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NFDC EXPOSE 3: How NFDC favored Sun TV, overpaid more than 60 lakhs to it  

It flouted all-established Directorate of Audio Visual Publicity (DAVP) and Electronic Media Advertising (EMA) policy norms of the Ministry of Information & Broadcasting. And it’s just the ‘discovered’ tip of the iceberg.  

In the curtain-raiser article on NFDC Expose, we informed you about the modus operandi of Indian bureaucracy and its micro-corruption. The second article in this series laid bare the facts about how NFDC tried to thwart attempts by the Ministry of Information & Broadcasting (MIB) to probe its financial wheeling-dealing.  Though NFDC officials used every possible means to do that, the dogged determination of the MIB officials had LIMITED success.  

Armed with a Presidential Order, a team of inspectors from MIB began its work at the Mumbai office of NFDC. They were given a limited time-frame of two to three weeks. It was not an obstacle-free course. The team faced open hostility. It was not provided crucial records in spite of repeated requests and assurances. In one case, an important file was handed over to them and taken back the next day. Their queries were not answered and they were generally left to themselves to ferret out information from a pile of loosely-kept records. Every possible stratagem and subterfuge was used to deny them access to information. It was a frustrating experience for the team, yet it tried hard and succeeded in partially uncovering the administrative rot and corruption within the NFDC establishment.

NFDC over-paid a sum of 60 lakhs to Sun TV owned by the Marans

The  I&B Ministry team discovered by sheer luck that NFDC had made an overpayment of more than Rs. 60 lakhs to Sun TV for the release of TV spots under its EMA policy, acting as a media-buying agency for various Govt. of India (GoI) ministries, departments, and PSUs. It also discovered that the conditions of the EMA policy were brazenly flouted by NFDC not only in this case but in all other cases too. NFDC totally disregarded and discarded the long-established procedures and policies followed by the Directorate of Audio Visual Publicity (DAVP) in media planning and monitoring of such releases to TV channels and other mediums.

Can any media-buying agency true to its salt ever make over-payments to TV channels and publications when the client is the biggest advertiser of the nation?

Now, those who are into the media business know  well that advertising agencies and their media-buying arms follow a certain process. They generally delay payments for months and under no circumstance overpay the channels or publications. NFDC for some strange reasons believed in ‘overpaying’ the media even before verifying if the particular channel had actually telecast the advertisement it was being paid for. And who were its clients? Various ministries of GoI and PSUs. As a matter of fact, banks and financial institutions  would readily and happily discount the bills raised against them. Their release orders are like gilt-edged govt. bonds, yet NFDC was overpaying the channels.

Professionals in the media business will instantly understand what was actually going on here. It was a prima facie case of nepotism and corruption involving huge ‘kickbacks’. In this business, you don’t do favors like this unless there is a pay-off involved. It’s a well-practiced game of percentages, and quid-pro-quo, particularly when the client is GOI, the benevolent and proverbial cash cow for corrupt businessmen, bureaucrats, sundry contractor and jobbers, and politicians. What follows will make it amply clear to you that there was a scam here.

DAVP has systems and processes to monitor and authenticate if the channels have telecast the spot or not, NFDC did not care to follow those systems and processes.

This strengthens the belief that things were not above board and there was something fishy going on in this case. DAVP followed a reliable system of third-party verification of TV spots released by it to various TV channels. TAM Adex (renamed now as AIS -Advertising Information Systems) was assigned the task. Since June 2012, third-party verification was also made mandatory. NFDC chose deliberately to discontinue verification by TAM Adex. The reason given was that TAM Adex data was not reliable. So, what was more reliable than TAM Adex verification system according to NFDC officials? They felt that a chartered accountant could do such verification more accurately than TAM that has thousands of audience measurement meters installed in homes across the length and breadth of India to monitor and record TV-watching habits of viewers.

Can you believe this? Is it not obvious that a chartered accountant does not have the institutional mechanism and wherewithal to verify and record the actual timing and duration of hundreds of telecasts happening at the same time across the nation? The fact that NFDC officials dared to dismiss the objections raised by the investigating team of the ministry so brazenly, shows that they had some savior in the top bureaucracy and political system and knew they could get away with it. Anyone with a little intelligence and nose for probity can smell the dead fish and the rat of a scam here.

Here is what the absence of a credible verification system finally led to.

Over-invoicing to the tune of 50%

The deliberate avoidance of a credible verification system that already existed and was used by DAVP, created room for skullduggery. Some selected channels resorted to over-invoicing including the Sun TV Network. In one instance, over-invoicing was found to be even exceed 50%. How can that happen unless there is some clandestine understanding between the party that has been raising the invoice and the party that is making payments against it? This points to a deep-rooted and brazen conspiracy to defraud the public exchequer in the absence of direct ministerial control, since NFDC is an autonomous corporate entity. Such over-invoicing is a known method used by bureaucrats and govt. officials in this country and is the root cause of micro-corruption we have been referring to from time to time in this expose.

What is interesting is how the over-invoicing issue was discovered. Some intelligent person in the investigating team wisely referred these invoices to DAVP. DAVP knew that channels resorted to over-invoicing and gave fake telecast certificates as well. DAVP followed the rules and asked TAM Adex to verify the telecast certificates it received from channels. In the case of discrepancies, channels generally accepted DAVP’s point of view and corrected the invoices. If they disputed it, TAM Adex provided the recorded telecasts as evidence. It was a well-designed and nearly foolproof mechanism that guided DAVP in  dealing with over-invoicing.

The question is why did NFDC in the first place do away with TAM Adex? 

NFDC had no experience of doing this kind of media-buying job; it would have been wiser for it to stick to a time-tested established procedure, yet it acted otherwise. What was the NFDC Managing Director Nina Lath Gupta’s motive behind this unconscionable move? More than many others, she, an IRS officer on deputation, should have known about the issue of over-invoicing, what it entails and  various other contours of subterfuges adopted by venal tax and duty evaders and pilferers of public funds.

What was her pay-off in this episode?

Over-invoicing and over-payment neither brought any benefits to NFDC nor to its client ministries and PSUs. It brought undue windfalls to a select group of privately-owned TV channels and the people of India ultimately paid for it.  TAM Adex was the only credible deterrent available to deal with this issue and it had helped DAVP save money. Why did she replace it with an indefensible verification system? Did she do it on her own or was she asked to do it? Who were the ‘real’ beneficiaries of this bad decision of NFDC? Were kickbacks in cash or kind involved here?

NFDC took ad-hoc advances from client ministries flouting the provisions of EMA policy

This is another irregular activity NFDC indulged in. As per EMA policy,  media-buying agencies including DAVP and NFDC are supposed to take advances from client ministries only against identified and approved media plans. They cannot take ad hoc advances and if they did so, they violated EMA rules. NFDC took crores of rupees on ad hoc basis from various ministries and departments. Why? What was done with that money in the interim, before the actual payment was made to channels?

This seems totally out of order not only from the EMA policy perspective but also according to prevailing advertising and media industry practices and norms. Even small clients make payments to their agencies after an advertisement is released and bills raised. There are months of delay in clearing media bills by advertisers. Advances are paid in rare cases where the client-agency relationship is new. Most of the agencies also insist on advance payments from political parties and film industry advertisers.

In this case, since the client is GoI itself, there is no need to make payment in advance even if the media plan is approved. As mentioned earlier, a bill raised against a GoI entity is like a gilt-edged security that banks are ever willing to discount at nominal rates. It’s strange that NFDC asked for ad hoc advances in crores and was even paid that kind of money by the concerned ministries and departments, not only in violation of EMA policy but also against prevailing industry norms.

This expands the scope of scam to the ministries concerned. Making NFDC one of the media-buying agencies under the EMA policy along with DAVP is not as harmless as it looks. There is something seriously wrong in this development and a bureaucratic scam and micro-corruption of far-reaching proportions is involved here.

Why did NFDC violate the norms that were essentially designed to check corruption?

If you look at it objectively, in each instance, NFDC violated the norms that were designed to check malpractice, nepotism, financial wheeling-dealing, the scourge of kickbacks, etc. There is no rule in the EMA policy that was not transgressed by NFDC. And all these transgressions did not benefit GoI ministries or NFDC or PSUs.  The beneficiaries were invariably outsiders. Here are a few more examples of NFDC’s wayward and dubious actions:

  1. DAVP empanels TV channels and fixes advertising rates with them. Under the EMA policy, NFDC was supposed to release ads only to the empaneled channels or the ones recommended by client ministries, departments, and PSUs as per DAVP rate contracts with channels or less.. NFDC violated both the rules. It released TV spots at will, to a select few TV channels of its own choice without the approval of its clients and at rates far higher than what DAVP had approved.
  2. It even released TV spots on channels that were not part of the client’s media plan.
  3. The EMA policy also envisages that not more than 5% of the agreed budget of the media campaign of a client will go to a single channel. Even this rule was violated.  
  4. NFDC was supposed to return the agency commission of 15% earned by it from Channels to client ministries and PSUs under EMA policy. It did not do that either.

    There was a piece of recent news about CBI registering a case regarding some ambulance scam in Rajasthan against the former Chief Minister Ashok Gehlot, Congress leaders Sachin Pilot, Karthi Chidambaram, Ravi Krishna and others.  The financial irregularities involved are to the tune of Rs 2.56 crores and it’s a case of overpayment to a certain entity connected to these leaders. 

If you begin to calculate the figure of NFDC’s purported scams SO FAR, it will be far bigger than this.

If one thought that the I&B Ministry would refer the matter to the CBI and let it investigate the affairs of NFDC in the light of these revelations that are part of its records, it did not happen. In fact Bimal Julka, the then Secretary of I&B Ministry, who retired on 31st August 2015, did just the opposite. Why and how did he do it will be revealed and discussed in the next part of this expose. There will be other EXPLOSIVE revelations too. Keep reading.

Kahani lambi hai lekin sacchi hai, baat apni pakki hai.

Coming Up Next

How and why Bimal Julka, Secretary I&B (Retired) conspired to put NFDC’s ‘special investigation report’ on the back-burner and restore agency status to NFDC under the EMA policy

How NFDC flouted co-production guidelines and did undue

favors to producers of films like ‘The Girl In Yellow Boots’, ‘Dabba’, and ‘Shanghai’ 

NFDC brazenly and repeatedly violated CVC-prescribed tendering guidelines to favor a few, causing losses in film and sound restoration work