Telangana audit flags Rs 1,100-cr PF scam, firms under scanner

Hyderabad: Hundreds of private manpower agencies in Telangana have come under scrutiny after a state government audit and Aadhaar-based verification of outsourced workers revealed suspected provident fund (PF) fraud exceeding Rs 1,100 crore, said reports on Friday, August 14.

Covering around 1.6 lakh outsourced employees, the audit uncovered suspected ghost workers and highlighted concerns over how agencies managing salaries and statutory dues were being monitored, said the Times of India.

Over 60 per cent of outsourcing employees either did not have provident fund accounts or their contributions had not been regularly deposited, it said.

Under the outsourcing system, departments release payments to agencies covering salaries, the employer’s provident fund, and Employees’ State Insurance (ESI) contributions, agency commission, and goods and services tax. Agencies also deduct PF and ESI from employee salary.

However, the audit found that both the employee contribution and the employer share given to agencies were not deposited with the Employees’ Provident Fund Organisation (EPFO).

Based on an audit of payment records over several years, the report said the diversion is estimated to be a whopping Rs 1,100 crore.

What Aadhaar verification uncovered

The Aadhaar-based verification drive reportedly uncovered mismatches between the number of workers listed on agency records and those actually employed, fuelling suspicions that fictitious employees may have been created to siphon off salaries and other benefits.

As the probe gathered pace, several manpower agencies are said to have ceased operations or shut their offices, making it harder for authorities to identify those responsible and recover the funds.

The government has recommended legal action against agencies accused of violating provident fund regulations and directed that pending dues be recovered. It has also urged regional PF authorities to initiate proceedings against firms that failed to remit mandatory contributions.

Meanwhile, labour unions have called for accountability not only from the agencies involved but also from officials who allegedly failed to detect the irregularities. The episode has reignited calls for an end to the private outsourcing agency system.