The Congress (government) of Assam is threatening to revive investigations into an alleged letter of credit (L/C) scam in which the north-eastern Indian state's former chief minister Prafulla Kumar Mahanta is suspected of involvement.

The calls come amidst criticisms of Assam's current government by its outspoken former chief minister, who now leads its opposition Asom Gana Parishad (AGP) party.

Immunity

The multi-million dollar L/C scam dates back to the early 1990s, with some reports suggesting it netted around US$55 million for those who participated in it.

Another former Assam governor, S K Sinha, had granted Mahanta immunity from prosecution in the L/C scam.

Investigations

The current government of the state says it will ask the Central Bureau of Investigations (CBI) to reopen its investigations into the scam.

The CBI first launched an investigation into the case in 1993. The investigators submitted a report in 1997 when it also sought permission from the state governor to prosecute Mahanta.

Ministerial involvement

The Assam case centres on the practice of offering credit, usually L/Cs to contractors for work undertaken for the government. The department managing the work sanctions payment and money is subsequently withdrawn from the treasury by the contractor.

Some observers believe that government contractors were routinely able to submit L/Cs for hugely inflated amounts because they were allegedly able to do so with the knowledge of ministers who received a share of the proceeds. (DC World News, 6 December 2001).

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