What is the Rs 371-crore AP Skill Development Corporation scam that led to Chandrababu’s arrest

HYDERABAD: It was on March 20, 2023 Andhra Pradesh Chief Minister YS Jagan Mohan Reddy said in the State Assembly that former Chief Minister Nara Chandrababu Naidu planned, directed, and orchestrated the Rs 371 crore scam in the name of  the then Andhra Pradesh State Skill Development Corporation (APSSDC)  to train unemployed youth in the State.

The then State Government under Chandrababu Naidu entered into a Memorandum of Understanding with German engineering major Siemens. It was alleged that the Government had released Rs 371 crore in five tranches in just three months even without the German company investing a single penny into the ambitious project. The MoU stipulated that 10 percent of the Rs 3,356 crore for the development of the scheme would be paid by the AP Government.

The Jagan Mohan Reddy Government identified lacunae in the way the funds were transferred from the Government’s coffers. It was noted that no note files were signed by the then-principal finance secretary and the then-chief secretary. It was reported that attempts were made to destroy the documentary evidence.

The Background

The Andhra Pradesh Government in 2014 established the Andhra Pradesh State Skill Development Corporation (APSSDC) to train unemployed youth by linking them to various educational institutes in the vicinity of industries such as Kia in the Anantapur district.

The Rs 3,300 crore project was to be executed by the APSSDC and a consortium consisting of Siemens and Industry Software India Ltd and Design Tech Systems Pvt Ltd. Under the scheme, Siemens was to establish six centres of excellence. While 90 percent of the project cost was to be borne by the Germans, the AP Government was to invest only 10 percent in the form of grant-in-aid,

As per the Enforcement Directorate’s investigation, the AP Government violated the laid norms and paid Rs 371 crore without calling for tenders. The officials allegedly drafted the work order for Rs 371 crore without mentioning the 90% in-kind grant provided to the companies, the agency further alleged. The officials then

With the ACB, ED, and the AP CID following up the trail it was found that Rs 241 crore was diverted to several shell companies such as Allied Computers, Skillers India Pvt Ltd, Knowledge Podium, Cadence Partners and ETA Greens, even without receiving any software or hardware from them for skill development.

On March 4, 2023 as a precursor to Chandrababu Naidu’s arrest the ED arrested , the ED arrested Soumyadri Shekhar Bose (former MD of Siemens Industry Software (India) Private Limited), Vikas Vinayak Khanvalkar (MD of DesignTech Systems Limited in Pune), Mukul Chandra Agarwal (Financial advisor at Siemens) and Suresh Goyal (Chartered Accountant of SSRA & Associates).

One of the central issues in this case is how a note from Skill Development, showing the estimated cost as a Detailed Project Report (DPR), was presented to the cabinet, bypassing established government procedures. This irregularity, combined with the swift approval and release of funds, has raised serious questions regarding adherence to rules, regulations, and due process.

Furthermore, the contract and government orders appear to be at odds, as funds were released without a clear contractual basis. Allegations suggest that Mr. Chandrababu Naidu gave orders for the immediate release of funds, even when objections were raised by finance department officials. Key officials within the government, including the Finance Principal Secretary and the Chief Secretary, have reportedly played a role in facilitating the release of funds. However, the whereabouts of these funds remain unknown.

It has also come to light that over 70 transactions involving this money occurred through shell companies. A whistleblower had previously reported this skill development scam to the Anti-Corruption Bureau (ACB) in the state. Additionally, a government whistleblower issued a similar warning in June 2018. Unfortunately, initial investigations into these claims were set aside.

In a troubling twist, notefiles related to the project were allegedly destroyed when these investigations commenced.

Further complicating matters, companies such as PVSP/Skiller and DesignTech, which played a significant role in the Skill Scam, have claimed Cenvat without paying service tax. Suspicion arose when GST officials noticed irregularities in the company's transactions, which were eventually revealed to involve money transfers through Hawala channels as early as 2017.

The AP CID

The accused mentioned in the FIR registration by AP CID in 2021

1. Ghanta Subba Rao

2. Dr K Lakshminarayana

3. Nimmagadda Venkata Krishna

4. Designs Tech systems

5. Skiller enterprise

6. Sowmyadri Shekar

7. Pratap Kumar Das

8. K Vikas Vinaya

9. Sanjay Daga

10. Mukul Agarwal

11. Saurabh Garg

12. Hirji Kanji Patel

13. Shirish Chandra Kanth

14. Director of IT Smith

15. Director of Pratrikrin

16. Director of Inweb

17. Director of Knowledge Po

18. Suraj Goyal

19. Manoj Kumar Jain

20. Directors of Talentedge

21. Vipin Sharma

22. SawangKumartolaram

23. Saurabh Gupta

24. Sitaram Gupta

25. Yogesh Gupta

The name of Chandrababu Naidu does not figured out in the FIR registered by AP CID in 2021. However, the officials contest that since it is an old case and under investigation, his (CBN) role in the scam has been established and the evidence will be produced before the court.

The ED notice

The Directorate of Enforcement (ED) served notices to 26 members that include Ghanta Subba Rao (the then M.D., APSSDC) and Dr.K.Lakshminarayana, Rtd, IAS (the then Director of APSSDC) in connection with the skill development corporation scam. During 2014–15, an agreement was signed with the then Chandrababu Naidu government to set up Centres of Excellence for Skill development training with two companies involved – Siemens India Software Ltd and Design Tech. They projected the project would cost about Rs. 3300 crores. The SISW & DT would sponsor 90% of the cost of the project as a grant – in kind. The Government of Andhra Pradesh had to pay only 10% of the cost, i.e., Rs 370 crores.

• Without any proper verification, the proposal of Siemens India and Design Tech was accepted. The entire contribution of the Government of Andhra Pradesh of Rs.370 crores was released in advance even before any work commenced.

• Siemens India and Design Tech did not spend even a single rupee out of their resources.

• Even out of the Rs.370 crores released by APSSDC, Rs.241 crores were siphoned off and converted into cash by using a chain of shell companies and fake invoices issued by them.

• A complainant was received in 2018 itself by the A.C.B., about this large-scale corruption, after the case initiated by G.S.T., Intelligence wing, Pune. However, the then Government did not initiate any action. Moreover, important note files in the State Secretariat were removed and destroyed to cover the tracks of the important accused in the case.