The Enforcement Directorate has begun investigating an alleged ₹100 crore scam involving the supply of medicines and medical equipment to government hospitals and medical colleges in Uttar Pradesh, with investigators examining procurement records, supplier selection and payments.
Why Has the ED Opened an Investigation?
The ED has sought seven years of records from the UP Medical Supplies Corporation Limited, or UPMSCL, as part of its investigation.
Officials allege that the department has been delaying submission of information to allow evidence connected to the case to be destroyed.
FIRs have already been registered in three districts of Uttar Pradesh, with former Congress MLA Mukesh Srivastava named as the main accused. While UPMSCL has not yet provided the records sought, the ED already has documents found to be the basis of the FIRs.
What Records Has the ED Sought?
On July 3, ED Assistant Director of the Lucknow Zone wrote to the Health Department Director General, Dr Pawan Kumar Gupta, seeking information for the 2019-20 to 2025-26 financial years.
The agency sought details of companies invited through EOI or RFP for purchasing medicines and medical equipment, the amount of medicine and equipment purchased from each supplier, and how much money was paid to those companies.
The ED also sought information on substandard medicines and equipment supplied to hospitals, action taken in such cases, and bank guarantees submitted against each tender and supply order.
Investigators have also sought details of government hospitals in Shravasti, Bahraich, Gonda and Balrampur from 2013-14 until now, including their utilisation and medical reimbursement records.
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Why Are Procurement Records Under Scrutiny?
The Director General wrote to the UPMSCL managing director on July 16 seeking the information. Instead of providing the records, UPMSCL sought clarification from the Principal Secretary (Health) on whether purchase and payment-related documents could be shared.
The corporation was established to curb corruption after complaints over the purchase of medicines and equipment at the district level. It began operations in 2018 and has since been responsible for most procurement.
The Centre provides funds to states for rural and urban healthcare services through the National Health Mission. UPMSCL uses these funds to float tenders, purchase medicines and equipment, and supply them to districts.
What Did the ED Find After Mukesh Srivastava’s Arrest?
The investigation intensified after former MLA Mukesh Srivastava, also known as Gyanendra Pratap Srivastava, was arrested in a case linked to the medicines and equipment procurement documents sought by the ED.
The agency began investigating after his arrest.
Around nine companies allegedly linked to his family and relatives were found to be involved in the supply of medicines, equipment, furniture and maintenance work in Bahraich, Balrampur and Shravasti.
The companies allegedly received contracts worth more than ₹18 crore in these three districts.
What Did the UP Vigilance Probe Find?
According to the allegations, the former MLA set up fake and unnamed firms and construction companies in the names of family members, relatives and close associates, including the RG Group.
These firms allegedly secured contracts worth crores without valid tenders or on the basis of forged documents.
A Vigilance investigation in the Health Department in Balrampur, Shravasti and Gonda found that substandard medicines and medical equipment were released for supply against work that had either not been completed or did not exist on paper through fake bills.
Mukesh Srivastava is also accused of conspiring with senior Health Department officials, including Chief Medical Superintendents and clerks. Investigators also found allegations that his companies directly used the department’s GeM portal ID.
How Were Tenders Allegedly Manipulated?
The former MLA allegedly accumulated assets worth crores, including hotels, farmhouses and plots, during and after his tenure as an MLA from 2012 to 2017, exceeding his known legitimate sources of income.
The Vigilance probe also found allegations that, under the supervision scheme, funds intended for operation of vehicles were illegally withdrawn for three vehicles. The role of the CMO Dr Ghanshyam Singh also emerged during the investigation.
Investigators further alleged that proper tender procedures were not followed. Printing work was carried out without a tender, while in other cases deposits for tenders were issued and CMO approval exemptions were obtained, allegedly causing financial-rule violations.
Three CMOs, Dr Ghanshyam Singh, Dr Satyadev and Dr Praveen Kumar, along with junior engineer Ram Manohar Maurya, have since retired. Vigilance has registered a case against them and is continuing its investigation.
How Large Is the Alleged Scam?
The investigation concerns an alleged ₹100 crore scam in the supply of government medicines and medical equipment. The scale of the inquiry can also be seen in the volume of records sought by the ED, covering seven years of procurement activity.
Investigators are examining how suppliers were selected, how much was purchased, how payments were made and whether substandard supplies or irregular procurement practices were involved.
Sources cited in the case said the alleged scam followed a pattern similar to the ₹5,000 crore NRHM scam reported in 2011.
What Should Public Procurement Systems Ensure?
The allegations highlight the importance of transparent tendering, complete procurement records and proper scrutiny of public money used for medicines and medical equipment. Strong documentation and verification are particularly important when purchases directly affect government hospitals and patients relying on public healthcare.
The420 view
The ED investigation is examining not only individual contracts but years of procurement, payments and supplier records. The case puts the focus on whether public healthcare funds were spent through proper tender procedures and whether medicines and equipment supplied to government facilities met the required standards.
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