Not just finding fault, we also report on good practices: CAG

We are doing social audit and in the process we utilise the presence of civil society

Its report on the 2G spectrum allocation issue that unearthed a scam of gigantic proportion involving politicians, bureaucrats and corporate executives has brought the spotlight on the CAG. Vinod Rai, the head of CAG, spoke to B S Arun of Deccan Herald on 2G scam and a range of issues in a rare interview. Excerpts:

So much has been made out of the Rs 1.76 lakh crore notional loss to the exchequer from the 2G scam which your report pointed out. Several ministers criticised it and telecom minister Kapil Sibal said there was zero loss...

Look, the report has three parts: are the rules and regulations followed? (About) the procedure which has been laid down, such as first-come-first-served (FCFS) basis. Why fixed cut off date in October was advanced etc.  When the minister (Kapil Sibal) made the statement, he said he agreed on two points – that rules and regulations were not followed which was why he set up the Shivraj Patil committee; that rules were bent to benefit somebody. He also said he agreed there was criminal culpability.

However, he did not agree over quantum of money loss. In the report we have said, “the entire process of allocation of 2G spectrum raises serious concern about the systems of governance in the Department of Telecom which need to be thoroughly reviewed and revamped…the amount of loss could be debated.” This was what the minister was doing - he was debating. There is imperative need to fix responsibility.

The CBI put the loss close to Rs 31,000 crore. But you cannot ignore even if it is Rs 31 crore. I said why don’t you debate how best this system canbe used. This, I think is the positive outcome of the report. Some failings are there which were highlighted. The issue is how such failings do not repeat in future.

Many have accused you of getting into questioning the government’s policy framework in the 2G report.

We are not doing policy framework. Look at what we said in the 2G report: “The need for doing so (review of issuance of Universal Access Service Licences) was further justified as six years have passed since the introduction of the UAS regime in 2003. While accepting the government’s prerogative to formulate the policy of UASL, it was felt that an in-depth examination of implementation of such policy needed to be done.”

We are not questioning the policy at all, no where, just no question of that. As regards 2G, all that we have asked is if you have followed the FCFS policy, we say you have not followed it (strictly). We referred to fixing of a cut-off date. It was not adhered to. These are our findings. The law ministry and the PMO directives were not followed...We have not questioned the policy anywhere. I don’t know why (this has been raised). I told the Joint Parliamentary Committee (probing the 2G scam) that we totally accept the government’s right over policy formulation. It is the implementation of that which we are commenting on. We don’t question policy. Why should we?

What have you learned from the Satyam experience?

We did a detailed study of Satyam. Major problem there was that the same auditor remained for 10 years. The auditor was appointed by the promoter and they have close relationship between them, and AGM and board were just kind of rubber stamp. At CAG, we change our auditor every three years for every PSU. Then, each PSU should have audit committee of the board, chaired by our auditor. I do a peer review too. We do a super audit of that so that the Satyam kind of problem does not recur.

What is the effectiveness of CAG reports? Have you brought in changes?

Well, I would very much like to believe so. Now we are broad-basing the report, making it more relevant. We completed a report on the Commonwealth Games but could not place it in Parliament’s budget session as the session got truncated. No time was lost when we brought out our 2G report. We want to ensure that the reports are contemporary as the focus is on the accountability of the person/persons involved. Also, Parliament and public are appraised of the factual position.

Do you propose to use RTI in your audit reports since you can get the required information quickly and in a time-bound manner?

We don’t propose to use it but we have suggested to the government an amendment to ensure that the same right given to the common man under RTI be given to us also. That means that within 30 days we will get response to our query as today it takes up to six months and even if they don’t, there’s not much we can do.

The CAG’s office has always worked in the background though it has a massive manpower and is the auditor for the entire government machinery. Give a sense of the kind of work you do and the manpower you have.

The CAG’s office is created by the Constitution and we directly report to the legislature. The CAG office is situated in Delhi and we have at least two Accountant Generals in states - one for accounts of the state and another for auditing. Our sanctioned staff strength is 63,000 but today we are 45,000.  I stopped recruitments three years ago as I did not want routine type of people. Now we are recruiting professionals.

About the organisation, the Constitution provides total independence to CAG by ensuring its budget is charged to the Consolidated Fund of India. Once CAG is appointed, he cannot be removed, unless it is by impeachment. A CAG, after completing term, is ineligible for any other employment.

Our work entails financial auditing and compliance audit which means all expenditures incurred are as per approval of budget in Parliament. I am laying stress on the third one – performance audit – to ensure that the money spent on any sector is spent optimally, efficiently and economically, earning maximum value. Usually, we do about 65,000 audits per year, both state and Centre. Reports can be of two types – audit reports and stand-alone reports on certain sectors like spectrum, railways, etc. Once it is submitted to Parliament, major reports are examined by the Public Accounts Committee of Parliament.

CAG has suggested several changes in its area of work so that its coverage is expanded.
Yes, we have suggested amendments to the Audit Act, 1971. We want to audit the panchayat raj institutions, schemes such as rural job scheme, health mission, the PPPs (public-private-partnerships) etc. Today, schemes like health mission are implemented by NGOs. Now the proposal we have made is to enable us to have automatic legal mandate to audit these types of projects. The canvass of CAG will increase.

I want to stress that we don’t merely find out what is wrong, we are reporting even good practices. We give suggestions on how to improve project/scheme; the government is consulting us in policy formulation because we have a huge amount of experience, and utilising that experience, we are able to advice the government on how best to implement policy. Yet another change is we are doing a lot in social sector. We are doing social audit - in the process of doing audit we utilise the presence of civil society, say in water management. We are doing social audit and are just completing reports on water and rural health mission.

How is CAG of India rated internationally? Do you get to audit international organisations?

I can say with pride that we are amongst the best in the world. For 19 years, India is chairing a working group on CAGs. Getting recognised at international level is important for us.

There are 189 CAGs today globally. Now, we along with CAGs of USA, UK, France, Germany, Canada and Australia, are considered to be among the best. We have been invited to audit United Nations and its organisations like WHO, FAO and World Food Programme (WFP), and each one of them is a huge body. We were invited to audit the main UN for six years and FAO for four. For the last four years, we have been auditing WHO. This year, we have been chosen to audit WFP which has 71 stations. We are chosen on two counts – technical and professional excellence. We truly believe we are among the top seven or eight in the world.