The committee, was constituted on February 11 to probe alleged misutilisation of funds worth Rs 12 crore between August 9 to December 31, 2012 in Save Drinking Water project of CCDU in Jammu and Srinagar cities.
"It appears that irregularities in execution of programme and incurring of expenditure have been committed", a four-member inquiry committee headed by Chief Engineer Irrigation and Flood Control, K K Gupta, has said in 25-page probe report.
The scam in CCDU and department of Irrigation and Flood Control was occurred during the tenure of Congress Minister Taj Mohideen, who is now Medical education Minister.
During January 15 cabinet expansion, Sham Lal Sharma had taken command of the PHE, Irrigation and Flood Control Minister from Taj Mohideen, who was the minister since 2009.
It had rocked the Council during the recently concluded budget session and Sharma had assured the probe.
"It is opined that no further payment be released in favour of the said agency (CCDU) till all shortcomings in execution of the programme and expenditure thereto are removed or set right, rather fulfilled, in accordance with the guidelines and instructions issued from time to time by the competent authority while releasing the funds", the report said.
"A detailed, independent and full-time inquiry and audit of accounts is required to arrive as to whether the expenditure shown to have been incurred is reasonable and justified," it said.
The probe report further questioned the awarding of contract to the single bidder, a Jharkhand-based NGO.
"A single NGO has been assigned the responsibility of conducting almost all activities of the programme in the state, creating a sort of dominance/monopoly.
"Therefore, slackness and casual approach has developed in execution of the programme, as evidenced during the on-spot interaction of the committee with the participants," it said.
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