The Congress government in Karnataka is facing explosive allegations after RTI documents revealed that it awarded cloud service contracts to a company embroiled in the infamous Andhra Pradesh e-challan scam — raising serious concerns over due diligence, misuse of public funds, and willful negligence in managing its flagship guarantee schemes.
According to the documents, the Siddaramaiah-led government granted exemption under Section 4(G) of the Karnataka Transparency in Public Procurement (KTPP) Act to Data Value Solutions — a private cloud services firm whose director Kommireddy Avinash, the son-in-law of former Andhra Pradesh DGP N. Sambasivarao, had been arrested in connection with a massive Rs 36.5 crore e-challan scam in Andhra Pradesh.
Despite the company being under investigation and its director behind bars, no background verification or departmental inquiry was conducted before the contract was approved. Shockingly, Chief Minister Siddaramaiah himself cleared the order, triggering outrage over what the opposition is calling a “reckless and politically motivated contract” given to a blacklisted firm.
Scam-tainted company wins contract for key guarantee schemes
On June 28, 2023, the Finance Department and the e-Governance Department approved the procurement of cloud hosting services from Data Evalu Solutions to support the digital infrastructure required for rolling out Congress’s ambitious guarantee schemes, including Griha Jyoti, Griha Lakshmi, Shakti Yojana, and Yuva Nidhi.
The department cited urgency and high application traffic as the reason for skipping the standard tender process, granting a 4(G) exemption that allowed the government to bypass competitive bidding. A total of Rs 63.13 lakhs was sanctioned to the company in two tranches — Rs 33.13 lakhs for Azure services and Rs 30 lakhs for AWS hosting, as per official note sheets.
This move has now sparked political and public backlash, as RTI documents confirm that the same company had earlier defrauded the Andhra Pradesh Police Department by diverting traffic fine payments meant for the government coffers to a fake application named Razor PE, swindling nearly Rs 36.5 crore between 2018 and 2019.
No due diligence, no discussion on criminal record
Despite the company’s and its director’s serious criminal background, the Karnataka government failed to mention these facts anywhere in the official documentation. The RTI documents reveal that not a single line in the proposal file discusses the company’s involvement in the Andhra Pradesh scam.
Furthermore, there is no record of background checks, no references to pending criminal cases, and no deliberation over the implications of hiring a company whose key official had been arrested for financial fraud just months prior.
“This reeks of corruption and complete abdication of responsibility,” said a former senior official from the Karnataka Administrative Services, who requested anonymity. “When a company’s director has been arrested and his operations linked to a multi-crore scam, the least a government should do is investigate — not reward him with new contracts.”
Opposition cries foul: “Congress hired a criminal contractor”
The BJP and JD(S) have pounced on the revelations, accusing the Congress government of knowingly hiring a scam-tainted firm and exposing sensitive citizen data and crores of taxpayer money to risk.
“This is a clear case of criminal negligence. The government bypassed tender rules under 4(G), handed over Rs 63 lakh to a company whose director has been jailed, and still has the audacity to stay silent,” said BJP MLA R. Ashoka, calling it “a textbook case of conflict of interest and political compromise.”
He demanded a judicial probe into how Data Value Solutions — linked to fake payment gateways, dummy accounts across Telangana, Karnataka, and Andhra Pradesh, and illegal revenue collections — was entrusted with digital infrastructure handling crores of applications and personal data under major state-run welfare schemes.
Behind the scenes: How the deal was pushed
The file trail shows that Data Evalu Solutions first submitted a proposal on June 10, 2023, just weeks after the Congress government came to power. The e-Governance Department cited the rising application load on the Seva Sindhu portal — used by citizens to apply for guarantee schemes — as justification for quickly onboarding cloud providers without a tender.
Initially, the government approved Rs 89.90 lakh for ESDS to provide cloud services over two months. However, technical errors and overload led to a proposal for additional services from Azure and AWS, routed through Data Evalu Solutions — despite other vendors offering lower prices.
A notification from the Finance Department on June 28, 2023, cleared Rs 33.13 lakh and Rs 30 lakh for Azure and AWS, respectively, routed through Data Value, cementing their position as the service provider for one of Karnataka’s most high-profile schemes.
A ticking digital time bomb?
Cybersecurity experts are also raising red flags, warning that outsourcing hosting to a company facing fraud charges — with a history of manipulating payment systems and banking networks — could compromise citizen data, breach confidentiality, and expose the government to massive legal liabilities.
“State welfare data includes names, Aadhaar details, income status, and banking information. Giving backend control of such systems to a questionable firm is a disaster waiting to happen,” said Dr Anirban Sen, a cyber security expert formerly with CERT-In.
Congress remains silent amid the firestorm
So far, Chief Minister Siddaramaiah, IT Minister Priyank Kharge, and e-governance officials have remained tight-lipped about the controversy despite growing calls for a white paper on the matter.
RTI activists and digital rights groups are now demanding that the contract be scrapped immediately, the role of officials scrutinised, and that Data Value Solutions be blacklisted permanently from government procurement.
With the guarantee schemes being the Congress’s electoral trump card, this scandal threatens to dent its credibility and raise fundamental questions about the integrity of digital governance under its rule.
