 blocks and increasing the number of members from 200 to 5,000.
Several ministers, ex-ministers and senior officials became regulars at lavish parties thrown by Manorama Devi's son Amit Kumar and her daughter-in-law Priya Kumar (aka Rajni Priya).
However, the organisation ran into trouble after Manorama Devi died in February this year.
The reins fell into the hands of her son and daughter-in-law who lacked Manorama Devi's business acumen and links.
Moreover, Amit Kumar and his wife had ventured into real estate, retail and various other businesses using the taxpayers' money, making the business untenable.
"The bubble had become so large that it was bound to burst," said a senior police official.
Investigators are still trying to comprehend the modus operandi of the scam.
"It was an elaborate system. The government money, after reaching the district administration bank accounts, was transferred to the accounts of the Srijan Samiti. When a cheque was issued by the administration, the required sum was transferred back to the government accounts. Even the passbooks and bank statements were fraudulently updated," Director General of Police P K Thakur told this correspondent.
"The scam came to light only when a cheque was dishonoured and the district administration conducted an investigation into the matter.":
The state government believes not only the office-bearers of the NGO, but government officials and bank staff connived to dupe the system.
"We feel that various government officials and bank officials, particularly the officials of the local branches of the Indian Bank and the Bank of Baroda in Bhagalpur, are involved in this matter," said Chief Secretary Anjani Kumar Singh.
"It's like the whole system connived against itself. It was an elaborate plan. It began with transferring cooperative department's money to Srijan's accounts. However, soon most of the government funds were diverted to the accounts of the NGO. A total of Rs 360 crore (Rs 3.6 billion) from the District Land Acquisition Office; Rs 122 crore (Rs 1.22 billion) from the Welfare Department; Rs 13 crore (Rs 130 million) from the Urban Development; and Rs 50 crore (Rs 500 milliuon) from the District Cooperative Bank were diverted into Srijan's accounts this year alone," a senior police official said.
"Out of the total money, more than Rs 380 crore (Rs 3.8 billion) is still untraceable," he added.
The NGO had expanded its wings into neighbouring Banka and Saharsa districts as well -- Rs 30 crore (Rs 300 million) was diverted to Srijan's accounts from these districts.
The police have registered 14 cases in this scam and 18 people have been arrested so far.
An accountant with the social welfare department, Mahesh Kumar Mandal, died on August 19 while in custody.
Several accused, including Amit, Priya and an additional district magistrate, Rajiv Ranjan, are still absconding.
There have been fallouts for the bureaucracy too: Nine IAS officials, including senior ones, are under the scanner in this case.
A senior IAS official, who is currently serving on deputation with the central government, is said to be the key player in this scam.
The chief secretary rank official reportedly granted Srijan Smiti the status of a cooperative bank, going against the laid rules and regulations.
"It's impossible to fathom that no one knew anything," said a senior IPS official.
The siphoned off money, meanwhile, continues to grow -- from Rs 870 crore (Rs 8.7 billion) at the start, it had reached Rs 1,000 crore (Rs 1 billion) at the time of filing this report.
"We are still assessing the actual damage. We are calculating month by month. So far, we have reached the middle of last fiscal," said Director General of Police P K Thakur.
On August 26, the Central Bureau of Investigation took over the case and filed 10 FIRs.
Apart from the office bearers of the Srijan Samiti, bank officials in Bhagalpur and Saharsa and government officials have been named in the FIRs.
The scam has offered Rashtriya Janata Dal chief Lalu Prasad an opportunity to point fingers at Chief Minister Nitish Kumar and his deputy, Sushil Kumar Modi.
Among the accused is former Bharatiya Janata Party farmer cell head Vipin Sharma.
Sharma is considered to be close to a Union minister and a former Union minister from Bhagalpur.
A rift between Sharma and Manorama Devi's son Amit is believed to be the reason the district administration's cheque bounced.
On the other side, the JD-U expelled its youth wing leader Shiv Kumar Mandal after his father was arrested.
The RJD chief has upped the ante against the BJP.
'There is enough evidence to show that Sushil Kumar Modi is involved in this scam. Not only Modi, in fact, other party leaders such as Giriraj Singh, Ashwini Choubey, Manoj Tiwari and former Union minister Shahnawaz Hussain are implicit in this case,' Lalu Prasad has said.
Sushil Modi has called the accusations baseless.
"The genesis of the scam traces back to 2000-2004 when Rabri Devi was chief minister," Sushil Modi told this correspondent.
"The finance department was with the RJD for 20 months. Over Rs 40 lakh (Rs 4 million) of the health department's money was stolen when Lalu's son was the health minister. I am not saying that RJD leaders were responsible. They might not have known, but Lalu's allegations are completely baseless."
Interestingly, the National Democratic Alliance government was in power in the state during 2005 -13, when the NGO expanded its clout. But Modi steered clear of his party’s complicity in the scam. “We could have done something if we knew this was happening. The officials and banks, the very system entrusted to check the leaks, were busy in covering the leaks. How could we have known?”
