Report on the fraudulent misappropriation of Railway cash at Mulakalacheruvu and Vayalapadu station on Guntakal Division of So

Preliminary Report on the Fraudulent Misappropriation of Railway Cash at Mulakalacheruvu and Vayalapad stations on Guntakal Division of

South Central Railway.

Name of the Stations	::	Mulakalacheruvu & Vayalapadu
Section	::	Dharmavaram to Pakala
Name of the Station Masters	::	P.V.Ramana, SM/Mulakalacheruvu & K.Kishorilal, SM/Vayalapadu
Division	::	Guntakal
Railway	::	South Central Railway
Nature of the fraud	::	Misappropriation of Railway earnings by incorrect accountal of sale of Printed Card Tickets (PCTs), by maintaining two sets of Passenger Classifications and Daily Trains Cash Books (DTC).

1.0 Modus Operandi:

1.1 SM/Mulakalacheruvu station maintained two sets of Daily Trains Cash Books (DTCs) at the station. One DTC showed the correct accountal of tickets as per stock physically available, with a corresponding Passenger Classification. (This set was produced whenever inspecting officials visited the station). The other DTC had lower ticket numbers in various series of PCTs with a corresponding Classification submitted to the Traffic Accounts Office. Thereby, the SM had committed misappropriation of Railway earnings to the extent of the value of tickets sold but not accounted/remitted.

2.0 Detection of the Fraud:

2.1 The fraud, detected in Traffic Accounts office, SCRly, came to light during Internal Check of one ticket collected at Tirupati which was issued at Mulakalacheruvu station by comparison with the highest number of that series as shown in the Passenger Classification submitted to Traffic Accounts Office. Having noticed difference in the ticket number, further check was ordered by a visit to the station by Inspecting officials. The passenger classification of June ’05 was compared with the DTC at station. The points noticed by this team are:

2.1.1 The commencing and closing numbers of 71 series of tickets in the DTC are higher than those appearing in the Passenger Classification submitted to Accounts Office;

2.1.2 There is difference between closing numbers of previous day/month and commencing number of the next day/month in the DTCs;

2.1.3 Deliberate under-casting of page totals into day’s summary has been resorted to resulting in short rmittance;

2.1.4 The amounts indicated in the Cash Remittance Notes are tallying with the Daily Cash total in the DTC of June’05 (refer para 3.2).

3.0 Extent of Misappropriation:

3.1 The difference in the commencing and closing numbers of 71 series of tickets between the DTC and the Passenger Classification has been worked out as per the statement in Annexure ‘A’. From this statement it may be seen that the total amount of difference between the DTC and PCs which can be attributed to the value of tickets sold but not accounted and remitted amounts to Rs.18.97 lakhs at Mulakalacheruvu station.

3.2 Since the amounts indicated in the Cash Remittance Notes are tallying with the Daily Cash total in the DTC of June’05, it is apparent that the SM/Mulakalacheruvu has been carrying forward the misappropriation committed by him some time during the past.

4.0 Period of Misappropriation:

4.1 Shri P.V.Ramana, has been working as SM/Mulakalacheruvu from 04.08.2002 till date. Records from September ’04 onwards have been seized. The records for the period prior to September ’04 were not produced by Shri P.V.Ramana, SM/Mulakalacheruvu. Unless all the records i.e., DTCs and PCs (office copies) pertaining to the period of tenure of Shri P.V.Ramana as SM/Mulakalacheruvu are located and examined in detail, the actual period during which the misappropriation really took place cannot be pin-pointed at this stage.

5.0 Inspection by TIAs:

5.1 For purpose of inspection by TIAs, Mulakalacheruvu is categorised as ‘B’ class, i.e., inspections are to be done once every six months. The last three inspections done by TIAs were on 23-2-04, 30-9-04 and 8-3-05.

5.2 SM/Mulakalacheruvu cleverly avoided the detection of the fraud by TIAs by maintaining two sets of records and producing the set of DTCs and Passenger Classifications which tallied with the ticket stocks on-hand.

6.0 Follow-up action:

6.1 The following action has been taken:

6.1.1 Immediately on receipt of the information on the fraud, DRM/GTL has been advised to place Shri P.V.Ramana, SM/Mulakalacheruvu under suspension.

6.1.2 All available records at Mulakalacheruvu station have been taken into custody as also relevant station returns and records in the Traffic Accounts office.

6.1.3 On suspicion, records at Vayalapad, the station where Shri P.V.Ramana worked prior to posting at Mulakalacheruvu, were got verified. Similar misappropriation as has taken place at Mulakalacheruvu, has been detected at Vayalapad, to the tune of Rs.6.19 lakhs (details in Annexure’B’) in respect of 42 series of tickets of PCTs. Vayalapad station was last inspected by TIA on 13-2-04, 22-9-04 and 28-3-05.

6.1.4 DRM/GTL was telephonically advised by FA&CAO/WST on Sunday the 24^th July’05 to place the SM/Vayalapad Shri K.Kishorilal under suspension.

6.1.5 The available records at Vayalapad station (from 2001) have been taken into safe custody as also relevant station returns and records in the Traffic Accounts office.

6.1.6 An inspection of all stations between Guntakal and Pakala, where PCTs are being issued is being undertaken w.e.f. 27-7-05 to check for similar irregularity/misappropriation.

6.1.7 Error sheets to the tune of Rs.18,97,630 and Rs.6,19,333 against Mulakalacheruvu and Vayalpad stations respectively have been issued.

7.0 Areas of possible lapses:

7.1 The system of sending all the collected tickets on a daily basis to Traffic Accounts office has been dispensed with sometime in 1993. At present the highest number in each series of tickets for the last day of every month and the first two days of the following month are to be sent with the TCRs to Traffic Accounts office from every station. Since TCRs are being received very sporadically from the stations, the extent of internal check is rendered very limited.

7.2 The Ticket Indents submitted by stations are to be verified in Traffic Accounts office with the Passenger Classification - the number of the last ticket issued (shown in the Ticket Indent) on the last day of the previous month for each series should be compared with the closing number in the Passenger Classification of the month. Had this phase of check been scrupulously done, this fraud would have come to light at the time of verification of the indents submitted by SM/Mulakalacheruvu in December 2002 and December 2004.

8.0 Proposed Corrective Action:

8.1 The areas of failure / lapses as observed in the course of analysis of the fraud cover both the Commercial and Accounts departments, with lapses at the supervisory and clerical levels. While immediate responsibility on the dealing staff at the station has been fixed, further action to streamline the systems and procedures will need be done jointly in consultation with the Commercial department.

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