Allow CAG to audit PPPs, Panchyati Raj bodies: Vinod Rai

Outgoing Comptroller and Auditor General Vinod Rai favours bringing all private-public partnerships (PPPs), Panchayti Raj Institutions and societies getting government funds within the ambit of the CAG.

As he prepares to demit office tomorrow after an eventful tenure at the head of the Constitutional financial watchdog, he strongly defends the reports including on 2G spectrum allocation during his term that had triggered a number of controversies and raised the hackles of the government, and bringing in the concept of presumptive loss in audit.

He says at no time during the turbulent days the thought of quitting came to him when he was attacked from several quarters.

After a five-and-half year tenure in the office, Rai also backed demands for a collegium type of selection for CAG though he was not very sure about the effectiveness of a multi-member body.

Targeted by those in government as exceeding the mandate by going into policy formulations, he makes it clear that by nature audit has an adversarial function and it cannot praise government policies.

"All PPPs, PRIs and ULBs (Urban Local Bodies), societies, etc should be brought under the CAG," Rai, who turns 65 tomorrow, told PTI in a wide-ranging interview.
Asked whether NGOs taking government aid should be brought under the purview of CAG, he said, "That's right, the special societies."

Citing the example of National Rural Health Mission executed by societies getting hundred per cent funds from government, Rai said, the government had requested the CAG to do the audit and they did it. "But probably, it would be more advisable to bring it within the automatic legal mandate of the CAG."

The PPPs which have become the preferred mode for executing infrastructure projects in airports, highways and ports are outside the purview of the CAG audit at present. Only special audits are done where the government makes a request.

Rai sought amendments to the CAG Act of 1971 to keep pace with the changes in governance.

"The Act needs to be updated. For example, after the 74th and 75th amendments, came PRIs and ULBs institutions that have come into government's channels for delivery of schemes. Similarly, PPP models have been achieved. These all need to be covered under the CAG Act", he said.

In a presentation made before the Planning Commission a few years ago, it was revealed that 60 per cent of the government expenditure does not come under the purview of the CAG.

Rai, who remains unfazed by attacks especially from some in the government over the audit reports, says, "I don't call them attacks".

To every issue, he said, there was a counter issue and every argument had a counter argument. "These are debated in Parliament and outside Parliament. So we have never taken it as any controversy or attack upon us because all our reports are debated in the PAC," he added.

Today media being so alert and predominant, some of these issues come into public domain and get debated, he said.

Asked if ever the thought of quitting crossed his mind in the face of severe attacks over his reports, especially on 2G and coal allocations scams, he said, "Never, never. In fact, we never had any attacks of that kind. Every argument has a counter argument. If you give your views, obviously somebody will give his counter views.

"There are two sides to a coin. In fact, I have always had great regards for my colleagues in this department who despite reading all this in the media had never swayed from the path of totally objective auditing," he said.

Rai strongly defended the concept of presumptive loss in arriving at under-recoveries of the government in spectrum allocation and other matters.

"The external audits we perform is post the event. So we are guided by hindsight only. That is usually the allegation and that is exactly how external audit functions", he said.
Asked about his comments that he felt sorry for those who had propounded zero-loss theory in spectrum auction, an apparent reference to minister Kapil Sibal's remarks, the CAG said, "I feel sorry for the nation if anybody believes that there has been no loss."

Rai said the audit found that there was some loss to the national exchequer in the
policy of spectrum auction that was followed in 2008.

"Now the issue is the quantum of loss. Now in the quantum of loss we have given four figures. Nobody can say for definite what is the quantum of loss.

"I pointed out that the quantum of loss, the figures that we had...the CBI is giving Rs 35,000 crore. We have given from Rs 66,000 crore to Rs 1.76 lakh crore. In fact one of our reports also has a figure of Rs 4.19 lakh crore.

"So what I said was whether it was anybody in the political executive or in the bureaucracy, we feel sorry if they feel that there has been no loss. We feel sorry for the country if anyone of these people feel that there is no loss to the exchequer."
Rai also said that the concept of presumptive loss is used worldwide.

"Presumptive is not a word which is of our creation. It is used in international auditing parlance. It's an express used by the IMF too in the international auditing parlance and finds a place in the Direct Tax Code where they have talked about presumptive income and presumptive gains which are liable for taxation. Obviously, they won't use the word presumptive loss because losses cannot be taxed", he said.

On his recent comments that auditors cannot remain only cheer leaders, Rai said there was a context in which he had said that auditors should not be cheer leaders.

"Audit has an adversarial function. In any situation whether it is private or public or government or whatever it is, it has an adversarial function.

"We are not going to praise government policies in an adversarial function. What is the purpose of audit--to look into actions taken and try to ensure that the actions that have been taken are as per the rules and procedures."

Asked whether there was pressure from government that reports be tailored in a particular fashion, Rai said, "Never. Government has been very fair. Everybody in the government whether it is a politician or a bureaucrat, they have given their view points when we go for entry and exit conferences."

To a question on CAG being made a multi-member body, Rai said, it was for the government and Parliament to take a view.

He cited three models prevalent in the world including the multi-member bodies in countries like France and Mexico where it is a court of audit with punitive powers.
"I don't think it will make any significant difference whether it is a single member or multi-member body," he said.

The outgoing CAG appeared to favour a collegium type mechanism to choose a new CAG on the lines of selecting a Chief Vigilance Commissioner (CVC).

"When we were asked, we gave our opinion that probably the most transparent method being adopted by the government today is the way the CVC is appointed. There is a collegium approach to it. So that could be. So that is the opinion we have given."

Asked whether he would recommend punishment for those who do not follow due financial diligence in implementing schemes that result in losses to the exchequer, Rai said, there was no mechanism and he was not in that business.

"What happens is that we give our report. We give it to the PAC. If there is any irregularity, we give it to the CVC. We don't suggest any punishment. We just say that xyz has happened and accountability of the persons involved should be looked into", Rai said.

To a question about his comments that government should encourage enterprise and not crony capitalism, Rai said, the government should be seen to be totally transparent and there should never be any slant.

"Government should encourage enterprise and not choose between individuals in their enterprise. That's what we have meant. That is why the CVC has laid down the policy of public action or public bidding," he said.

Asked if he has any intention of joining politics after demitting office, he said, he was an apolitical person and he proposed to continue the same way.

"I have already said I am totally apolitical. I have not decided what I will be doing as yet. Firstly, I need to take a kind of holiday, assess my situation and will certainly be doing something part-time.

"But in which particular field I will do it, it depends...because I have some experience about the role of audit and some experience about the financial sector."

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