Mismanagement of funds

BHUBANESWAR: Lack of proper management of funds by the State-owned companies had led to huge financial loss to the State exchequer. Though the Fiscal Responsibility and Budget Management (FRBM) Act has empowered the Government to take action against officers, responsible for such mismanagement of public funds, hardly any erring official was taken to task by the Government. The State Government issued guidelines in November 1996 for investment of surplus funds by the public sector units (PSUs). Even though the State-run companies generated huge cash surplus, they have neither formulated any investment policy nor prepared cash flow statement to assess the requirement of funds and determine the surplus fund for investment. Improper management of funds by the Odisha State Beverages Corporation (OSBC) and the Odisha Mining Corporation (OMC) has led to an interest loss of ` 2.07 crore and ` 1.04 crore respectively. This was pointed out by the Comptroller and Auditor General (CAG) in its audit report submitted during the Budget Session of the Assembly. The chairman and managing director of the OSBC decided to invest funds ranging from ` 23 crore to ` 90 crore in term deposits for seven days to 366 days with interest rates varying from 3 to 11 per cent per annum without the approval of the Board of Directors. On maturity, the company reinvested those deposits seven times and never the term deposit was withdrawn before maturity. This indicated that the company was in no need of funds. Had the company invested the surplus funds on a long-term basis it could have earned higher interest ranging from 8.5 to 11.75 per cent which amounted to ` 1.95 crore. The company sustained a loss of ` 12 lakh towards interest for not converting its current account in IDBI into flexi account. The company had an idle balance ranging between ` 27.34 lakh to ` 5.49 crore during July 2008 and March 2010. The company board directed for conversion of its current account (UBI) into flexi account for optimisation of returns on investment while the same principle was not followed in case of the IDBI current account. The OMC had issued instruction to its regional offices to maintain a certain amount as maximum permissible balance in their current account and remit the surplus fund to the head office. The OMC sustained interest loss of over Rs 1 crore due to delayed transfer of surplus funds from the current account.