Exclusive: EPFO likely to update Central board about investigation, audit following Mumbai PF fraud

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Retirement fund manager Employees Provident Funds Organisation (EPFO) is likely to give an update on scrutiny and audit of accounts in regional offices following the PF fraud in a Mumbai regional office.

“As the custodian of the EPF, the Central board must know the exact situation related to the PF fraud at Kandivali EPF office, the exact amount of loss, and the progress so far in the ongoing CBI inquiry. The EPFO authorities are expected to offer a detailed account and update the CBT when it meets on 20 Nov,” said a government official who declined to be named.

The Central board of EPFO is meeting for the first time later this month after the fraud was unearthed almost three months back, and the retirement fund ordered a scrutiny of Covid withdrawals. The CBT meeting has now been rescheduled from 16 November to 20 November.

At least one Central board trustee has written to EPFO to come clean on the issue by providing details about the siphoning of PF corpus at the Kandivali EPF office.

The frauds came to light around four months back and pushed the EPFO headquarter in New Delhi into action. Subsequently a decision regarding scrutiny was taken after an internal audit at the concerned EPFO office in Mumbai in August.

“But the report and progress of this inquiry is yet to be made public. As CBT is the apex decision making body, a formal debate, a situation update is due,” said a board member of the EPFO also requesting anonymity.

“The fraudulent withdrawal has happened from the accounts of four to five companies which were closed down earlier. Following the fraudulent withdrawals, money was transferred to accounts in several cities including Mumbai, Ghaziabad, Patna and Mathura. It indicates the network may not be confined to the Mumbai regional office only,” said the board member.

The amount of fraud is expected to be between Rs. 21 crore to Rs. 100 crore – as per unconfirmed information floating in the office corridors, the board member said. “It may be more, it may be less but for building trust among subscribers, EPFO must come clean on this,” said the board member cited above.

At least six officials were suspended by the EPFO so far, authorities had informed in September, and CBI has arrested at least three people in this connection so far.

The siphoning off of corpus was executed by a group of Group B, and Group C staff of the retirement fund manager from dormant accounts of erstwhile companies during first wave of covid-19 in 2020 and the fraud came to light four months back.

As per the revised EPFO circular, seen by Moneycontrol, the agenda items for the board meet is being finalised and it will be circulated in next few days. To be sure, EPFO may not enlist the PF fraud issue formally in the agenda, but discuss and debate on the day of the CBT meeting.

The CBT is the apex decision-making body of the EPFO, chaired by the Union labour minister. The Union labour secretary is the vice-chairman and the Central Provident Fund Commissioner is the member-secretary. There are five Central government representatives, including officials from the finance ministry, and 15 state government representatives. There are also 10 employers’ representatives and 10 employees’ representatives in the Central board as members.

EPFO has over 60 million active subscribers and it manages a corpus in excess of Rs. 15 trillion. The last board meeting took place in March.