MRPL: The Concealed Tale of Erroneous Salary Revisions

New Delhi: Prime Minister Narendra Modi has recently described the PSE (Public Sector Enterprise) as “a profit and social benefit generating enterprise, which not only earns profit for shareholders but benefits the society.” The Prime Minister is more than accurate, for in a democracy like India public sector institutions are property of the people of the country and the Public Sector Enterprises are accountable to the public.

Mangalore Refinery and Petrochemicals Limited (MRPL), is a schedule ‘A’ Miniratna CPSE in Petroleum sector under the administrative control of Ministry of Petroleum & Natural Gas. It’s shocking (to the Public only) MRPL declared net loss of Rs 2,708 crore in the fiscal 2019-20. 

The components of the loss could be multiple. Here in this case, if sources are to be believed, “heavy monetary burden was thrust up on the PSE in 2010 through an erroneous pay fixation flouting all norms stipulated by the competent departments at the Centre.”  MRPL, then a joint venture company (read private sector), was acquired in 2003   by ONGC, the prestigious profit making Public Sector Maharatna. (On 28th March 2003, ONGC acquired the total shareholding of A.V. Birla Group and further infused equity capital of Rs. 600 crore thus making MRPL a majority held subsidiary of ONGC).

On March 23, 2005, MRPL was formally inducted as a Public Sector Undertaking and there after the Company has been headed by CMD of ONGC as Chairman and a Managing Director appointed as CEO.

As per the norms stipulated by Department of Public Enterprises (DPE) under MoHI&PE GoI, when a private sector company is taken over by any Central Public Sector Enterprises (CPSEs), the* Basic Pay* of those continuing with the new organization has to be fixed at the minimum of the pay scale of a CPSE employee of the same grade. But here DPE norms were intentionally flouted in the case of MRPL for obvious reasons.

Documents reveals the employees working in MRPL as on Dec’ 31, 2006 were rewarded with  “inflated” Basic Pay for each pay scale of executive cadre, fixing the basic pay much above the stage sanctioned by DPE, flouting its guidelines. Those who were entailed for a basic pay of Rs. 51,300 were fixed at Rs. 73,000. Approximately 600 executives of the company benefitted out this “excess generosity” of the then MRPL management.  The cost of   this “overgenerous” approach of the management, according to the fact sheets PNI has accessed, has made the country poorer by over Rs 150-200 crore.

Sharing vital information with PNI on this “excessive’’ generosity a senior official with MRPL who was privy to the exercise says ‘’the pay fixation process proceeded with a programmed agenda loaded with personal motives. According to the official, MRPL was accorded a PSU status in March 2005 after purchase of majority shares / holdings from Birlas by ONGC. Yet, it continued with private sector pay scales and perks till October 2007.

According to the official, the company decided to adopt DPE defined PSU pay scales only in November 2007. “At that time the company (MRPL) did not have the concept of Dearness Allowance payment. Therefore, it took the basic pay of each executive and added all the perks being drawn by each executive to the same after monetising the same. The sum so arrived was first adjusted into the basic pay and after reaching the maximum of the scale, any amount that spilled over was reflected as Personal Pay I, Personal Pay II, Protected Pay, Special Pay, and stagnation increments etc. The Management calculated the Dearness Allowance on the sum so arrived, which became an additional benefit made available to all the executives who were on the rolls of the company on December 31, 2006. The perks being specific to the grade, the same were given as additional benefit and paid from retrospective effect i.e. 1.1.2007’’.

A former official for MRPL terms this “excessive generosity” as malfeasance. “When DPE revised the pay scales in respect of PSUs with retrospective effect from 1.1.2007, had  issued specific guidelines that any employee migrating from a private sector to a public sector the pay scale of the migrant  should be fixed at the minimum of the relevant pay scale applicable in that PSU. That DPE, vide its Office Memorandum bearing F. No.2 (34)/12-DPE-(WC)-(GL)-XX/12 Para 7, (page 4) had issued clear instructions /guidelines that a company migrating from Private Sector pay scales to Public Sector pay scales w.e.f. 1.1.2007 shall fit each such executive’s basic pay at the minimum of the scale.

 However MRPL management violated this rule with impunity. Taking the inflated basic pay arrived at in November 2007 as the basis, they further bloated the basic pay by adding Personal Pay II (a term coined by MRPL Management), Protected Pay and Special Pay to the already inflated Basic Pay despite clear instructions against not to add any such allowances to basic pay prior to fitment in the revised scale or thereafter. However, the above deliberately a number of executives were fitted at the maximum of the scale and a host of them stated receiving higher basic pay in the revised pay scale. Consequently, a number of executives started receiving Stagnation increment from 1.1.2009. An executive holding a top position in the company, who had just 20 years of total experience, was fitted at a stage close to the maximum of the scale, Rs.73000/- instead of Rs.51300, the starting basic pay.

So it’s clear, those involved in the pay fixation acted “absolutely in violation of DPE guide lines”. As a result, “the privileged were fitted at the maximum stage of the Pay scale or given much higher starting basic pay than the minimum of the relevant pay scale.”

As an insider says, “In 2010, owing to deliberate misguidance, the Board of MRPL was taken for a ride. Now, in 2020, by approving regularisation of the excess amounts paid as Basic Pay, DA thereon, inflated allowances, enhanced social security contributions by the company and inflated incentives, the company Board seems to be inclined to regularizing the pillage of the Treasury.”

How could such a mega misappropriation go unnoticed? If the official can be believed the embezzlement was “deliberately ignored by the then CVO and successive CVOs.”

The official said that the “excessive inflation of basic pay  in respect of those executives who were on the rolls of MRPL on Dec’ 31, 2006 was completely ignored by the then officer in charge of vigilance and covered up by subsequent CVOs till  a complained  on the embezzlement was lodged with the CVC. Based on their findings the CVC had directed the MRPL management to recover the amount paid in excess from the recipients. But it is learnt reliably, instead of complying the CVC directions recover the money, the MRPL management is constantly pleading the Board to write off the huge amount, about Rs 150 crore plus.”  According to informed sources “efforts are progressing to regularize the salary misappropriation” that has drained the company coffers poorer by many millions.   

Corruption is defined as dishonest or fraudulent conduct by those in power. If so, by any standards this organized faulty pay fixation to favor themselves (top Management) and their favorites is a calculated act of corruption that eroded over a hundred core rupee from the coffers of a PSE, the property of the general public of the country.

Prime Minister Narendra Modi has said: The work to eradicate corruption must begin from the top. It is spread like termite in our country. We have to work at all levels to eradicate corruption.

Joe Biden, presidential candidate of the United States: Corruption is a cancer, a cancer that eats away at a citizen’s faith in democracy, diminishes the instinct for innovation and creativity.”

Chanakya Niti says “When someone informs King about money theft by government officer, King should call his superior and subordinates individually and ask about it. When that government officer is found guilty, each of these persons who lied or given wrong testimony to King should be given same punishment.”