Kerosene marker scam: How two HPCL managers fought to expose a multi-crore deal of the petroleum ministry
Ashok Singh and Ravi Srivastava were sacked for trying to expose alleged wrongdoing by the oil ministry on the direction of the minister and help of oil company officials. Now, the government is delaying action on CBI, CVC inquiries into the whole affair. Mr Srivastava, one of the whistleblowers gives an account of their struggle
Fuel adulteration (petrol and diesel) is a huge lucrative business operated by the oil mafia together with unscrupulous oil company officials who pocket crores of rupees together with ministry officials, transporters and retailers. It's been a long-standing menace for the Ministry of Petroleum and Natural Gas (MOP & NG) that has been possible mainly because of the artificially low price of kerosene.
While the price of kerosene made available through the public distribution system has been revised only nominally, so as not to upset the vote bank, the low-priced kerosene has made the adulteration of motor fuels an all-profit-no-loss business. In November 2005, Manjunath Shanmugam, a sales officer with Indian Oil, was murdered for checking adulteration at a petrol pump in Uttar Pradesh.
The government has tried to show that it is serious about curbing the misuse of kerosene by colouring the kerosene that is distributed through the PDS with a blue dye, and even conducting raids at petrol pumps. But the truth is that money from the adulteration trade is used to even buy positions of chairmen, directors and such plum positions in oil companies and related bodies. A hint of the extent of the misuse is available from a recent study by the National Council for Applied Economic Research (NCAER) which established that 38% of kerosene is diverted and used for adulteration by petrol/diesel pump owners with the help of transporters and oil company officials.
After Shanmugam's murder, the MOP & NG set up a committee of top oil company officials who were sent abroad to study and suggest a suitable "marker" for checking adulteration. Such markers are used in South Africa, Malaysia and some other countries, for the similar purpose of checking adulteration that is stimulated by differential pricing or subsidised fuel prices.
The committee zeroed down on a few suppliers of these markers, and of these M/s Authentix was picked by ministry officials and the then petroleum secretary MS Srinivasan together with former petroleum minister Murli Deora, to supply a marker to oil marketing companies Indian Oil, Bharat Petroleum and Hindustan Petroleum.
The decision was taken without even conducting a pilot study. Besides, the oil companies were advised to procure the marker from M/s SGS Ltd, the Indian agent of M/s Authentix, on a single offer basis. There was such a tearing hurry to implement the marker system that no formulation, specification, chemical composition or environment impact was studied/verified or compared. The MOP & NG even amended the marketing discipline guidelines (MDG) to empower the private company's personnel to check/inspect retail outlets for the presence of the marker across the country.
In July 2006, the then petroleum secretary ordered the oil companies to implement the marker system expeditiously and oil companies placed purchase orders the following month. The public demonstration marker system was launched by the petroleum minister Murli Deora, petroleum secretary MS Srinivasan, dealers' association president Ashok Badhwar, member of parliament Sajjan Kumar, on 4 October 2006, at Indian Oil's Bijwasan Terminal. The initial order placed by oil companies for one year, till September 2007, was worth about Rs100 crore.
The Oil Sector Officers' Association (OSOA) convener Ashok Singh and coordinator RP Srivastava (who is writing this article) were approached by marketing officers of oil companies who complained that petrol pump owners were being subjected to extortion by SGS, with the excuse of inspection/checking the use of the marker.
In November 2007, the Association mandated a leading Mumbai advocate to obtain procurement details of the marker system through the Right to Information (RTI). While the contract for the supply of the marker was extended for six months (up to March 2008) and the MOP & NG initially denied giving any information, the advocate managed to get some information in May 2008.
On the basis of the information available, Mr Singh and Mr Srivastava filed a formal complaint to the Joint Director of the Central Bureau of Investigation (CBI), Mumbai, in May 2008. Quite unexpectedly, within four days of filing the complaint, Mr Singh was suspended by HPCL (Mr Srivastava is also employed with HPCL) on fabricated charges.
Both approached the Central Vigilance Commissioner (CVC) in June, July and August 2008 seeking protection for whistle blowers. This was declined, and instead all correspondence was shared with the HPCL management, who also discontinued all facilities for Mr Srivastava. He was evicted from his office and made to sit under the staircase, perquisites were stopped and even salary deducted. The MOP & NG ordered oil companies to extend the contract to SGS till December 2008 and marker worth a further Rs200 crore was purchased on a single offer.
A public interest litigation (number 60) on the marker scam was filed before the Mumbai High Court in June 2008 by social activist Simpreet Singh. In October 2008, the Court ordered an investigation into the entire marker episode and directed the MOP & NG separately to conduct an inquiry through its vigilance department. An report in the Indian Express confirmed that the marker was removable/launderable with by ordinary clay. HPCL was looking for some excuse to remove Mr Srivastava and he was suspended in January 2009, on a charge of instigating a flash strike by officers from 7 to 9 January 2009.Incidentally, HPCL officers did not participate in the strike and Mr Srivastava himself was on duty on the strike days. In the meanwhile, the MOP & NG abruptly advised all oil companies to stop using the marker with effect from January 2009, but did not give any reason.
A report in The Times of India in June 2009 confirmed that HPCL's own R&D advisor had noted, as early as in January 2005, that the marker is carcinogenic (could cause cancer in human beings). The CBI filed a PE in the marker case in April 2009 against the then petroleum secretary, SGS, Authentix and some oil company officials. According to a CNN-IBN News report on 21 September 2009, the CVC ordered the CBI to conduct an inquiry against senior petroleum ministry officials. The report also confirmed that Authentix had been previously black-listed abroad for its "Biocode" marker sold at Rs13,000 a litre and that there was no basis for procuring the marker at such an exorbitant price.
Ashok Singh and RP Srivastava were removed from service with HPCL in March 2009. Mr Srivastava was evicted from the company's accommodation in August 2009 after suffering insults and humiliation by the HPCL management for 15 months. The same HPCL claims to be a model employer, and a pioneer in human resources management and such HR practices as emotional intelligence/performance management, competence mapping, and so on. Despite the orders of the High Court and the CVC, it appears that no visible action has been taken by the CBI. But it seems that the inquiry has been completed and the report submitted in August 2010 has an advisory for oil company chairmen, vindicating the complainants. The CVC also publicly admitted in a report in the Indian Express, dated 30 December 2009, that corruption has reached the highest level in the government and of course the ministries of petroleum, power and some other ministries. It asked as to how long people would have to continue paying an artificially high price for fuel, while listening to repeated government propaganda that OMCs are losing so many crores a day, which in fact is adding to the prosperity of corrupt officials and adulterators?
Mr Singh and Mr Srivastava have filed a writ petition in the Bombay High Court, challenging their dismissal in April 2010 and this was admitted in September 2010. Mr Deora was shunted out as petroleum minister in January 2011 and out of the Cabinet in July 2011.
(Ravi Srivastava worked with Eicher Motors and Kansai Nerolac before joining HPCL in 1982 as an operations officer. He is a volunteer in the 'India Against Corruption' movement. To read more click "Tale of two whistleblowers of HPCL".)