Govt admits irregularities in rice exports - India News and Travel Times Provides India-centric and other News and Features

Government on Friday accepting that there were irregularities in non-basmati rice exports to some African countries during the tenure of the first United Progressive Alliance (UPA) Government, said it had referred the matter to the Central Vigilance Commission (CVC) after slapping show cause notices on officials of Public Sector Undertakings (PSUs) involved in the transactions. "The action follows an internal enquiry by Department of Commerce which found that the exporting PSUs did not follow the transparent procedure for selection of domestic associates or determination of the price at which the rice was exported," said Union Commerce and Industry Minister Anand Sharma in the Lok Sabha today. These transaction were significantly completed during December 2007-March 2009, when the Commerce Ministry was headed by Kamal Nath, who is presently in charge of the Ministry of Road Transport and Highways. In wake of the rising prices in the domestic market, the government had put a ban on the export of non-basmati rice. It, however, allowed export of limited quantity to some African and the least developed countries on diplomatic grounds. "But the predetermined terms of contracts between foreign buyers and domestic suppliers (with small margins for the PSUs) led to hugely disproportionate profits accruing to private parties, namely the foreign government nominated domestic suppliers in India," said Anand Sharma. The lack of due diligence on the part of officials resulted in a denial of the legitimate profits of the PSUs. All records have been forwarded to the Central Vigilance Commission," he added. Anand Sharma further said the probe was ordered following questions on the integrity of the process of relaxation of export ban on diplomatic ground. "All documents proved that PSUs were to be exporters only for record sake and operated on a meagre trading margin ranging between 1 per cent and 1.5 per cent," he said State Trading Corporation (STC), MMTC Limited and PEC Limited are the three PSUs, which take up the job of export-import on behalf of the government. Despite the government giving its nod to the release of only 13.5 lakh tonnes, the actual quantity exported was about 1.22 lakh tonnes. The commodity was reportedly exported to Comoros, Ghana, Madagascar, Mauritius and Sierra Leone. "With the exception of Mauritius, the PSUs did not follow the transparent rules for selection of domestic associates for determination of export price," said Anand Sharma. In all the cases except Mauritius, the importing country nominated an agency and a domestic supplier was selected in India without involving the PSUs. Sharma said in lifting the ban on exports (for limited purpose) and giving right to export solely to the PSUs, the government recognized that commercial profits would increase to the state-owned firms because of large differential between the domestic and international prices. But the PSU officials did not exercise due diligence. "At a minimum, the concerned officials erred in exercising sound commercial judgement. The show cause notices to them have sought explanation for "abrogating their responsibility leading to non-realisation of public policy goals. Further action will follow," said Anand Sharma. "Detailed guidelines have been issued by the Directorate General of Foreign Trade to prevent recurrence of such incidents," he added.