A team of officials from the accountant-general (AG) office in Patna has detected gross violation of rules in the transfer of government funds to the account of Bhagalpur-based non-government organisation Srijan Mahila Vikas Sahyog Samiti Limited.

During scrutiny of the documents related to transaction of money to the account of Srijan in the Indian Bank and the Bank of Baroda, the team from the AG office came to know that the bank officials used to transfer the amount from the account of the district official to that of Srijan even without the signatures of its founder-secretary, late Manorama Devi, on cheques.

During the investigation, it came to the fore that a cheque of Rs 7.5 crore was deposited in the district administration's account from the treasury.

While a sum of Rs 3.5 crore was deposited in the account of the district administration, the rest of the government money went to the account of Srijan.

Surprisingly, the cheque didn't carry the signature of Manorama Devi.

'The practice has been going on in both the banks for long. This indicates the connivance of the bank officials with the office-bearers of the NGO,' an investigating officer said, adding that evidence of district magistrates' signatures being tampered with had been gathered by the investigators.

On the other hand, observers expressed surprise over the failure of the auditors to detect the scam, which continued since 2003.

'It's hard to believe that the auditors relied on the fake balance sheet and bank statements of the accounts of the district magistrate and never bothered to verify them from the banks concerned,' said a finance officer who has seen the case closely.

During investigation, it came to the fore that funds to the tune of Rs 93.23 crore were transferred to the accounts of Srijan from Indian Bank and Bank of Baroda by furnishing fake cheque and forged signature of the district magistrate.

'It is equally surprising to know that the district magistrate couldn't suspect foul play for such a long period,' the officer added.

The officer said the fraud would have been detected much earlier, had the auditors done their job honestly.

What is baffling is that the total interest earned on the amount deposited with the banks stood only at Rs 81, Rs 79, Rs 150. Moreover, the interest had been calculated on dates, which didn't match with those fixed by the banks.

For example, the statement reflected that the bank used to calculate interests on the deposited money on six months in a year. According to norms, interests are calculated on January 31 and July 31, whereas the fake statements showed that the bank calculated the interest on January 14, 2012, and November 6, 2012.

'A district magistrate happens to be the custodian of all the transactions and auditors for auditing the government accounts. How could they ignore their responsibility and commit such mistakes? They said there might be more such instances in other departments from where financial embezzlement had not been reported so far,' the finance officer added.

Additional reporting by Ramashankar