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In the racket, unearthed over the weekend, some employees of the Social Welfare Department, in collusion with the Pay and Accounts Office staff, had siphoned off over Rs 180 million (Rs 18 crore) meant for post-matriculation scholarships through forged bills.
Investigations have revealed that the racket had been in existence for the last few years and that the money was drawn in the name of 12 non-existing colleges.
The kingpin R Moti Naik, a warden, and Shankar Rao, an accountant in the District Social Welfare Office in Hyderabad, were on Sunday arrested while two other accused are still at large.
Following the exposure, the state government has initiated a series of measures to streamline procedures to prevent recurrence of such malpractices, state Social Welfare Minister J R Pushparaj said.
"We propose to give sanctioning and drawing powers to district Deputy Directors (of the social welfare department) as against the present practice of allowing college principals to draw the scholarship money. There are at present 5,000 odd principals in the state enjoying these powers," Pushparaj said.
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