Salman Khurshid has compared Arvind Kejriwal to ‘gutter snipes’ and threatened legal action, after the maverick anti-corruption activist alleged that a trust run by the union law minister and his wife has bungled public money. But, going by a recent comptroller and auditor general (CAG) report, Khurshid is likely to be in trouble.

Khurshid is in deep trouble for an alleged financial fraud by a trust he runs with his wife Louise, a former MLA. The trust is accused of swindling Rs 71.50 lakhs granted to help out the handicapped persons with aids and appliances in his homestate of Uttar Pradesh.

Khurshid is threatening civil and criminal suits against Kejriwal who was arrested on Friday while leading a score of disabled people to the prime minister's residence to demand his resignation. The fact is that the fraud charge has not been cooked up by Kejriwal or his outfit India Against Corruption as pretended by Khurshid.

It has actually come from an inspection report of the Director General of Audit, Central Expenditure, a wing of the Comptroller and Auditor General (CAG). The inspection report will form part of the CAG report that is yet to be tabled in parliament. The inspection report has come into circulation even before the CAG report is finalised.

The report notes "suspected fraud" by the the Zakir Hussain Memorial Trust, run by Khurshid's wife as chief executive officer, that it detected in the course of scrutinising implementation of the scheme of assistance of disabled persons for purchase/fitting of aids and appliances during audit of the Ministry of Social Justice and Empowerment.

The government auditors thrice visited the trust's office located in Khurshid's house in Jamia Nagar here on March 2, 19 and April 2 this year but no one was available and no response was received from the trust to their communications.

The CAG office, thereafter, asked the ministry to recover the grant of Rs 71.50 lakhs given to the trust in 2009-10, along with the interest of Rs 15.49 lakhs @ 10 percent up to May 2012. It also pulled up the ministry for further sanction of Rs 68.25 lakhs during 2010-11 for implementation of the scheme in the same 17 districts of Uttar Pradesh where it had committed the fraud.

The ministry also got a rap for trying to cover up the fraud by the trust by pleading that it is not under its aegis. The CAG affirmed that the grants have been released by it to the trust and "as per the provisions of the sanction order, accounts of the trust would be open for audit by CAG of India." The report noted that the ministry is bound to take action against the trust in the event of non-compliance of its sanction order.

The trust is alleged to have cooked up holding of camps in 17 districts to help the handicapped and sought them verified with details of the test inspections of the beneficiaries and the purchase of aids and appliances.

In the test check reports, the camps were claimed to have been held in Bareilly, Siddhartha Nagar and Shahjahanpur districts in 2010 on January 15, 25 and February 15. The auditors nailed the lie citing the trust letters dated April 1, 2010 to the district magistrates of these districts that it intends to hold camps, showing that the camps were not held before April. "Thus wrong information was furnished by the trust to the ministry," says the inspection report. When the ministry queried the district magistrates, it came out from the Allahabad DM that no such camp was held by the trust till October 7, 2011, though the trust had claimed in its report to the ministry that the Allahabad camp was held on
June 5, 2010.

The inspection report further nailed the trust's lie that camps were held in Sant Ravidas Nagar on April 17, 2010 and inspection carried out on June 4, 2010, citing the fact that aids and appliances were dispatched by supplier only on July 19, 2010 and as such they cannot be disbursed in April.

The CAG has also objected to the ministry not recovering the grants despite all these pointers of alleged misappropriation and instead further releasing rant of Rs 68.25 lakhs in March 2011 for the financial year 2010-11 for implementing the scheme in the same 17 districts. That too despite the trust not furnishing the utilisation certificate within six months of the close of the financial year, the report said.

Read the finding in the excerpt from the CAG report attached below (from page 9 onwards)