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Updated: September 25, 2012 00:52 IST

Continuing onslaught on the CAG

Ramaswamy R. Iyer
Comment (16)   ·   print   ·   T  T  
The Hindu

The work of India’s supreme auditor cannot be put through an audit unless the institution itself initiates one

The relentless campaign against the Comptroller and Auditor-General, of an unprecedented ferocity, compels me to write again on the subject.

First, has the CAG caused a political and constitutional crisis, as some have argued? All that the CAG does is to submit audit reports. Any audit report, if it is a good report, is bound to contain elements that can be used for a criticism of the government. Using the report to stall Parliament was a clear, declared political decision of the Opposition. To say that the CAG shares the responsibility for this amounts to saying that the CAG should not have submitted a report at all, or should have submitted a totally bland report from which no party can pick up any point for criticising the government.

G. Mohan Gopal, a highly respected legal expert, makes two main points (The Indian Express, 10 September 2012): the fallibility of the CAG, and giving illegal advice to the government.

Fallibility

The fallibility of the CAG is a truism; no one ever denied it. There are two important procedural safeguards against errors in the audit reports. In drafting paragraphs for inclusion in the audit report, substantiation has to be provided for every remark through ‘key documents’. This is a stringent requirement. After such internal procedures, when the first draft of the audit report is ready, it is sent for comments to the Ministry or organisation under audit, and is revised in the light of comments received. If I am not wrong, this process is repeated more than once. At every stage, the executive can draw attention to errors of fact or understanding or law, if any, in the report. In fact, apart from corrections or revisions being made in response to comments, the initial objections themselves are dropped in many cases in the light of explanations by the executive. Not every comment initially formulated finds its way into the final audit report. The fallibility of the CAG is a red herring.

Turning to the charge of ‘illegal advice’, the CAG did not give any legal advice on his own on the choice between administrative instructions and amendment of the Act; he was only citing an advice of the Law Ministry of 2006. It might be Mr. Gopal’s view that the advice was wrong, but I doubt if the Law Ministry would accept that view. The CAG’s point was that in July 2006, on the basis of the Law Ministry’s clear advice at that stage, competitive bidding could have been adopted through administrative instructions. Anyway, that is only a hypothetical point; the final decision was to amend the Act. The CAG did not question that decision. He merely pointed out that the time it took to arrive at that decision (for whatever reasons) meant the continuance of the procedure of selections by a Screening Committee. Further, he did not even criticise that procedure per se, but only the absence of openness, transparency and fairness in that procedure, and the difficulty of determining the basis for the selection of parties. What remains of the illegality charge?

Mr. Gopal makes another point, namely, that mining licences could be granted only by the State governments, and that the Screening Committee was just that, namely, a Screening Committee, and that it was making no allocations of coal blocks. I am sure the CAG will have something to say on this, but as a layman let me ask Mr. Gopal a few simple or simplistic questions. Why was there a Screening Committee at all? What was it screening for? If it was not making allocations of coal blocks, what exactly was it doing? If there was no such thing as ‘allocation of coal blocks’, why did no one say so when the draft audit report was under discussion between the Ministry and the CAG? Did the Ministry question the term ‘allocation of coal blocks’ at any time?

On all these matters, did it not occur to Mr. Gopal that he should take the precaution of checking with the Ministry and the CAG before publishing his rash remarks?

Tendentious

Mr. Gopal castigates the CAG for calculating “losses arising from obeying the law”. That is a highly tendentious statement. First, what the CAG is talking about is not ‘losses’ to the government, but windfall gains to the recipients of the allocations. Secondly, it is preposterous to say that the CAG is calculating ‘windfall gains’ as arising from the government following a legal course. His point is that the allocation of coal blocks confers windfall gains on the recipient parties, and so the process of selection of parties should be fair, objective and transparent. This would apply, whatever the route followed for the selection of parties.

As for Kapil Sibal’s criticism of the CAG for making policy (The Times of India, September 15, 2012), the answer is threefold. First, the CAG does not make policy prescriptions. He draws inferences from his audit findings and makes some consequential recommendations for the government’s consideration. It is for the government to consider and accept or reject them. Secondly, the CAG picks up policy decisions or recommendations from the files and tries to find out whether they were acted upon promptly or at all. Thirdly, where there is no recorded and reasoned policy decision behind the executive action, the CAG examines the rationale of the action. If there is a clear record of the reasoned adoption of a policy, the CAG does not and cannot question it.

Mr. Sibal also says that maximising revenues might not always be the government’s objective. True, but this should be a recorded ex ante decision, not an ex post facto rationalisation.

Again, the allocation of coal blocks is of course an executive decision, but would Mr. Sibal argue that the arbitrary and discretionary allocations of scarce natural resources are an executive prerogative that the CAG cannot question?

Disingenuous argument

Finally, there is the disingenuous argument that the executive is accountable whereas the CAG is not. The executive is of course accountable to Parliament and the people — through the CAG — though every attempt is made to evade it and obfuscate issues, as in the present case. As for the CAG, the argument is presumably that he should be accountable to the people for the quality of his audit. He is our supreme audit institution, and we cannot ask another auditor to second-guess his audit.

Besides, apart from the Ministries and other government organisations and public enterprises, even IITs, IIMs, private companies, etc, can come within the scope of his audit if they receive funds or allocations of natural resources from the state; and the CAG nominates private sector auditors for the audit of public enterprises and test-checks their audit. Which of these agencies or organisations can be asked to undertake an audit of the CAG’s work? In any case, such an imposition on the CAG would be unconstitutional.

All this agonising is unnecessary because the CAG is not exempt from criticism. (That is perhaps the understatement of the year, considering the campaign that is going on.) As already mentioned, the executive has plenty of opportunity to challenge every statement in the audit report at every stage, including the stage of examination by the PAC. Secondly, there is a discussion of all this in the media, and many commentators analyse the audit reports. Is this not a form of accountability?

If there is to be a peer review of the work of the institution of the CAG, it has to be initiated by the CAG himself. The CAG has in fact done so. He constituted an international panel consisting of representatives of the SAIs of several countries to conduct a review of his organisation’s work, and the panel is understood to have submitted its report.

In conclusion, it is sad that persons of such eminence should attack a constitutional functionary either on the basis of inadequate understanding or with the deliberate intention of obfuscating issues.

(Ramaswamy R. Iyer is a former Secretary, Water Resources, Government of India.)

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Does Mr. Iyer forget that the Law ministry itself CORRECTED its initial
judgement of 2006 and gave a second advice, which the CAG FAILED to take
into account when preparing this report. It is this that Prof Gopal is
talking about. The CAG report is therefore flawed in many ways, wish a
'layman' like Mr. Iyer would have researched his facts more.

from:  rubai
Posted on: Sep 24, 2012 at 23:21 IST

Yes, blame the CAG for exposing your pathetic leadership and corrupt government.

from:  Rajesh
Posted on: Sep 24, 2012 at 22:33 IST

Article is a excellent reply to all those who question the very
constitutional auditor whose sole purpose is only to audit and not to
accuse government or talk about profit or loss. Earlier its finding on
2G scam led to cancellation of licenses by supreme court and now many of
the coal blocks are being investigated and some already got canceled. It
won't be to hard to find some congress sympathizers writing what will
bolster their stand on attacking the auditor itself by bringing red
herrings into the play but YE PUBLIC HAI, YE SAB JAANTI HAI

from:  Kumar Ronak
Posted on: Sep 24, 2012 at 20:47 IST

A very common sense approach to the coal scam and CAG's approach to
unearth it. After SC, the only other institution that has stood up to
it's constitutional responsibility is CAG. And there is no doubt why
Congress and its cronies, under the guise of Articles, newspapers etc.
are on an onslaught to discredit, demoralise it. For all the stupid
and nonsensical utterances by Kapil Sibal, PM, Chidambaram et all to
confuse everyone, no person of average intelligence can understand
that these so called leaders used all possible mechanism to loot the
natural resources. Just as a cynical person will use every possible
excuses to its advantage, the congress leaders have done the same. And
after all this, PM has the courage to ask the countrymen to repose
faith in him. If he is such an economist genius and honest, one would
ask, why the hell did he not auction 2G, Coal etc to earn decent
revenue or get the trillions of black money from abroad, to improve
the fiscal deficit.

from:  Sidharth
Posted on: Sep 24, 2012 at 20:30 IST

India - Congress -> CAG to gag - Writing On the WALL ....... everything goes to bottomless pit while Nero (MMS) dances to "reforms", "FDI", "head-count", Kasab, Telangana excuses.

from:  dubba
Posted on: Sep 24, 2012 at 17:00 IST

While the executive and elected representatives of people have a right to point out deficiencies, if any, in CAG’s observations, they cannot question the CAG’s right to work as an independent authority and do its duty of post-facto examination of government transactions. (2) In case of coal block allocations the government has erred and instead of accepting that it has indeed taken decisions which are against interests of revenue, our PM and his ministers are attacking the office of CAG itself. This must be condemned.
(3) We must put in place a system which ensures that ministers and the bureaucracy are made accountable for all their decisions and decisions which result in loss of revenue are cancelled and the guilty are punished quickly. CAG is powerless in this regard. Only an ombudsman or Lokpal can do this.
(4)Hence citizens must press for appointment of Lokpal and Lokayuktas who will complement CAG and curb corruption and can improve governance.

from:  Narendra M Apte
Posted on: Sep 24, 2012 at 16:37 IST

When the Anna Hazare movement attacked the politicians and resorted to street protests, the Congress government was the first to illustrate the greatness of the Parliament and the constitutional machinery and the need to respect it. Isn't it very ironic that the same Congress government is now organizing a vilification campaign against one of the most supreme Constitutional functionaries in India just because it's report has exposed the double standards of the government.

from:  Shiv Ganesh .S
Posted on: Sep 24, 2012 at 13:39 IST

It is the best article I could read on this issue.The comments of politicians shall mostly be biased which can be understood. But who are in know how of the working of constitutional institutions should give the true picture of any issue and that is what this article has done.Well done sir.

from:  Madhusudan Namjoshi
Posted on: Sep 24, 2012 at 12:46 IST

Superb article. I am fan of this news paper.

from:  Rits
Posted on: Sep 24, 2012 at 12:44 IST

It is hard not to be impressed by the professionalism, professional integrity and patriotism of the CAG and his staff.
It is becoming clear that mismanagement of the Indian economy (for whatever excuse) has led to the economy tethering on the brink of disaster (as articulated by the PM himself). At this time, the nation is deeply grateful to the CAG and his staff for highlighting major areas where the public purse has been badly short-changed.
If the citizens insist, the politicians may show willing to at least largely, if not fully, recover the losses, which can assist the economy at this time of great need.

from:  D Mahapatra
Posted on: Sep 24, 2012 at 12:10 IST

This is a succinct, and at the same time, a comprehensive analysis of all the democratic issues at stake. And, it is also a fitting rejoinder to all the red herrings set flying off the tangent. I wish to add one point. The 'consequential recommendations for the government's consideration' made by the CAG are logical and most often irrefutable. The key documents and the in-house cross-examination by the 'Devil's Advocate, so to say, ensures that. Mr. Ramaswamy R. Iyer is quite right about the endless revisions on the basis of replies, as I know from practice. We look forward to the international panel's report. In conclusion, may I add that the proof of the pudding is in the eating. Witness the 2G and Coalgate disclosures
And as the NLP Captcha below says prophetically, &qu You can't direct the wind, but you can adjust the sails.

from:  Soundararajan Srinivasa
Posted on: Sep 24, 2012 at 11:49 IST

Mr Iyer has put the issue in its correct perspective.The government cornered and fighting with its back to the wall.is deliberately indulging in misinformation drawing a red herring across the trail.Mr Sibals contention that government policy cannot be questioned by any one is fallacious if not outrageous.Bank employees are going on strike demanding the withdrawl of the skewed econoic policy.all policies are subject to judicial scrutiny.Otherwise government will do any thing saying it is the policy and cannot be questioned.The government is indulging in shooting the messenger which to put it mildly is tghe begining of the end of its ruling

from:  M.K.B.Nambiar
Posted on: Sep 24, 2012 at 11:39 IST

Our so called intellectuals are openly demeaning an constitutional organisation and they are disguising it as fair criticism. The slew of gross personal comments cannot be criticism .The president should step in to stem the rot or else we are not far from the day when political parties will start kicking the CJI .

from:  Anand Singh
Posted on: Sep 24, 2012 at 09:49 IST

Point well taken. CAG is answerable to the Parliament i.e. to the PAC formed by the Parliament. Let the findings/observations of the CAG be discussed threadbare in the PAC, so where is the problem? The Congress should not attach motives to the functionaries of the CAG and should contest CAG's contentions based only on facts. Are they willing to do that?

from:  Pramod Patil
Posted on: Sep 24, 2012 at 08:12 IST

It is not in human nature to admit wrongdoings.That is why we have statutory investigating agencies and a legal system to establish guilt. It is a government's statutory responsibility to see that these requirements are met even in cases where the alleged wrongdoer is itself. The report of the CAG on coal block allocation, even though it is unpalatable to the government, should not be rediculed by the government. It can however be challenged in the usual legal manner.

from:  K.Vijayakumar
Posted on: Sep 24, 2012 at 04:57 IST

Ironically Govt of India or the executive in general, is by far the biggest offender of Constitution and Law. Subversion of democracy poses a bigger danger than corruption itself. The gaurdians that be should strongly reprehend the PM and his GoM for this unpardonable crime. Gone are the days when a Cabinet Minister resigned shouldering the responsibility for the collapse of a single Railway Bridge. We have people at the highest level shamelessly defending there culpable actions without even having to represent a constituency.

from:  Raghavendra Adla
Posted on: Sep 24, 2012 at 03:31 IST
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