New Delhi, June 15, 2012: The CVC has imposed penalty on
some officials of State Trading Corporation (STC), Mumbai for
their alleged involvement in irregularities in trade
transactions for exports which caused a loss of Rs 725.09
crore.
The Commission observed various irregularities in trade
transactions for exports of various items under Credit Linked
Insurance Scheme (CLIS) operated by STC, Mumbai.
"It was observed that during the period 2005-09, various
business firms or associates had undertaken export of items
such as gold jewellery, construction material, etc, through
STC, Mumbai, under the CLIS scheme.
"Due diligence was not exercised by the concerned
officials of STC to ensure the credibility of suppliers or
associates before entering into business transactions with
them," the CVC said.
It said non-compliance of various terms and conditions,
as envisaged in CLIS and various circulars issued by STC from
time to time in this regard, resulted in a huge financial risk
or liability of an overall amount of Rs 725.09 crore (as on
September 15, 2010) besides interest and other charges,
without chances of recovery from the associates or insurance
companies.
The STC is a premier international trading house owned by
the Government of India.
"There were adequate tools available with STC to take
care of eventualities in the event of default in payment by
foreign buyers, but the same were not invoked or utilised by
the concerned officials of STC to safeguard organisation's
interests," the probity watchdog said.
It said that fixing of credit limit of local suppliers or
associates and proper monitoring could have avoided the
situation of accumulation of defaults in payments by foreign
buyers.
"Initiation of major penalty proceedings against erring
officials has been advised by the Commission," the CVC said
without divulging further information on the accused "as the
case is still being looked into".
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