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Updated: May 5, 2013 04:08 IST

'Debate the quantum but don’t deny there’s been a loss'

Girija Shivakumar
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CAG Vinod Rai
CAG Vinod Rai

I have been apolitical all my life and do not see why I should change into a political person, says Vinod Rai

In an exclusive interview to The Hindu on the sidelines of an audit event in Jaipur on Saturday, Comptroller and Auditor General Vinod Rai reflects on his tenure and answers the criticism that has been made of the CAG’s recent reports on 2G and coal.

After an eventful five years, your tenure is coming to an end this month. A criticism that some in government have made is that your reports have strayed from the path of auditing and begun to question policy.

We have never commented on policy formulation. In April 2008, immediately after I took over as CAG, I addressed senior civil servants and explained that auditors and those in the administration are on the same side. There should not be any ‘we’ and ‘they’ relationship since both of us are engaged in the job of ensuring good governance.

The executive implements government policy and our job as external auditor is to audit the government’s expenditures and implementation of policies, post the events. We believe that we are as much in the process of upgrading governance as anybody else is. We do not question policy. We only audit implementation.

I think it is an entirely incorrect perception that at any point we have questioned policy prescriptions or formulations. If you read 2-3 of our performance audit reports recently, in the introductory part itself we have said that policy formulation is the sole prerogative of the executive. We recognize that and respect it. What we audit is the implementation of that policy. Also, at times we have tried to see in the course of our audit whether that policy is suboptimal.

We have never taken on the role of policy formulation or even questioned policy formulation. We just audit the implementation of policies and not a single instance has been pointed out to us where we have questioned policy. Yes, we may have compared policies formulated by the government just to find out sub optimality.

There has also been some criticism of reports being leaked to the media.

Auditing goes through four or five layers. The first level of audit is when we make basic queries. Those questions cover a whole gamut of issues. The answers come, and at that stage, 80 per cent of what we ask is dropped because the answers satisfy us.

Now, at that stage if someone makes an RTI application about what the questions asked were and if we release those queries, these would give a very incorrect picture. This is because the media does not see the answers and that is where it becomes slightly misleading. If you ask me, in hindsight, I would like to suggest to government and Parliament that since we prepare reports for presentation to Parliament, thus anything that we do leading to the presentation should come into the public domain only after this has been done.

This is mostly because at the intermediate stage if any of this is seen by the public it is half baked and may give a very incorrect position.

The media being the media may want to sensationalise some issues and thus sometimes you have instances where out of context issues create headlines.

Another charge is that the audit process has made officers fearful of taking decisions, has led to policy paralysis.

To argue think that our audits have become a stumbling block to decision-taking is a bogey. It’s an alibi for non-performance because those in the bureaucracy who are dynamic and take decisions in good faith have always done so and come out unscathed.

An audit does not fault a person who may have gone wrong because he or she is exercising judgment every other day and acting in good faith. If something is premeditated and is an act of commission for a benefit, then certainly it is a vigilance issue and we point it out.

Some critics have asked why the coal and 2G audits which led to scams being probed deal only with the tenure of the UPA government and ignored what went on during the NDA’s time.

If you look at the spectrum issue, our report points out that the entire spectrum phenomenon had been audited by us. We had audited up to 2002 and thereabouts. The only difference was that they were financial audits or compliance audits and we had not gotten deep into the implementation of policies.

After 2002, when we have taken up this audit, it is a performance audit. In the process of a performance audit, we have gone into the efficiency and efficacy of the implementation of whatever policies the government had formulated. This is the only difference. We picked up a particular Cabinet decision and saw whether it has been implemented or not. That is it.

When different arms of government were seeking a market discovery process, the department concerned did not accept it. When different arms of government were suggesting market indexation, the concerned department did not accept that. Whereas in its own policy formulation two years later, the same department has gone into a market discovery process through an auction. All that we tried to explain is that the concerns of the Finance Department, the PMO, the Law Ministry were all indicating a market discovery process. What has the nation forgone by not following that process? Unlike the government, we are auditors. As I have explained to the PAC and JPC, ‘presumptive’ and ‘potential’ have been used interchangeably in our report. We have used four models to calculate the loss. The quantum or amount of loss can be debated but that there has been loss cannot be denied.

According to Opposition MPs, the JPC draft report uses the testimony of a retired CAG official of ‘dubious credentials’ to prove you wrong. How would you react to this?

I had explained this to the JPC. I must add that the JPC has been very fair to us because they gave us 3-4 opportunities to clarify our position as well as the thinking or process that had gone into the preparation of this report.

I do not want to comment on any officer. Each officer is as good as the other. It is a fact that this particular officer had done the audit and had made the presentation to the Public Accounts Committee of this audit. He may have had an afterthought and wanted to retract, however that is his choice. I do not want to comment on it. As far as we are concerned, we have explained to the JPC very clearly the processes that have been undergone.

I have 40 years of experience behind me in government. I am extremely proud of this department and its robust processes and there is no way in which an individual — even the CAG — can overrule the findings of the department and superimpose his/her own opinions.

We are totally in agreement with the observations of the Supreme Court. The government can decide that a particular national asset has to be made available to the public as a social welfare activity, irrespective of the cost. All we have been trying to do is compare the government’s policy formulations from time to time. We have never said that in the sale/auction of spectrum, revenue should be maximized. We have only said, as has the Planning Commission, that there should be an element of revenue generation not maximization. There should be a balance between revenue generation and maximization.

In the case of coal, we haven’t questioned anything. All that we have noted is that the secretary said the process was opaque, it was leading to windfall gains and these were his exact words. There was lobbying for these licenses and the minister in charge agreed with the findings of the secretary and decided that there should be a process of market discovery. That is all. We have not questioned any of these decisions. We are 100 per cent with the government and the Supreme Court.

What do you feel about the government’s attempt to make the CAG a multi member body like the Election Commission? Will this bring more checks and balances?

The government has been very fair with us. They sought our opinion around three years back, post the Commonwealth Games, on a multimember body. We pointed out that there are three models of supreme audit institutions in the world today. The first is where the audit is a court of audit and it sits as a multimember bench, it has powers that are punitive. It has the powers of the judiciary, like in France. The second is the commission of audit like in Japan. The third is of a single-member body like in the Canada, UK, Australia and NZ, the US. There is a single body CAG assisted by deputy CAGs, depending on the numbers required. Each model has its own advantages and disadvantages so we left it to the government to decide which would be more suitable in our milieu.

You are considered a symbol of the anti-corruption movement. How do you react to this tag?

It is very unfortunate and that is why I said that the media is fond of headlines. Certainly by no stretch of imagination would I like to be called an anti- corruption crusader because that is not what we are. Auditing has a philosophy. Worldwide, the audits run by supreme auditing institutions are meant to hold the executive financially accountable to the legislature. This is exactly what we are doing.

How do you feel about the past practice of CAGs joining political parties or accepting assignments like governorships?

I would not like to comment on any of my predecessors as each one of them is free to have chosen a career path or life beyond being CAG in his own way. As far as I am concerned, lots of people have said that I have political aspirations. I have been apolitical all my life and do not see any reason why I should change into a political person. I would like to remain active in the various fields that I have experience and proficiency in.

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Dear Chandu Fatafat
Try and understand the different types of audit and the auditor's role
in each one. A Chartered Accountant's company audit, CAG's audit of
government accounts and Performance Audit by CAG to cite three different
categories have different purposes and formats. In 2G, it was not just
an audit of 'income and expenditure' statement by CAG.

from:  M G WARRIER
Posted on: May 6, 2013 at 20:37 IST

@Chandu, CAG audits might have been investigative in nature after they
found irregularities. So what? They have exposed the accused!!. In this
case no one can predict the exact loss. It is simply impossible to do
that as selling the 2G license is a random experiment(in probabilistic
terms) and no one can predict the outcome. What CAG can only do is get
some estimates of reasonable beliefs.

from:  Arjun
Posted on: May 6, 2013 at 13:25 IST

"Judge not,ye shall not be judged",says Holy Bible!When he judges
others,how could he plead,"debate the 'quantum',but don't deny there's
been a loss"!Such a statement could have suited a layman but not the
Comptroller and Auditor-General of India!His principal responsibility
is to state whether Govt.of India has secured the last paisa due to it
and whether spending by the Govt. has been appropriate or there had
been irregularities!He should clearly pin point "the actual quantum of
loss to the exchequer"!He enjoys not any freedom to specify sensational
and astronomical figure!
Some of his contentions are apparently rebuttable:
1.Auditors" are engaged in the job of ensuring good governance"!
2.As per Art.151 CAG is obliged to submit his Audit Reports to the
"President", who shall cause them to be laid before each house of
Parliament"!That establishes his liability to ensure secrecy of their
contents!His palming off the charge of leakages is untenable!
3.Reports look investigative!

from:  Chandu Fatafat
Posted on: May 6, 2013 at 06:15 IST

At this moment I am proud of Shree Vinod Rai who was for short period Director on the Board of Bank of Baroda,representing Finance Ministry,Government of India. His modesty, industriousness and simplicity accompanied by professionalism while contributing to discussion in each issue at the Board meeting would have inspired other Directors. I salute Shree Vinod Rai who would leave footprints of honest and hard work without any fear or favour even when political climate is very hostile. He would really be a role model for all of us, particular civil service officials, who like to contribute to nation's clean and transparent administration. In a nicely and forthright interview he has briefly and precisely mentioned the clear and unambigous role of the CAG and how best he has performed. I pray Almighty to bless him for serving India and Indian people in these tough times.

from:  Dr.Amrit Patel
Posted on: May 6, 2013 at 04:36 IST

@ Sankaran Don't be so biased against CAG. He explains the reasons why
the 2G audit is not against the policy decisions of Government. It is
not just about the policy of first come first serve, the way the
policy was implemented that put the Telecom minister in the dock. As
Supreme Court has examined all the details and cancelled the licenses,
the CAG stands vindicated in this case. Even CBI had come with loss
estimates of 30K crores. Even with that estimate it is clear that
there has been huge loss to the exchequer. Therefore, he is right in
saying that there has been loss, but the actual amount can be debated.
That is why CAG's figures are called presumptive loss.
Regarding the coal scam, improper allotment in itself is a crime as
the precious resources are mismanaged. The recent CBI case and the way
UPA Govt. wants to scuttle the probe has yet again shown that CAG is
right in these issues.

from:  Arjun
Posted on: May 5, 2013 at 19:37 IST

Other than direct loss to Exchequer is the loss due to non-entitled &
undue gain to the Beneficiaries of 2G Spectrum Allocation.

from:  Babubhai Vaghela
Posted on: May 5, 2013 at 19:25 IST

I believe that the Comptroller and Auditor General Mr. Vinod Rai is one of the finest and fearless bureaucrats India has ever seen. He did an excellent job by bringing out some of the most corrupt cases committed by this UPA Govt. He should have brought out some more cases to show how much corrupt this UPA government led by Dr. Manmohan Singh and the Congress party led by Mrs. Sonia Gandhi. However, he has been branded as the most wanted villain by the Congress party and the congress party. Honest and decent bureaucrats has no place or recognition under the UPA/Congress government.

from:  K.R. Satheesan Pillai
Posted on: May 5, 2013 at 17:00 IST

Very candid responses to queries with malice to none.The closing last two sentences of his response clearly sums up what vinod Rai really is.He has said that he would like to remain active in various fields that he has experience and proficiency in. (The Bhagavad Gita in III-35 says that it is far better to engage oneself in one's own vocation even though may be faulty than another's vocation as that is fraught with danger.) If everyone is wedded to this post retirement principle the country will be flooded with specialists in the particular fields as had the retirees practised and perfected in their official career.

from:  G.Jagannathan
Posted on: May 5, 2013 at 16:02 IST

No matter how clean a gentleman is, mud slingers like digvijay singh are ready to
murk a persons character.

from:  satyanarayna
Posted on: May 5, 2013 at 14:43 IST

The nation feels proud to have Mr. Vinod Rai as a public officer.

from:  Dev
Posted on: May 5, 2013 at 11:25 IST

1)When the CAG says that at times in the course of audit,we try to
see whether that policy is suboptimal, the CAG contradicts himself
his earlier statement.
2)In all tender regulations, the date of opening the tenders is the most important and what happens after the due date is IRRELAVANT.How can the telecom anticipate the higher sale price of
few companies and that of 3G spectrum. Hence all the methods adopted by CAG are fundamentally wrong and absurd.
3)In the coal allotment issue, only allotment orders are issued but
no coal has been mined.Why then the CAG should quantify the loss?
His exaggerated figures explain his unreasonableness.

from:  SANKARAN
Posted on: May 5, 2013 at 11:13 IST

From whatever little I have seen or known of Vinod Rai, I take his
words on their face value. I had the privilege of being part of a
State Level Consultative Committee (SLCC) at Patna in 2005 presided
over by Vinod Rai. His clear perceptions and clarity about things that
we were expected to do in a state with poor CD Ratio were quite timely
and genuine. He said things without mincing words and acknowledged
without a demur that the state lacked credit absorption capacity, but
added at the same time that we cannot sit back and watch the state
relapsing into backwardness. Vinod Rai is one of the few we can be
proud of.

from:  NC Sinha
Posted on: May 5, 2013 at 10:54 IST

The CAG has to do its duty without fear or favour.As Mr.Vinod Rai has stated,one can argue
about the QUANTUM of loss but the Govt. cannot deny that loss was caused due to faulty
implementation of the process of allotment and process was OPAQUE and there were
windfall gains to the tendering parties and there was a massive lobbying going on during the
allotment period.What do these indicators say?Nobody will give you a stamped and signed
receipt for the kickback amount received.

from:  Ashok Prabhu
Posted on: May 5, 2013 at 10:51 IST

Vinod Rai has been an unusually lucky civil servant, who could get
opportunity to express his views in public whenever vested interests
put him in the dock. In retrospect, he may not regret the criticism
from political leadership, as that gave him an opportunity to place
audit as a relevant tool for improving governance. This interview
explains the rationale and relevance of performance audit and could
form the basis for future CAGs to mould their vision about their
responsibilities.

For quite sometime now, CAG is being harassed and criticized for
performing normal duties expected of him, by a government caged by the
rich and the powerful. Performance Audit has been a tool used by CAG
since 1960’s. What Vinod Rai and his predecessor have done is just to
sharpen the tool by infusing expertise into the audit team. By
training and educating cadres down below and bringing professionalism
in the performance of audit function, they improved the functional
efficiency of the office.

from:  M G WARRIER
Posted on: May 5, 2013 at 09:41 IST

Haha, who will believe this? (I have been apolitical all my life)Time will bring out the truth.

from:  AH
Posted on: May 5, 2013 at 09:13 IST

Sir,
I agree with Shri Vinod Rai, the retiring CAG from service that each
audit in the world has advantages or disadvantages. So, it is upto the
government to choose a better model suitable to this country, but the
question for any government is not the selection of model system, but
the intention of the system that we follow. Whether CAG is political
or apolitical this does not concern much if we are honest to our duty.
The problem is that the govt. formulates policy but does not adhere to
it for certain reasons best known to the policy makers. In each and
every policy we leave some holes which are utilized according to the
sweet will of the machineries responsible for the implementation of
the policy. This gives birth scams. If CAG detect the flaws of
loopholes it is said that CAG has become political and he has some
aspirations from the govt. after retirement. This mind set must be
changed. <

from:  BIMAL CHANDRA JHA
Posted on: May 5, 2013 at 08:36 IST

Very honest and plain speaking. Quite happy to read. It is evident that
Indian institutions flag has been kept high by thorough professionals
like Vinod Rai.

from:  Srinivasa Rao Rio De Janiero
Posted on: May 5, 2013 at 08:17 IST

hats off to you sir. you have proved and showed power of a
constitutional post and i think have set a golden path for coming
successors....... Thanx a lot sir....... India will remember you in a
true senses as a HERO & SON OF SOIL...........

from:  SAURABH RAJPUT
Posted on: May 5, 2013 at 07:58 IST

Vinod Rai has destroyed the impartiality of the Office of the CAG. His
views of his Office is very muddy: 1. An auditor is expected to audit
ONLY the REAL cash flow into and out of the coffer 2. He has no
authority to speculate on the "presumptive" or "potential" loss or
gain. That leads to encroaching into the Policy Matters of the duly
Elected Executive. 3. He has no authority to evaluate a Policy whether
it is Optimal, Sub-Optimal or Supra-Optimal. By wading into all these
issues, Vinod Rai has played into the media circus on the 2G "Scam".
Even though his notorious "Rs. 1.76 lakh crore" was a "presumptive
loss", the media reported it as though it was the REAL loss. This
prompted the PM to say that there was ZERO REAL loss to the Govt.
JPC's comment on the behavior of the CAG should make him introspect of
the mischief he has done to undermine the Executive. Truly he acted
as the pawn of the Opposition. He is a politician, and not an
impartial Auditor.

from:  Yamaka
Posted on: May 5, 2013 at 07:20 IST

Thank you Sir! The opinions of you really gave ordinary people like us
lot of mental peace. Best of luck to you!

from:  chandrasekaran
Posted on: May 5, 2013 at 07:03 IST
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