01 June, 2011 by Anupam Sharma- BUREAUCRACY Today reports...
Kindly link up with the laudable aims and goals of DGR
It seems that a Pandora's box is waiting to be opened in the Ministry of Defence. The Directorate General Resettlement (DGR) under the aegis of the Ministry of Defence is facing the biggest defence scam. The scam revolves around availing of re-settlement/ rehabilitation facilities in the name of Ex-Servicemen from the DGR by submitting fake documents, clandestine deals, and proxies running the agencies and in many cases, fake officers applying for resettlement schemes. The DGR seems more than hand in glove in these murky deals; allegedly facilitating and orchestrating the whole scam. A report.In order to maintain a youthful profile of the Armed Forces, approximately 60,000 Service personnel are retired/ released every year at a comparatively young age. A majority of the Service personnel at the time of retirement are at an age where they have numerous unfinished domestic responsibilities, which necessitate their taking up second occupation. The Central and State Governments have provided a number of concessions to promote the employment of Ex-Servicemen in civil jobs. There are reservations in Government departments, public sector undertakings/ nationalized banks and para-military forces, apart from the creation of the Directorate General Resettlement (DGR), an inter-Service organization functioning directly under the Ministry of Defence for resettlement and rehabilitation of Ex-Servicemen.
The DGR provides various resettlement and rehabilitation schemes to Ex-Servicemen officers, 'ESM (O)' and Ex-Servicemen 'ESM' (Personnel Below Officers Rank) through the Employment Directorate, Self-Employment Directorate, Training Directorate and Agriculture Directorate. The major schemes are as shown in the box. The eligibility criteria for various schemes can be viewed on DGR website www.dgrindia.com. The main criteria are summarized below:
benefit from the DGR earlier
Government/ semi-Government/ private concern and
In order to provide major resettlement and rehabilitation of Ex-Servicemen, on the request of the Ministry of Defence vide OM No 4(20)/US (Res) 93, the Ministry of Heavy Industries and Public Enterprises (Department of Public Enterprises) directed all departments under it to appoint security personnel in PSUs from Ex-Servicemen security agencies sponsored by the DGR vide OM No 6/22/93-DPE (SC/ST) dated 11 Nov, 1994. The Department of Public Enterprises decided to restore the OMs dated 11.11.94 and 18.3.96 with the following modifications:
(a) In order to ensure that PSEs get cost-effective and efficient security agencies, the DGR will sponsor more than one security agency so that the PSE concerned would have a choice in choosing the suitable outfit keeping in view its specific requirements.
(b) The service charge chargeable by the agency will be negotiated between the PSE and the agency concerned.
(c) The contract is for a specific period of two years, generally extendable by two more years vide OM No 6/22/93/GL-15/DPE (SC/ST) dated Feb 1, 1999.
MODUS OPERANDI
The DGR promulgated various schemes in such a manner that huge margins are deliberately created for the personnel running a scheme through the DGR. For example, most of the schemes have a minimum margin of 14 percent officially but much more is unofficially being borne by public sector undertakings/ State Government undertakings and in some schemes, the fee is paid directly to institutes through the DGR budget allotted by the Ministry of Defence for the resettlement and rehabilitation of ExServicemen. In order to circumvent Department of Public Enterprises OMs, the DGR promulgated its policy in such a manner that it virtually amounted to single tendering.
The DGR policy lays that a DGR sponsored agency must quote between 14 percent and 20 percent as service charges. On the contrary, the DGR registered agencies are providing services at 3 to 4 percent service charges. In case all the agencies sponsored by the DGR have quoted the same service charge, the contract must be awarded to the senior most sponsored agency, thereby, vitiating the very spirit of cost effectiveness and choosing the suitable outfit keeping in view the specific requirements of the PSUs. The DGR promulgated wage structure incorporates 28.98 percent as Weekly Off/ National Holiday/ EL/ CL. As per the Hon'ble High Court of Delhi, the EL/ CL are only eligible to regular and permanent employees. Therefore, most of the agencies save on this count also. Uniforma fair and transparent manner and has buttressed it with specific allegations against certain officers of the DGR named in the affidavit". Commenting on an additional affidavit, Sharma observed:
"The appellant has also filed an additional affidavit crystallizing the alleged glaring irregularities, violations, variations and improprieties in the functioning of the office of DGR".
In a landmark order, the Central Information Commissioner observed: "Needless to say, it is the mandate of the apex administrative authority to keep the organization falling in its domain, clean. The concerned Ministry in this case is the Ministry of Defence. The RTI Act does not confer any vigilance role on this Commission. Even so, the Commission cannot ignore the allegations, howsoever misplaced or frivolous, levelled by a retired Army officer, on affidavit. Hence, in the premises, we deem it expedient to request the Secretary, Ministry of Defence, Government of India, to have an inquiry caused into the matter and take action as deemed fit". No action has been taken by the Secretary, Ministry of Defence, till date on the orders dated October 18, 2010 in spite of repeated requests by the appellant.
Sometime in 2005, the management of a Toll Plaza was offered by the National Highway Authority of India (NHAI) to the DGR. The Self-Employment Directorate initially sponsored security agencies registered with the DGR, thereafter changed the criteria of sponsorship at whims and fancies from security agencies empanelled with it to officers registered for employment assistance with the private sector. Many officers employed at the Rajya Sainik Board/ Zila Sainik Board, re-employed with the Armed Forces of the Union, employed with the private sector, etc, were sponsored and such officers participated in the tendering process without taking prior approval of the competent authority, where they were employed. For example, Lt Col SK Baidyanada, who was re-employed with the HQ, Southern Command, till July 31, 2007 was sponsored for management of the Panvel Toll Plaza vide DGR letter No 1786/Govt-NHAI/Panvel/NH4B/DGR/Self Emp dated May 28, 2007 and the officer participated in the tendering process. Lt Col SK Baidyanada was again sponsored for the management of the Andewadi Toll Plaza vide letter No 1786/Govt-NHAI/Andewadi Toll/NH-14/Self-Emp dated July 31, 2011. Further, in some cases, the sponsorships for management of Toll Plazas were issued on hotel addresses, C/o BSNL Telephone Exchange, C/o Principals of Schools, C/o SO to AOC-in-C, etc. As per the policy, the officer was to sit for minimum 8 to 10 hours at a Toll Plaza. In some cases, the officers were running more than one Toll Plaza at a time along with a security agency and other resettlement facilities through the DGR.For example, the management of a Toll Plaza at Sriperumbudar was in the name of Lt Col C Medhi (Retd), M/s Eagles Eye Securities. The officer was sponsored for the Toll Plaza vide DGR letter No 1786/Govt NHAI/ Chennai/ NH-4/ DGR/Self-Emp dated October 26, 2006. The officer registered his name in the DGR on June 23, 2007; the Toll Plaza was operated by Lt Col C Medhi (Retd) from 1.7.2007 to 5.11.2008. At the same time, Lt Col C Medhi (Retd) was running a security agency in the name of M/s Prove Security and Allied Services in the North Eastern States (For the Toll Plaza, the officer was based in Bangalore and for the security agency at Howrah). Similarly, Lt Col SK Mehta (Retd) was sponsored for the Chennasamudram Toll Plaza vide DGR letter No 1786/Govt NHAI/TN/NH-4/DGR/Self-Emp dated November 7, 2006. The officer registered his name with the DGR on December 29, 2006 and the Toll Plaza was operated from 11. 1.2007 to 30. 9.2009 (For the Toll Plaza, the officer was based at C/o Mrs Sahilini Mohan, Bangalore, and for the security agency at Vellore). Lt Col SK Mehta was also running a CNG station at Mayur Vihar, Delhi, simultaneously and was based at Noida (UP).
Rajiv Karsolia's sponsorship document for running security agency EATS, which got numerous sponsorshipsThe officers in these cases were first sponsored for the management of the Toll Plaza by the DGR and subsequently registered themselves with the DGR. Such blatant irregularities/commission cannot happen without the active participation and connivance of DGR officials. How can the addresses of hotels, C/o BSNL Telephone Exchange, C/o Principals and C/o SO to AOC-in-C be considered authentic correspondence of an Ex-Serviceman officer?
What were the interests of Principals or AOC-in-C or his SO to allowance is 7 percent of the Basic, including VDA. The amount for six months works out to approximately Rs 2,700 whereas, the uniform costing between Rs 700 and Rs 1,000 is provided to the security guard in six months. The minimum rates levied by DGR-sponsored security agencies are about Rs 15, 478 per security guard and Rs 22, 981 per security supervisor for an eight hour shift to PSUs.
As on December 31, 2005, 110,000 Ex-Servicemen were employed through the DGR for security services to various public sector undertakings/ State Government undertakings/ autonomous bodies throughout the country. The Reserve Bank of India has instructed that the security of the treasury chest of all banks in the country be entrusted to DGR-sponsored ESM security agencies only. Due to the enhanced security requirement, security of Toll Plazas, etc, the approximately 150,000 security guards are deployed through the DGR as on date. Around 2,600 security agencies are registered with the DGR since 1992. Many proprietors have died, many have withdrawn from the scheme and many proprietors have joined together to form Ex-Servicemen private limited companies with the DGR. Thus the effective security agencies registered with the DGR are less than 2,000 as on date. The quota of 300 security guards is laid by the DGR to dissuade the genuine officers running the agencies, as their quota would expire within three to four years, then what? The DGR patronizes subletting to civilians. As a result, officers employed with PSUs/ State Governments/ private sector, etc, at handsome salaries are lured to register for security agencies/ management of Toll Plazas, Coal Transportation, etc, at the DGR to sublet the same to civilians, on a profit sharing basis at the cost of resettlement and rehabilitation of genuine Ex-Servicemen. The DGR officials are also hand in grove in these murky deals; allegedly facilitating and orchestrating the same. As a result, DGR officials have made assets disproportionate to their known sources of income.
The quota is only for Ex-Servicemen running the scheme themselves.For civilians and/ or selected persons, who look after DGR officials; there are no rules, procedures or guidelines (as would be evident from succeeding paras). The DGR promulgated schemes are flouted in connivance with DGR officials to such an extent that the entire resettlement and rehabilitation venture has become a hub of corruption.AFFIDAVIT EXPOSES ALL
Bureaucracy Today urges its readers to share information on corruption around them. On this BT initiative Bureaucracy Today sources volunteered to share the scam details which led to this exclusive story. Original story at http://www.bureaucracytoday.com/cover_story_june_11.html
An affidavit submitted before the Central Information Commission (CIC) exposes the rampant and clamorous irregularities left, right and centre to subvert the rules, procedures or guidelines to benefit the vested interests by the DGR's own officials.
ML Sharma, Central Information Commissioner (former Additional Director and Special Director, Central Bureau of Investigation), on an affidavit filed before the CIC, observed, "In short, the appellant has alleged that the office of DGR is not functioning in give their addresses? Where are the checks and balances? Only the DGR can answer.
RULES CHANGED ON WHIMS AND FANCIES
In most of the cases mentioned in this report, the eligibility criteria for various schemes were changed at whims and fancies of the office of the DGR. The affidavit points out that many Ex-Servicemen have taken facilities from the DGR and have sublet them, in gross violation of rules to civilians. Moreover, a number of officers have taken dual or more facilities at a time from the DGR. The dual facilities seem to be in connivance with officers posted at the DGR. As a result, officers posted at DGR made assets disproportionate to their known sources of income. A few examples of dual or more than dual facilities extracted from the affidavit are as under:
State of Rajasthan and at the same time he was running a security agency
through the DGR in Gujarat. The officer was also sponsored for the management of a Toll Plaza in Gujarat:
The officers employed at the Rajya Sainik Board/ Zila Board are the authorities to monitor the sponsorships issued by the DGR. If the authorities themselves are taking illegal facilities and subletting the same, then the level of monitoring could be imagined. According to the affidavit, nearly 60 to 70 percent of the security agencies empanelled with the DGR do not fulfil the eligibility criteria laid down by the DGR.
TRAINING INSTITUTES
The DGR organizes various resettlement courses for ESM (O) and ESM with various institutes registered with it. In the case of officers, the Ministry of Defence funds 60 percent of the course fee and 40 percent is funded by the officer. In the case of ESM (Personnel Below Officer Rank), the entire fee is paid directly to the institutes through the DGR budget allotted by the MoD. As per Expression of Interest, published by the Training Directorate, DGR, the "Institutes belonging to Ex-Servicemen should not be a beneficiary of any Employment Scheme/ Self Employment Scheme sponsored through the DGR". In gross violation of rules, a number of officers being beneficiaries of Employment Scheme/ Self Employment Scheme at the same time have registered and are operating training institutes in connivance with DGR officials.
These institutes have issued certificates to persons, who were never nominated by the DGR and in many cases the officers never attended even a single class at the institute. Since the certificate was to be signed by the DGR representative, theGovernment funding of 60 percent was accordingly shared by the trainee officer, institute and the DGR officials.
As per the information provided by Brig AK Pradhan, Commander (Appellate Authority) Headquarters Karnataka and Kerala Sub Area, Major General (now Retd) SG Chatterji, AVSM, VSM, DGR was given Rs 5 lakhs as a token of contribution for organizing the second course at the IIM, Bangalore, by Major V Ravindran (Retd). Major V Ravindran had spent Rs 11 lakhs for organizing the first IIM Course at IIM, Bangalore. If these are the amounts for the IIM, Bangalore, then what about the IIM, Ahmedabad, IIM Indore, IIM Lucknow, MDI Gurgaon, etc.
Major V Ravindran was the Director of Institute Cavalier India, Bangalore, and was conducting resettlement courses of officers and PBOR (Personnel Below Officer Rank). Major V Ravindran (Retd) was also running a security agency in the name of M/s The Cavalier Detective. Later, Major V Ravindran (Retd) converted the said proprietorship firm to a private limited company in the name of M/s Hi-Alert Asset Protection Private Limited. The sponsorships were issued to Major V Ravindran (Retd) in less than two years, as senior most by the DGR.
Major V Ravindran (Retd) was sponsored for more than 1700 security guards in less than two years. As per a counter affidavit filed by Col Manmeet Singh, Joint Director (Emp), before the Hon'ble High Court of Delhi, "Bi-annual Report and Return, filling of 'N-2 Updation' is mandatory by the proprietor or director. Any falsification and/ or error/ omission in this report pertaining to the strength of guards including the period of employment is viewed very seriously. These are cross-checked with N-2 returns of other co-sponsored security agencies and sponsorship letters of DGR as well as from key employers'. If the said rules are applied in the case of Major V Ravindran (Retd), it would reveal that out of aforesaid sponsorships, more that 1,200 security guards were materialized in favour of Major V Ravindran (Retd), implying that Major V Ravindran (Retd) had approximately 2,500 security guards in a span of less than twoyears. Since the officer was registered in the year 2000, going by the above statistics of 2500 security guards in two years, since empanelment, he has taken approximately 10,000 security guards. Whereas, a Naval officer, singularly selected to undergo the SEALS course at San Diego, California, and commanded the Elite Marine Commando MARCO Establishment of the Indian Navy, running a security agency through the DGR has moved the Hon'ble High Court of Delhi against the high-handedness and arbitrary functioning of the DGR in WP (C) No 1464/2011.The Hon'ble High Court of Delhi has passed the interim order in favour of the petitioner. The next date of hearing before
the Hon'ble Justice S. MURALIDHAR is scheduled on August 24, 2011.
CONNIVANCE OF DGR
The affidavit samples the case of M/s Exserviceman's Airlink Transport Services Private Limited; in short 'EATS' registered with the RoC-Delhi. The Joint Director (Emp) accorded the 'EATS' the status akin to a State mGovernment- owned Ex-Serviceman corporation. The EATS does not qualify to be a State Government-owned Corporation or an Ex-Serviceman-operated private limited company as per DGR policy. Also, the affidavit quotes the information provided by the CPIO of the DGR, "As per directions of the Hon'ble Delhi High Court, Director General Resettlement is the Chairman of the company and a serving officer is managing the company as Managing Director." However, a copy of the orders of the Hon'ble High Court of Delhi was not provided to the appellant.
The affidavit further says: 'It is well settled law that persons employed with the Armed Forces cannot practise any profession or carry on any other occupation, trade or business without the prior sanction of the President of India. The same is averred in Section 19 (4) of the Naval Act, 1957. Moreover, Section 19 (1) of the Naval Act further reads that 'No person subject to Naval Act 1957 shall be a member of or be associated in any way with any society, institution, association or organization that is not recognized as part of Armed Forces of the Union or is not purely social, recreational or religious nature'. In a clear violation of the same, Commodore Rajiv Karsolia, Principal Director (Emp) at the DGR, is a Director with the EATS, Commodore Ranjan Seth, VSM, former Principal Director (Emp) at the DGR, was the ex-officio Chairman, EATS, and the Director with the Uttarakhand Purv Sainik Kalyan Nigam Limited (UPNL) and Rear Admiral Bola Radhakrishna Rao, NM, VSM, FIS, Chief Hydrographer, is the Director with the UPNL. What's shocking is that those named above are senior officials holding high ranks in the Armed Forces and are side by side enjoying the office of profit at the EATS and the UPNL. Even pecuniary gains are not allowed to Government employees.
What is damning is that Commodore Rajiv Karsolia and Commodore Ranjan Seth were the final approving authorities for all sponsorships of security agencies to various PSUs and State Government undertakings. When the matter was reported to Major General (now Retd) SG Chatterji, AVSM, VSM, Director General Resettlement\ and Appellate Authority, vide appeal dated October 30, 2009, no action was taken against the said officer and Commodore Karsolia changed his designation from being the Director to that of Nominee Director in the EATS and continued sponsoring his own company, EATS. As per the documents, EATS was sponsored as a State Corporation and simultaneously as an individual proprietorship firm by Commodore Rajiv Karsolia and Commodore Ranjan Seth. The moot question arises that how could EATS operate as two separate identities at the same time?
Money spinners
The game of acquiring facilities in the name of Ex-Servicemen by proxies runs deep in a defence department known as Directorate General Resettlement (DGR). The Ex-Servicemen facilities; security agencies, toll plazas, coal loading and transportation, training institutes, etc, are major money spinners for the owners running them. Government rules are stringent. Only DGR-sponsored agencies can provide security services to public sector undertakings/ State Government undertakings or autonomous bodies, as per the Department of Public Enterprises. Now, what happens,
(a) Service charges levied by DGR-sponsored agencies to PSUs are minimum 14% and maximum 20% and on the contrary, the DGR registered security agencies holding valid licences are providing security services at service charges of 3% to 4%
(b) DGR promulgated wage structure incorporates 28.98% as Weekly off/National Holidays/EL/CL. As per the Hon'ble High Court of Delhi, the EL/CL is only eligible to regular and permanent employees. Therefore, most of the agencies save on this count.
(c) Uniform allowance is 7% of the Basic including VDA. The amount for six months works out to approximately Rs 2700 whereas the uniform costing between Rs 500 and Rs 700 is provided to a security guard in six months.
(d) Quota is laid to dissuade the genuine officers running the agencies, as their quota would expire within three to four years, then what? The DGR promotes subletting to civilians. As a result, officers working in PSUs/ private sector at handsome salaries are luredto sublet the same to civilians, at the cost of national security, on a profit sharing basis.
According to sources, what is actually happening at the ground level is this: Agency owners sublet DGR facilities taken in their name to civilians on a profit sharing basis. The owners are not present at any facilities at all and have proxies in place. The guards are not paid the prescribed salary as per DGR norms. Rather they are paid much less than what they should be getting leaving huge margins of money with the agency owners as a surplus. The agency owner, the Ex-Serviceman in whose name the agency is being run, shares the booty with the proxy owner (mostly a civilian or a fake Armyman). In many cases, the civilians do not deposit PF, ESI and Service Tax with concerned authorities, thereby ultimately leaving the security guard and agency owner in lurch. This money is also reportedly shared with DGR officials who have connived in running these façade agencies putting the security of major PSUs, State Governments and autonomous bodies at risk.
On an average, taking Class 'A', 'B' and 'C' cities, the average cost of a security guard through the DGR is approximately Rs 14,000 per month and that of a supervisor Rs 21, 000 per month. A rough estimate says, nearly 1,15,000 Ex-Servicemen are employed through the DGR. We can well imagine the amount of money being swindled by these fake/corrupt/non-existent officers. The amount makes it one of the biggest defence scams running for years. If the people running these agencies are proxies, civilians and money swindlers, then the entities are causing a great threat to national security. This is only a conservative estimate. The scam is gargantuan.
Lt Col R S Tripathi (Retd), son of the late Mr. J R Tripathi, was running two security agencies in his name as proprietorship firms; namely M/s Hind Security Services and M/s Perfect Services. Both the security agencies were sublet to Shailendra Kumar Singh and Armendra Kumar Singh, both civilians. M/s Perfect Security was also sponsored for the management of a Toll Plaza vide DGR letter No 1786/Govt-NHAI (MP)/DGR/Self-Emp dated July 7, 2006.
DGR: HUB OF CORRUPTION
As per the additional affidavit, a large number of non-entitled persons have illegally ventured into the operation of security agencies/ management of Toll Plazas, etc, which are registered in the name of Ex-Servicemen officers as also, certain employees in the office of the DGR have also joined hands for providing undue business to such non-entitled persons as well as financial benefits to certain selected individual/companies. Such activities are rampant in gross violation of the laid down rules, procedures, guidelines, etc, as a result of which the entire 'Welfare' venture has become a hub of corruption. The affidavit further says the names of those security agencies recommended and forwarded to public sector undertakings/ State Government undertakings for limited tendering do not possess the mandatory licence, issued/ to be issued by respective State Governments, thereby entitling the non- entitled persons to carry out business activity illegally. The DGR instructions read that "all security agencies registered with it are to comply with the provisions of Private Security Agencies (Regulation) Act, 2005 and Rules, as applicable in the State they are working in, including Licence from respective States being strictly adhered to. Principal employers are also requested to ensure adherence to the same, before giving any contracts. The DGR is itself sponsoring agencies not complying with the provisions of Section 4 of the Private Security Agencies (Regulation) Act, 2005 with ulterior motive in connivance with non-entitled persons. A number of officers/ civilians running agencies as proxies have submitted forged
'Acknowledgement' with DGR and continue to get contracts worth several crores with PSUs (see Box). Though Section 4 of the Act is clear and unambiguous, the DGR officials render contrary advice on the statutory provisions to the PSUs for their personal gains. The quota of number of guards allowed per agency is as per whims and fancies, the age limit is ignored; officers while in service are allowed to run agencies, officers taking dual facilities in single name, officers not fulfilling eligibility criteria taking facilities and subletting to non-entitled persons, etc.
What not is happening in the DGR in the name of resettlement of Ex-Servicemen?
SENIOR DEFENCE OFFICERS KEEP MUM
The Directors of seven private limited companies registered with the DGR had submitted a joint written complaint to the Director General, Resettlement, alleging preferential treatment in sponsoring certain security agencies, but no action was taken and on the contrary, the seven security agencies were not sponsored vis-a-vis the others.
H S Chowdhary, Chairman, Central Association of Private Security Industry
(Delhi Chapter), vide his letter dated April 28, 2011 had brought to the notice of the GOC, Headquarters Delhi Area, the Chief of Army Staff and the Adjutant General that Col Tekpal Singh Kang, Joint Director (Emp) responsible and accountable for sponsoring various security agencies registered with the DGR to public sector undertakings/ State Government undertakings, while being employed at the DGR was running a security agency as per the affidavit submitted by him to the Government of NCT of Delhi. There were also serious allegations about the officer having taken bribe to sign sponsorship letters, but no action seems to have been taken by the senior defence officers.
And corruption continues unabashedly. Officers are giving unauthenticated addresses for correspondence, for example, schools, hotels, telephone exchange, SO to AOC-in-C, etc. Anybody can guess that these addresses are fake but the DGR is not bothered. It keeps on sponsoring officers already running a facility for another one and accepts wrong and fake undertakings (evidence available with Bureaucracy Today). A flummoxing case is of TC Yadav, who keeps on applying and getting various facilities through DGR with different ranks. In one place he is Capt TC Yadav, then Maj (Dr) TC Yadav, and then in the third case he becomes Col TC Yadav.
CAN'T DGR AND MOD SEE THIS GAME?
Damning evidences of many agencies being run from the same premises, sublet to civilians thereby posing threat to national security and officers accepting money have come forth.This defence scam run by the DGR runs into crores of rupees. It may turn out to be bigger and blatant than the 2G Spectrum scam, once investigated.
Knowing the credibility of this magazine and the seriousness of the matter, Neelam Nath, Secretary, Department of Ex-Servicemen Welfare, MoD, contacted this magazine just before its June issue going into print to say that she was unaware about the graft in the DGR and would ensure that a board of three officers was constituted to give a report about the scam brought out by Bureaucracy Today.
Credit: Defence Scam in the name of Resettlement- exposé by BUREAUCRACY Today
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