Jamshed Ashraf was sacked by Nitish Kumar on Feb 18, 2010 after he spoke about “massive irregularities” in his department. Earlier on Jan 14, 2010 he even handed over a letter to Nitish to draw his attention towards what he said Rs 500 crore scam.

Home Secretary Subhani was quoted in the Indian Express as saying: “I have seen the queries raised by PAG and answered it point-wise through the excise department. If PAG is still not satisfied with the reply, there is the Public Accounts Committee to look into it. I am ready to face its queries.”

The report, which is due to be made public in February, says: “Due to vitiated, in-transparent, discriminatory and opaque tendering process followed by a group of handpicked officials of the department, in a departure from the established process followed in the past and suo motu unilateral increase in the price of supply of the country liquor on specious assumptions... the department has not only violated the sanctity of the tendering process but also provided benefit of Rs 181.15 crore to the wholesale supplier....”

The PAG report says the excise department had no business to increase rates of country liquor to Rs 2.80 per 200 ml sachet when the lowest tendered rate was Rs 2.36. It says this was 10 per cent above existing rate and 15 per cent over the rate quoted by the lowest bidder, whose application was rejected.

“The four-member screening committee (headed by Subhani) went beyond their mandate of evaluating the bids and administratively determined the price on presumptuous and imaginary grounds, provided by a coterie of suppliers to provide undue benefits to the bidders,” the report says.

Subhani said the excise department had to raise price as all tenderers were unhappy with the prevalent price. “Though I agree that present rate for 200 ml sachet is Rs 2.14 but then, it was Rs 2.54 in 2006. As per giving maximum supply to one firm, it is because of its capacity,” he said.

The department, after having added VAT and margin money, fixed price for 200 ml sachet at Rs 12.25 per 200 ml sachet while it should have been actually Rs 11.42. It sold 13,57,86,364 sachets of 400 ml (at price of Rs 23.66) and 31,95,10,973 sachets of 200 ml during 2009-2012.

It had invited tender for grant of manufacturing and supply on wholesale spiced country liquor to Bihar State Beverage Corporation Limited from August 1, 2009 to March 31, 2012.

Though the previous tender period expired on March 31, 2008, the department took several months for fresh tendering and in the process, previous licensees got undue extension.

PAG also objected to the excise department starting tender process in February 2009, knowing well that elections were due in May and code of conduct would be in put in place.

The report says two lowest tenders, M/s Lords Distillery Ltd and M/s Narang Distillery Ltd, were rejected on grounds of “non-submission of certificate from registrar of company”.

PAG says such certificate was outdated requirement. It says two applications were accepted in absence of similar certificates. The rejection deprived excise department of competitive rates.

Bihar Liquor (Price Fixation and Control) Rules 1994, says Board of Revenue will fix the rate of spirit for manufacture of country liquor. But the excise department did not seek its approval and the tender was finalised by a screening committee under chairmanship of excise secretary, PAG says. The government told PAG it had sought the board’s permission in March 2009, which was not acceptable to PAG.