Coal miners' PF money put in DHFL despite red flags: PAC

New Delhi: Parliament's Public Accounts Committee (PAC) has observed that money from the Coal Mines Provident Fund Organisation (CMPFO) was invested in the debentures of Diwan Housing Finance Corporation Limited (DHFL) despite its "ill reputation", and there was lackadaisical approach in redeeming its debentures despite adverse critical ratings.

The PAC, chaired by Congress general secretary and Lok Sabha member KC Venugopal, tabled its report in the House on "failure of Coal Mines Provident Fund Organisation (CMPFO) to take timely decision to redeem debentures of DHFL resulted in avoidable loss of ₹315.35 crore".

The report was tabled in the Lok Sabha on Friday.

The committee has recommended a comprehensive forensic audit of DHFL to determine the scale of fraudulent activities, identification of individuals responsible, and tracing of movement of funds, according to a press release issued by the Lok Sabha Secretariat on the PAC report.

The parliamentary panel highlights that CMPFO had the option to exercise early redemption of non-convertible debentures amounting to ₹864 crore and could have taken prompt action when the debentures' rating became AA- to safeguard the fund of ₹864 crore.The panel has observed there has been "critical irregularity" on part of the Ministry of Coal to oversee the functioning of CMPFO which led to the failure to ensure safety of its investments due to "lackadaisical approach in redeeming debentures of DHFL despite adverse critical ratings.""DHFL was already involved in misappropriation of funds with other states from 2015. The committee has noted that despite the ill reputation of DHFL, the ministry of coal did not have processes and procedures to gauge the gravity of the situation to prevent investment of pensioners' money in such bonds," the PAC report said.