Raids on former Union Finance Secy in illegal bank note thread supply case

The Central Bureau of Investigation (CBI) is conducting raids at the premises of former Finance Secretary Arvind Mayaram in Delhi and Jaipur in connection with a Prevention of Corruption Act case, relating to supply of security threads for Indian banknotes.

Mayaram, a former IAS officer of the Rajasthan cadre and 1978 batch, is currently serving as an advisor to Rajasthan Chief Minister Ashok Gehlot.

The raids are currently going on for last six hours. A CBI source said that a few incriminating documents have been recovered in the raids.

The CBI had lodged an FIR against Mayaram, the then Secretary, Economic Affairs in the Union Finance Ministry, officials of UK-based De La Rue International Ltd, and unknown officials of the Ministry and the RBI for allegedly helping the UK-based firm in getting a contract to supply thread for bank notes. The contract was extended thrice by allegedly flouting the rules and kickbacks were received in lieu of this.

According to information, the CBI received a complaint in this respect on February 14, 2017 from the Department of Economic Affairs and initiated a preliminary inquiry into the matter.

The CBI found in the inquiry that the Indian government entered into an agreement with De La Rue for supply of exclusive colour shift security thread for Indian bank notes in 2004 for a period of five years. The contract agreement was subsequently extended four times till December 2015.

The enquiry has further revealed that the then Finance Minister on July 17, 2004 authorised the RBI to enter into an exclusivity agreement with the suppliers of exclusive security feature.

Thereafter, a sub-committee headed by then RBI Executive Director P.K. Biswas was constituted to go through all aspects of exclusivity of three security features firmed up for Indian banknote papers and also details of prices.

The exclusivity agreement was signed by the RBI with De La Rue on September 4, 2004.

It was stated in para 2 of the Preamble at Page 2 of the agreement that "whereas M/s De La Rue has developed an exclusive India specific green to blue colour shift clear text MRT machine readable security thread for use in Indian banknote paper and for which De La Rue holds exclusive manufacturing rights". However, the CBI found that De La Rue made false claims of holding a patent and they did not have any at the time of presentation in 2002 and their selection in 2004.

"De La Rue applied for patent in India in the name of 'A Method OF Manufacturing A Substrate having colour shift effect' only on June 28, 2004. Date of publication of this patent was March 13, 2009 and date of grant of patent was June 17, 2011. The Exclusivity Agreement was signed by Biswas without verification of patent...," read the FIR.

"The RBI and SPMCIL on April 17, 2006 and September 20, 2007 submitted their reports regarding non-possession of patent by De La Rue for their colour shift thread but Mayaram never apprised the same to the FM. Despite non-possession of patent by De La Rue, the contract agreement was extended time to time till 2012.

"In 2013, the matter was brought to the notice of Mayaram, that the contract agreement with De La Rue had expired in 2012 therefore, extension cannot be granted legally. But Mayaram approved another three years extension of an expired contract to De La Rue. He also overruled the fact that extension cannot be done without obtaining mandatory security clearance from the Ministry," the CBI said as per its preliminary probe.

The CBI's FIR read that Anil Raghbeer, signatory of Contract Agreement from De La Rue received Rs 8.2 crore from offshore entities apart from the remuneration paid by De La Rue in 2011. Therefore, the enquiry has prima facie revealed that a criminal conspiracy was hatched amongst De La Rue International Ltd, Mayaram and others.