THE FODDER SCAM – CHARA GHOTAALA

ABSTRACT

The World Bank defines corruption as “the misuse of public office.” As was held by the supreme court in Lalu Prasad Alias Lalu Prasad Yadav vs State Through C.B.I. (A.H.D.), 2002, “corruption is omnipotent, omniscient and omnipresent.” It grows in menacing proportions and poses a great threat to the welfare of the society. The occasion for political corruption increases when control on the activities of public administration is fragile and the division of power between the political actors and the public bureaucrats, as well as between government and the middlemen is not clear.

India ranks as the fifth-largest economy globally by nominal GDP and the third-largest by purchasing power parity. Despite its economic growth, the country is plagued by scourge of corruption, ranging from small bribes to large-scale schemes, which frequently make the headlines.

Several factors contribute to the widespread corruption in India, including a lack of transparency within the bureaucracy and a government-controlled monopoly over certain industries. In recent years, numerous high-ranking government officials have been implicated in major frauds. For instance, the Coal Allotment Scam, which cost ₹186,000 crores, involved accusations against the Indian government for inefficiently awarding coal blocks between 2004 and 2009. Another significant scandal was the Commonwealth Games Scam, costing ₹70,000 crores, where only half the amount was utilized for Indian sportspersons, and the Swiss Timing company was awarded a contract at an excessively inflated fee of ₹95 crore. Additionally, there have been numerous other scams, including the 2G Spectrum Scam, the Black Money Laundering Scam, the Adarsh Housing Scam, the Stamp Paper Scam, the Hawala Scam, the Stock Market Scam (Madhu Koda scam) and the Fodder scam.

In the present article, I would be covering in detail the fodder scam of the 1990s.

BACKGROUND

The story unfolded in the rural landscapes of Bihar, where politics was more than just a profession; it was a way of life. Lalu Prasad Yadav rose as a people’s champion, a passionate speaker whose rustic charm appealed to the common people. By the 1990s, he had emerged as the mass leader of the single-largest caste in Bihar – the Yadavs. Apart from this, he made a powerful Yadav-Muslim alliance to win over the numerically significant backward classes. Given his absolute support base, Lalu seemed unstoppable and unassailable in the beginning of the 1990s. However, as Yadav’s political career flourished, so did rumours of corruption within his administration.

His rise to power was swift, till the fodder scam surfaced and almost overturned his political career. It was this infamous “Fodder Scam” that would come to define his legacy, as for Lalu, fodder scam cases have been like a time loop in which he seems to be trapped forever.

WHAT WAS THE FODDER SCAM?

The Fodder Scam was a corruption scandal spread over a period of several years where high-level politicians, bureaucrats, numerous other administrative and elected officials and businessmen connived together and entered into a criminal conspiracy for fraudulent withdrawal of public money.

The scam involved the embezzlement of about ₹9.4 billion (equivalent to ₹48 billion in 2023) from the treasuries of undivided Bihar since 1990. A chargesheet was filed against 38 people on October 27, 1997, facing charges under IPC and the Prevention of Corruption Act.

Among those implicated in the theft and arrested were then Chief Minister of Bihar, Lalu Prasad Yadav, as well as former Chief Minister, Jagannath Mishra. The scandal led to the end of Lalu’s reign as Chief Minister, since he was convicted by a special CBI court. The other accused in the case include former Bihar minister Vidya Sagar Nishad, former public accounts committee chairmen Jagdish Sharma and Dhruv Bhagat.

The corruption scheme involved fabricating “vast herds of fictitious livestock,” for which fodder, medicines, and animal husbandry equipment were allegedly procured and the scam derives its infamous name from its origins in the Animal and Husbandry Department of the Bihar government, where fraudulent transactions were conducted under the guise of procuring cattle feed over a span of 20 years, under successive administrations.

A DETAILED TIMELINE OF THE SCAM

The scam had started as a small-scale fraud involving only low-level government employees, but gradually involving big politicians and bureaucrats. It started coming to the surface in 1985 when it was noticed by the office of Comptroller and Auditor General of India, T.N. Chaturvedi, that invoices from Bihar treasury were always coming late, and subsequently warning the then chief minister of Bihar Chandrashekhar Singh that this could be indicative of embezzlement. In the aftermath of this, closer scrutiny was kept by the office of the CAG on the activities of the successive governments until 1992, when Bidhu Bhushan Dwivedi, a police inspector in the state’s anti-corruption vigilance unit submitted a report highlighting the possible occurrence of fodder scam and the likely involvement of the Chief Minister in the same. To prevent the scam from surfacing, Bhushan was transferred to some another unit of administration only to be threatened and suspended later.

On 19 January 1996, the State Finance Secretary ordered an enquiry which revealed large scale loot of government money by the animal husbandry department. The scam finally came into light on 27 January 1996 when Amit Khare, the deputy commissioner of West Singhbhum district raided the offices of the animal husbandry department in the town of Chaibasa and seized documents that evidenced that funds were being siphoned off by fictitious companies purportedly supplying fodder. As a consequence of the raids, two commissions were set up by the state government, one of which was headed by the State Development Commissioner Phoolchand Singh, who was later found to have been involved in the ghotala, and the commission was thereby, aborted. Multiple FIRs were also filed by the Bihar police as per the instructions of the Bihar government. Moreover, multiple PILs were filed in the Patna High Court and the Supreme Court to hand over the case to CBI.

Accordingly on March 11, 1996, the Patna High Court directed the CBI through its Director, “to enquire and scrutinize all cases of excess drawls and expenditure in the department of Animal Husbandry in the State of Bihar during the period 1977-78 to 1995-96 and lodge cases where the drawls are found to be fraudulent in character, and take the investigation in those cases to its logical end, as early as possible; preferably, within four months.”

As the CBI began its inquiry and investigation into 64 fodder scam cases out of which 41 were registered by the state police and 23 were registered on the basis of the intelligence reports, Lalu Prasad Yadav came under the radar because of his possible linkages. Attempts were made to obstruct the CBI probe by alleging that the CBI has intentionally misinformed the court and that proceedings similar to contempt of court must be initiated against the CBI officials. However, the probe nevertheless was allowed to continue.

After the investigation was complete, the CBI registered the first FIR in the Chaibasa treasury case and the CBI requested the state Governor to prosecute the Chief Minister. On 17 June, the Governor permitted Lalu and others to be prosecuted. Five senior officials from the Bihar government—Mahesh Prasad, the Science and Technology Secretary; K. Arumugam, the Labour Secretary; Beck Julius, the Animal Husbandry Department Secretary; Phoolchand Singh, the former Finance Secretary; and Ramraj Ram, the former AHD Director—were all placed into judicial custody on the same day. It was established by the investigation that fraudulent withdrawal of huge amounts of Government money from the different treasuries have been made on the basis of the fake and fraudulent allotment shown to have been issued by the Animal Husbandry Directorate at Patna.

On June 23, 1997, a chargesheet was filed accusing Lalu prasad Yadav and 55 others, and 63 cases were registered under Sections 420 (forgery) and 120 (b) (criminal conspiracy) of the Indian Penal Code and Section 13 (b) of the Prevention of Corruption Act. On 29 July, Lalu was arrested and detained. As a result of this and given the mounting pressure from the opposition, Lalu resigned as the chief minister but installed his wife Rabri Devi as his replacement who won the vote of confidence. However, additional cases of fraud and criminal conspiracy related to illegal withdrawals from Bihar treasury were also filed as the CBI discovered further evidence over the following years.

After the division of Bihar and the formation of Jharkhand, the cases were transferred to Jharkhand on October 5, 2001. In February 2002, the special CBI court began the trial of the fodder scam case.

Since 1996, Lalu had been arrested and detained multiple times in various scam cases. Apart from being arrested for fraudulent withdrawals of Rs 370 million from the Chaibasa treasury, on 28 October, Lalu was arrested again on a different conspiracy case related to fodder scam, which was followed by one day imprisonment in another fodder scam case on 28 November 2000.

Most significantly, a disproportionate assets case had been filed against Lalu in august 1998, based on the claims of the income tax department that Lalu had amassed wealth of Rs 4.6 million out of the government treasury. Accordingly, charges were framed against Lalu and his wife as a co accused for abetting the crime on 9 June, 2000. However, they were acquitted on 18 December, 2006 by a special CBI court.

Finally, on 1 March 2012, nearly 16 years after CBI was handed over the case, a special CBI court in Patna framed charges against Lalu Prasad Yadav and Jagannath Mishra along with 32 other accused for fraudulent withdrawal of money from Banka and Bhagalpur districts.

The trial was completed in May, 2013 and On September 30, 2013 Lalu and Jagganath Mishra along with 45 others were convicted by a CBI court in the Chaibasa case and Lalu and Mishra were sentenced to five years and four years imprisonment respectively. Lalu was an MP at the time and was disqualified from contesting any election for eleven years.

However, he was convicted again in December 2017 for illegal withdrawal from Deogarh treasury and was sentenced to three and a half years imprisonment in Ranchi’s Birsa Munda Jail with an additional fine of Rs 10 lakh. In January 2018, he was convicted again in yet another Chaibasa treasury case for illegal withdrawal of Rs 33 crore and two months later, i.e., in march 2018, was convicted again in another case of illegal withdrawal of Rs 3.13 crore from Dumka treasury, between December 1995 to January 1996, and was sentenced to 14 years imprisonment with an additional fine of Rs 60 lakh.

IMPACT OF THE FODDER SCAM

What distinguished the Fodder Scam was not only its scale but also its profound impact on Bihar’s political landscape for it exposed the deep-seated nexus between power and privilege. For Lalu and other big personalities involved, it got them entangled in a web of scandal and controversy, crumbling political empire and a series of convictions and sentences. As a whole, it sparked the need to have a more transparent and accountable system of governance.

FREQUENTLY ASKED QUESTIONS

What is a government treasury?

Treasury refers to the financial department or division within a government or organization responsible for managing and controlling financial resources, including funds, assets, and investments.

What is the current status of punishment for Lalu Prasad Yadav with regard to the fodder scam case?

In February, 2022, Lalu was sentenced to 5 years imprisonment and a fine of Rs 60 lakh was imposed in connection with the fifth fodder scam case involving embezzlement of over Rs 139 crore from Daronda treasury.

What are the legal provisions under which Lalu and Mishra and other accused were convicted?

IPC

120B – punishment for criminal conspiracy
409 – Criminal breach of trust by public servant, banker, merchant or agent.
418 – cheating with knowledge that knowledge that wrongful loss may ensue to person whose interest offender is bound to protect
420 – cheating and dishonestly inducing delivery of property
467 – forgery of valuable security, will, etc.
468 – forgery for purpose of cheating
471 – using as genuine a forged document
477(A) – falsification of accounts
201- causing disappearance of evidence of offence, or giving false information to screen offender
511- punishment for attempting to commit offences punishable with imprisonment for life or other imprisonment

PREVENTION OF CORRUPTION ACT