AEPC Under Govt. Administrator?

Industry news

AEPC Under Govt. Administrator?

Council faces allegations of large-scale fraud of government grants. It was only after Smriti Irani moved to Textiles that the ministry toughened its stance, say sources.

Finally, the government is cracking its whip on the wrongful practices and frauds of an export promotion council. It is common gossip that many EPCs engage in rampant misuse of government funds and schemes, that there is a reason why just a handful of the same faces hold office in the executive committees of EPCs. Hopefully, AEPC will be made an example of.

Union Textiles Minister Smriti Irani has given the go-ahead to supersede the Apparel Export Promotion Council (AEPC) and to appoint a government administrator to take over its management. "Keeping in view the large scale fraud of government grants by the Council, it has been decided that the government may appoint an 'Administrator' to take over the management of the Council so that its functioning may be streamlined to protect the public interest," says textile secretary Rashmi Verma's letter to corporate affairs secretary Tapan Ray.

"I would request you to examine the possibility of appointing a 'Government Administrator', superseding the existing executive body of the Council as provided in Section 397 to 400 of the Companies Act," wrote Verma on July 12.

Under the Act, a Section 8 company such as AEPC can be "superseded" and a government administrator be appointed only through the Company Law Tribunal under the Ministry of Corporate Affairs.

According to media reports, the textiles ministry had received a plethora of complaints against AEPC on issues of corporate governance, mismanagement of funds, misuse of Apparel International Mart and illegal leasing of office space in Delhi to benefit a private firm. While taking cognizance of the transgressions, the ministry started issuing "corrective actions" since June 2015. Reminders were sent but "AEPC, despite clear directions from the Ministry under Article 101 (i) has shown disobedience and not willing to improve its corporate governance," wrote Verma.

It was only after Irani moved to Textiles that the ministry toughened its stance, say sources. Barely a week into her new job, she swung into action. The trigger for her decision was also because of AEPC's recent attempt to wriggle out of government scrutiny, they said. The AEPC last month informed the ministry that it no longer wanted a government official as its secretary general claiming that "it was an autonomous body not controlled by the government". "Accordingly, AEPC has decided to select a candidate outside the government," it wrote on July 1. And followed this with ads in leading for appointment of a secretary general.

AEPC was indicted by the CAG on August 2 for extending undue benefit of Rs 17.42 crore to private firm Teesta Urja Ltd through a flawed tendering process for leasing of a furnished office accommodation.

It is also accused of operating a private Institute of Apparel Management at government-funded Apparel International Mart without government's nod as well as leasing out the premise - which was set up with the objective of a showcase facility for readymade garments - to private unrelated companies. The Council had also allegedly appropriated Rs 48.58 crore of earnest money deposited by garment exporters and returned only Rs 10 crore after the ministry issued an order last February. A mismanagement of "Driving Industry Towards Sustainable Human Capital Advancement" scheme resulted in winding up of the project with AEPC due to release Rs 74.50 lakh to DISHA applicants.