L&T corruption scandal sees 12 resignations

Vol 19, PW 3 (08 Oct 15) People & Policy
     

Corruption allegations are the last thing you'd expect to hit blue-chip Larsen & Toubro, one of India’s most iconic engineering brands.

Yet PETROWATCH learns ten senior executives of the Mumbai-based industrial conglomerate were asked to resign on September 14 amid controversy over the award of sub-contracts for the offshore Mumbai MHN process platform contract which L&T won in July 2009 from ONGC, valued at more than $1bn. One of the executives, says an industry source, was escorted out of his office to the L&T gate by security.

Company chairman AM Naik launched an investigation after external auditors raised uncomfortable questions about unexplained expenditure. “Subcontracts were awarded at inflated rates,” reports an inside source.

“This raised suspicions that money was skimmed off the top by executives.” Some executives, he adds, received unexplained gifts of gold items from subcontractors.

A few also had suspiciously high monthly photocopying and stationery expenses despite L&T not winning any significant offshore EPC contracts. Investigators learned photocopy and stationery vendors had been asked to submit high bills to allegedly cover up unauthorised personal purchases of laptops and other electronics.

“There were many unexplained items of expenditure, many discrepancies in accounting in several areas of the hydrocarbons division,” he adds. “This led top management to keep suspected executives under surveillance for some time.

” L&T’s media relations department did not respond to an email asking for a comment.