Chennai, July 2 (IANS) The Central Vigilance Commission (CVC) that probed irregularities in the public sector Corporation Bank has asked it not to issue or award tenders for appointment of technical, management consultants on retainer basis or for expanding the bank’s insurance, wealth and asset management business, due to violations of norms.
The CVC has also sent its recommendations to the department of financial services under the union finance ministry on the probe report submitted by its two-member team.
‘Some decisions are being taken,’ Vigilance Commissioner R. Sri Kumar told IANS by phone.
Kumar said he is hopeful that the action on the probe report would begin soon.
Sources told IANS that the CVC had asked the bank’s vigilance Officer to inform chairman and managing director Ramnath Pradeep not to proceed with the tenders.
The vigilance officer has accordingly informed Pradeep.
Sources said that the CVC has processed the probe report fast and has sent its recommendations to the department of financial services in 15 days.
‘Perhaps this is the first time in the Indian banking industry that such an action is being taken by CVC,’ sources told IANS, preferring anonymity.
A two-member team from the CVC camped at Corporation Bank’s headquarters in Mangalore May 9-14 to probe the complaints about irregularities in the sanction of loans and in the process followed for issuing a tender for selecting an IT consultant.
The inquiry was held under Sections 8 and 11 of the CVC Act.
Section 11 confers on the inquiry team the powers of a civil court to summon and enforce attendance of a person, to secure production of documents and to receive evidence on affidavits, among others.
Sources told IANS that the top management is on a sticky wicket in respect of the tender for the appointment of IT consultant as the eligibility norms were engineered to suit one bidder.
‘As per norms, firms providing consultancy to banks to make proposals or tenders cannot participate in bids. But this norm was violated for appointment of technical, management consultants on retainer basis and for expanding the bank’s insurance, wealth and asset management business,’ said a knowledgeable source, who spoke only on condition of anonymity.
The source said Corporation Bank consulted Ernst and Young (E&Y) for preparing a proposal for the tenders. Later, the bank not only allowed E&Y to bid for the project but also revised the tender norms.
Last October, the bank’s IT division in its note to the board mentioned that E&Y is a well-known consultancy. Later, E&Y made a presentation to the bank’s board.
On Oct 27 last year, E&Y forwarded the draft proposal for the appointment of technical, project management consultant on a retainer basis.
E&Y said the tender in the form offers wide scope and enables the bank to select projects and give to the consultant from time to time.
Part of the project is to study the bank’s core banking solution (CBS) and suggest new software even though Corporation Bank has been winning awards for technology. The bank last November floated a tender with some changes made to E&Y’s draft on the eligibility criteria.
E&Y had expressed its concern that the tender conditions were different from what it had suggested earlier and ‘this will not help’.
Subsequently, the bank issued a corrigendum a fortnight later specifying that the bidding company should have executed similar work in two public sector banks during the past five years as on March 31, 2010. The bank also altered the technical scoring methodology.
However, the tender was scrapped as E&Y was the only bidder. This was reissued Dec 15 and this time there were two bidders — E&Y and PricewaterhouseCoopers — with the former emerging as the lowest bidder.
Banking sources told IANS some discrepancies, however, were found in one of the bids.
But a committee of general managers in Corporation Bank approved the issue of purchase order to E&Y to validate its core banking solution (CBS).
In respect of the tender for appointing a consultant to advise on expanding life insurance, wealth and asset management business and also venturing into the general insurance sector, the proposal was drafted by E&Y.
The tender was floated Dec 21.
On the suggestion of E&Y, the scope of work was expanded by way of a corrigendum to include ‘payment services’ such as debit, credit and prepaid cards, mobile recharges and payment gateways.
In this tender too E&Y was the lowest bidder. Both these tenders were kept pending following the inquiry by the CVC.
(Venkatachari Jagannathan can be contacted at v.jagannathan@ians.in)
