By Venkatachari Jagannathan

Chennai, June 30 (IANS) The Central Vigilance Commission (CVC) will soon act on a report of its probe team that looked into alleged irregularities at the Mangalore-based public sector Corporation Bank.

Queried about the next course of action by the CVC on the probe team's report, vigilance commissioner R. Sri Kumar told IANS on phone: "The investigation has been completed. Necessary action that needs to be taken will be done."

According to sources, the next course of action would entail the CVC forwarding its recommendations to the Ministry of Finance.

E-mails to Corporation Bank chairman and managing director Ramnath Pradeep and general manager B.R. Bhat as well as Eric Anklesaria, director, financial services, at Ernst & Young asking for their comments remained unanswered.

A two-member team from the CVC camped at Corporation Bank's headquarters during May 9-14 to probe the complaints about irregularities in the sanction of loans and in the process for issuance of tender for selecting an IT consultant.

The inquiry was held under Sections 8 and 11 of the CVC Act. Section 11 confers on the inquiry team the power of a civil court in respect of summoning and enforcing attendance of a person, production of documents and receiving evidence on affidavits, among others.

Sources told IANS that the top management is on a sticky wicket in respect of the tender for the appointment of IT consultant as the eligibility norms were engineered to suit one bidder.

"As per norms, firms providing consultancy to banks to make proposals or tenders can't participate in bids. But this norm was violated for appointment of technical, management consultants on retainer basis and for expanding the bank's insurance, wealth and asset management business," a knowledgeable source, who spoke only on condition of anonymity, said.

The source said Corporation Bank consulted Ernst and Young for preparing a proposal for the tenders. Later, the bank not only allowed E&Y to bid for the project but also revised the tender norms.

Last October, the bank's IT division in its note to the board mentioned that E&Y is a well-known consultancy. Later E&Y made a presentation to the bank's Board.

On October 27 last year, E&Y, while forwarding the draft proposal for the appointment of technical, project management consultant on a retainer basis, said it has the expertise to offer a wide scope of suggestions, help select projects and give them to consultants.

Part of the project is to study the bank's core banking solution (CBS) and suggest new software even though Corporation Bank has been winning awards for technology. The bank floated a tender Nov 11 with some changes made to E&Y's draft on the eligibility criteria.

E&Y had expressed its concern that the tender conditions were different from what it had suggested earlier and this "would not help".

Subsequently the bank issued a corrigendum a fortnight later specifying that the bidding company should have executed similar work in two public sector banks during the past five years as on March 31, 2010. The bank also altered the technical scoring methodology.

However, the tender was scrapped as E&Y was the only bidder. This was reissued Dec 15 and this time there were two bidders -- E&Y and PricewaterhouseCoopers -- with the former emerging as the lowest bidder.

Banking sources told IANS some discrepancies, however, were found in one of the bids. But a committee of general managers in Corporation Bank approved the issue of purchase order to E&Y to validate its core banking solution (CBS).

In respect of the tender for appointing a consultant to advise on expanding life insurance, wealth and asset management business and also venturing into the general insurance sector, the proposal was drafted by E&Y.

The tender was floated Dec 21. On the suggestion of E&Y the scope of work was expanded by way of a corrigendum to include "payment services" such as debit, credit and prepaid cards, mobile recharges and payment gateways.

In this tender too E&Y is the lowest bidder. Both these tenders are now pending following the inquiry by CVC.