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What is the alleged AP skill development scam in which Chandrababu Naidu has been arrested?

Former Andhra Pradesh Chief Minister and president of Telugu Desam Party (TDP) N Chandrababu Naidu was arrested on Saturday (September 9) in the alleged Andhra Pradesh State Skill Development Corporation scam.

What is the APSSDC scam that the AP CID is alleging that Naidu is involved in?

In 2014, a few months after coming to power, then CM of AP N Chandrababu Naidu proposed to set up a skill development corporation under which skill development clusters would be set up across the state. The aim was to provide skills to unemployed youth.

The corporation collects content from various educational courses offered all over the country and abroad and converts them into courses which are offered online to students who register with the corporation.

Naidu’s government entered into a MoU with Siemens India to set up skill development centres. The project was to be executed by APSSDC in partnership with a consortium comprising Siemens, Industry Software India Ltd, and Design Tech Systems Pvt Ltd. Siemens was tasked with establishing six centres of excellence.

As per the MoU, the total cost of the project was Rs 3,356 crore, out of which the state government would provide 10 per cent only as a grant-in-aid while the rest would be invested by Siemens. On January 19, 2015, Naidu virtually inaugurated 17 skill development centres across the state.

However, in March 2021, Chief Minister Y S Jagan Mohan Reddy said in the AP Assembly that the skill development corporation was a scam, and that Naidu was the main perpetuator and beneficiary of the scam. After a preliminary investigation the AP CID registered an FIR on December 9, 2021 and took up investigation.

What are the allegations of the AP CID?

The key allegations are that the TDP government released Rs 371 crore in a hurry within three months of the launch of the project without Siemens investing even a single rupee.

While about Rs 130 crore was spent on the project, Rs 241 crore was allegedly diverted to at least five shell companies — Allied Computers, Skillers India Pvt Ltd, Knowledge Podium, Cadence Partners, and ETA Greens. These companies were supposed to provide computers, software, and other things for the skill centres.

But they did not provide or sell anything to the AP government, and the money was allegedly transferred to these companies based on fake invoices, with no actual delivery or sale of the items mentioned in the invoices.

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A portion of the funds was allegedly used to create the skill development clusters, a departure from the official procedure, while the rest was routed through shell companies, the CID states.

The CID also found that no note files were signed by the then Principal Secretary, Finance, and the then Chief Secretary, raising questions about transparency. The CID suggested that attempts were made to destroy critical documentary evidence linked to the scandal.

As per the CID, Naidu and the TDP were the ultimate beneficiaries of the scam. According to the CID, the former Chief Minister was the chief conspirator and prime mover of the alleged scam, who facilitated the transfer of public funds to the private entities.

Based on the AP CID’s FIR, the Enforcement Directorate also conducted a separate inquiry.

How has the case progressed so far?

On March 10, 2023, the ED arrested Soumyadri Shekhar Bose, former MD of Siemens Industry Software (India) Private Limited; Vikas Vinayak Khanvalkar, MD of DesignTech Systems Limited, Pune; Mukul Chandra Agarwal, MD of PVSP IT Skill Projects Ltd; and Suresh Goyal, Chartered Accountant of SSRA & Associates, for their alleged involvement in laundering the Rs 241 crore through various shell companies. The four men were booked under the Prevention of Money Laundering Act (PMLA).

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While Naidu was arrested on Saturday, CID Additional DG N Sanjay said that the investigation will widen. He said that custodial interrogation of Naidu was necessary to find out where the money that was allegedly siphoned off, went. He said that there was evidence that the money had gone to shell companies, and then siphoned off into accounts linked to Naidu and his son Nara Lokesh.

“There are several persons who are connected with Nara Lokesh, son of Naidu, who are involved in this illegal transfer of government funds into private accounts. The role of Lokesh Naidu will also be investigated. No one will be spared,” he said.

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What does the CID say about Chandrababu Naidu?

The CID has alleged that Chandrababu Naidu is the principal conspirator behind the scheme, orchestrating the transfer of public funds to private entities via shell companies, resulting in a loss to the public exchequer and private gains.

Naidu allegedly possesses exclusive knowledge of the transactions leading to the issuance of government orders and memoranda of understanding, making him a central figure in the investigation, and therefore his custodial interrogation is necessary.

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The investigation implicates Chandrababu Naidu, the prime accused, along with the TDP, as beneficiaries of the allegedly misappropriated funds. The investigation is focusing on locating these funds, about which only Naidu knows, the CID states.

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