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The sums don’t add up

The sums don’t add up
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First Published: Fri, Nov 25 2011. 09 30 PM IST

Illustration by Jayachandran/Mint.
Illustration by Jayachandran/Mint.
Updated: Fri, Nov 25 2011. 09 30 PM IST
It has cost me followers on Twitter, forced the government’s auditor to take the extreme step of sending an official (he misrepresented himself as an Election Commission official) to a Mint reporter’s residence, and attracted criticism about Mint being the government’s lapdog. So, why have we been writing about irregularities in the way the Comptroller and Auditor General of India conducted its audit of the so-called 2G scam?
After all, public perception is that the government’s auditor has played a key role in ensuring that “crooks” of all hues go behind bars.
Mint is as convinced about the importance of the Comptroller and Auditor General as it is that several things were wrong with the way spectrum was allocated to telcos in 2008. However, it is equally convinced that the auditor’s role is to audit government spends and the implementation of government policies. Its role is definitely not auditing the policies themselves.
Illustration by Jayachandran/Mint.
More importantly, all audit is a function of assumptions and the consistent application of these. This means the government’s auditor needs to demonstrate that its assumptions are logical and that they have been applied uniformly in all cases under review. This is one of the dimensions on which Mint has some issues with the auditor’s report on the 2G scam. From internal documents of the auditor reviewed by Mint, it is evident that there are significant gaps in the logic involved. And from information that is available in the public domain, it is clear that one of the telcos that received spectrum in 2008 and which should have been included in the auditor’s report (and, consequently, investigated by the appropriate agencies) has been generously ignored.
The documents also show that the report was rushed through by the headquarters of the Comptroller and Auditor General, brushing off concerns raised by the officer originally asked to oversee the audit.
More recently, other internal documents show that the auditor used one of the methods used to calculate losses to the government on account of the 2G scam at the request of the public accounts committee, a significant and strange departure from how CAG and the committee are expected to function.
While there can be no denying that there were irregularities in how spectrum was allocated in 2008, there can now also be no doubt that there were improprieties and irregularities in CAG’s own review of the allocation, especially in how the auditor went about calculating the loss to the government on account of the spectrum being issued on favourable terms to telcos.
Such mistakes are rare for CAG; indeed, Mint has based much of its reporting on irregularities in the bidding of some power projects by the government on the basis of a report by the auditor. If at all the auditor could have been accused of anything in the past (before the 2G episode), it would have been its punctiliousness. Then, this is a failing (if it can be called that) of all accountants and auditors.
In the 2G case, the auditor has a lot more explaining to do: it will have to explain its decision to take the audit away from the man initially asked to conduct it; it will have to explain why it chose to apply the methodology it did to calculate losses; and it will have to explain its haste.
It will also have to explain why it decided to entertain the public accounts committee’s request to calculate the loss in a certain way.
And while it won’t have to explain why it sent an official to the Mint reporter’s residence—the sort of shakedown tactic one normally wouldn’t associate with a body like CAG—I would definitely appreciate a truthful and logical explanation (the one given informally to a colleague of mine doesn’t make the cut).
If the auditor doesn’t provide these answers—and I hope the Joint Parliamentary Committee looking into the 2G scam grills it on these—then I would recommend disregarding its report entirely.
After all, we do know that some money changed hands in the 2G case (and there’s actually evidence of a money trail in one instance).
We do know that some deadlines were inexplicably changed at the last minute to the benefit of some telcos.
That should suffice to complete the case and punish the offenders.
PS: A review of old CAG reports will show that soon after India moved from a licence fee regime to a revenue share one (at the instance of the telcos concerned, and after some hectic lobbying) in 1999, the auditor put out a report highlighting the several tens of thousands of crores the move cost the exchequer.
Write to sukumar.r@livemint.com
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First Published: Fri, Nov 25 2011. 09 30 PM IST
More Topics: Edspace | R. Sukumar | CAG | Auditor | 2 G Scam |