Medi Claim in J&K: Part of Modi-Reliance Nexus?

Governor Satya Pal Malik has terminated the group medical insurance policy contract for 4.5 lakh government employees awarded to Anil Ambani’s Reliance General Health Insurance Company Ltd., following the detection of “irregularities” and multiple frauds. Malik cancelled the order saying, that the “tenders were allotted fraudulently”. He has further ordered a high-level probe into the matter. The decision for ‘cancellation’ by the governor came after the activists, employees’ union, and civil societies had raised suspicion over the allotment of the contract to Reliance – a private company. The suspicion was further emboldened by a tweet by Rahul Gandhi where he slammed the Modi government for slams like Rafale and health insurance in J&K.

The tweet read, “When your BFF is the PM, you can get the 1,30,000 Cr. Rafale deal, even without relevant experience. But wait. There’s more! Apparently, 400,000 JK Govt. staff will also be arm twisted into buying health insurance ONLY from your company.”

A month ago, on September 20, days after Malik was elected as the governor, the government had rolled out a Group Mediclaim Health Insurance Scheme as mandatory for their employees, employees of PSUs and Vaishnodevi Shrine Board. However, it was kept “optional” for pensioners and accredited media persons. The scheme included an annual premium of Rs. 8,777 for the employees and Rs. 22,229 for the pensioners – which would have almost amounted to nearly Rs. 400 crore and Rs. 350 crore respectively, to Reliance. As per sources, “Since it was made public that Reliance will be providing insurance, red flags were raised by many officials. Moreover, the process of the issuance of tenders was very obscure and was done on a holiday, in privacy.”

As per the The Indian Express, a group named Trinity was acting as a mediator which “floated” tenders on the behalf of the government and made changes to accommodate Reliance General Insurance Company. However, Finance Secretary Naveen Choudhary has refuted such claims saying that Trinity group was invited as a transaction advisor. However, in an interview with a TV channel, Malik accepted that the tenders were changed to benefit a particular company. In an interview which was aired last night, Malik had said, “I studied it myself. The issue is that the government had not issued any tenders. A private company had asked for tenders on behalf of another company. Those bids were not displayed anywhere on our (government’s) website. The tenders were changed to suit the front company which I don’t want to name. They had also increased the number of employees for premium. It was full of frauds. I discussed the issue with the chief secretary and made it clear that such things can’t happen in my presence. So, we decided to cancel it.”

Top Leaders Benefited From Scam

Notably, a staggering amount of Rs. 60 crore was paid as an advance on premium out of the estimated amount of Rs. 280 crore. “Even the top leaders were behind the issuance of this scheme. They were also benefited by it and that’s why they had let it proceed. The entire process lacked transparency. The number of employees was also increased to benefit the front company (Reliance). For instance, if the number of employees was 2 lakhs, it was increased to 3 lakhs. It was a full fraud,” said a high official source.

Commentators believe that the premium amount in itself was high-priced which raised the doubt in the first place. “Normally, even in corporate, the maximum premium goes around 4-5 thousand as far as I have studied. The high priced premium is a doubtful thing,” said a commentator.

Despite several red flags and warnings, the finance secretary has justified the tie-up with Reliance.  “Trinity came through a bidding process as a transaction advisor, and as a third party interface for grievance redressal. This is a standard practice to avoid mistakes, since government officials do not have requisite expertise in handling insurance related queries,” The Indian Express quoted Choudhary as saying.

Newsclick tried to reach Naveen Choudhary but couldn’t get through because of the poor network connection in J&K. On October 9, J&K government’s information and public relation department had issued a press statement stating the transparency in the bidding process. The press statement read, “rhetorical misgivings (are) being created about the Group Health Insurance scheme. It is said all PSUs and top private insurers participated in the bidding process.”

As per the sources, Naveen Choudhary allegedly rushed to escalate the process of signing in the scheme. What’s pertinent to note is that the scheme was not approved during the previous Governor NN Vohra’s tenure and was approved within few days after the new Governor Satya Pal Malik joined in.