Caught in a web of rules relating to vetting of books of private firms, the Comptroller and Auditor General has not been able to start scrutiny of Mukesh Ambani-led RIL’s accounts, even after the company agreed to special audit of gas field expenses nearly two months ago.
CAG was asked by the Oil Ministry to audit the accounts of RIL, which is facing allegations of gold-plating gas field costs that has increased four-fold to USD 8.8 billion.
The auditor has so far sought from RIL only a list of relevant documents for KG-D6 fields, as issues like legal tenability of audit of Production Sharing Contract (PSCs) and enforceability of corrective steps are being debated.
CAG had earlier complained that it could not make any headway in the last two years in the absence of access to the books of private operators, including RIL.
According to an October 3 note signed by V K Dewangan, Director (Exploration) in Petroleum Ministry, the September 22 meeting between CAG’s Principal Director of Audit (PDA), oil regulator DGH and RIL that was supposed to be the ‘entry meeting’ signifying beginning of audit, was later converted into a clarificatory meeting because of internal issues.
PDA has held three meetings to deliberate if the special audit of KG-D6 and other fields sought by the Oil Ministry was as per the provisions of PSC and who - RIL or the ministry - would be the auditee, it said.
While the ministry wanted special audit of accounts from 2003-04 fiscal, CAG wanted the scope of examination to records be restricted to 2006-07 and 2007-08 only.
RIL had on August 17 agreed to a CAG audit. Oil Minister Murli Deora too had on August 31 promised CAG unfettered access to account books of private firm.
As per CAG’s Regulations on Audit and Accounts for Special Audit, the request made by oil ministry for KG-D6 did not fall under the relevant rules, the note said.
To overcome this, the request may be covered in terms of reference framed in consultation with the CAG.
On the issue whether the proposed corrective actions in CAG’s audit could be enforced if they are not as per the provisions and spirit of the PSCs, it was agreed that the oil ministry would be the auditee, it said.
The government had in 2002 asked CAG to audit PSCs like the one for KG-D6 block with RIL, signed under the New Exploration Licensing Policy (NELP), but the premier auditor had then stated that its charter neither permitted audit of private accounts nor did it have the manpower to do so.
Subsequently, the government with the concurrence of CAG, appointed independent third—party auditors on the basis of an open bidding process. These auditors have been operating on behalf of the government and auditing the accounts of companies like RIL.
However in 2007, CAG was asked to audit the exploration spending and the agency conducted audit of all the private company reports, copies of which were available with the DGH.
To close the audit, they needed to seek originals which would now be made available to them.