Auditor may have taken PAC’s cue5 min read . Updated: 19 Nov 2011, 12:59 AM IST
Auditor may have taken PAC’s cue
Auditor may have taken PAC’s cue
New Delhi: The Comptroller and Auditor General of India (CAG) may have taken a cue from the Public Accounts Committee (PAC) while calculating losses arising from the improper allocation of second-generation spectrum to telecom companies in 2008 (or the so-called 2G scam), according to documents reviewed by Mint.
This is not to suggest that the government’s auditor may have been influenced by the committee, or that there were no irregularities in the issue of spectrum.
Still, the documents provide an alternative picture to one presented by Vinod Rai, the comptroller and auditor general, and Murli Manohar Joshi, the chairman of PAC, after reports surfaced that Joshi, a leader of the Bharatiya Janata Party, had written to the government’s auditor asking it to speed up its audit of the spectrum allocation.
According to a note of the headquarters of CAG (the department, not the individual), dated 12 July 2010: “We have also used another method for projecting loss as all the Public Accounts Committee members felt in the meetings held in June-July 2010, which were attended by us and DG (P&T)’s officers, the huge capital infusion into the telecom companies could be directly attributable to spectrum allotted."
DG (P&T) or DGA (P&T), both refer to director general of audit (post and telecommunication), the audit branch of CAG that conducted the spectrum audit.
The note came after a 30 June meeting of PAC, attended by CAG officials. The audit on the spectrum allocation was one of the issues discussed.
Interestingly, in a press briefing on Wednesday, Joshi clarified that he has never interacted with the government’s auditor on the audit report, or indeed told its officials how to calculate the loss. “I did not say come to my home and calculate the loss; we never said what loss figures should be. We never interact with the Comptroller and Auditor General on this, we only ask where the report is," Joshi said.
Joshi didn’t respond to an email and phone calls to his office. Rai wasn’t available to comment, his office said.
The 12 July note is one of the documents expected to be sent, over the weekend, to the joint parliamentary committee (JPC) investigating the irregularities in the spectrum allocation.
PAC is one of the parliamentary committees that serves as a watchdog over the government, and its primary task is to oversee the government’s accounts (through audit reports presented by the government’s auditor, CAG).
JPC is one set up for a specific and special purpose.
The 12 July 2010 note is significant because the “capital infusion" it mentions, achieved through a process of issuing fresh equity in the telcos involved, was one of the three methods used by the auditor to arrive at the loss figure.
Mint reported on 6 September that R.P. Singh, the man who headed the DGA (P&T) team and conducted the audit on the allotment of spectrum, had objected to this methodology, saying there is no “tenable link" between spectrum and the issue of equity. He had put the losses at ₹ 2,654 crore.
If the government’s auditor was indeed guided by PAC’s suggestion as the 12 July note seems to indicate, then it is a break from how the two usually work.
Also See | Point, Counterpoint (PDF)
“It is not the job of the Public Accounts Committee to guide the Comptroller and Auditor General; in fact it is the other way round," said former Lok Sabha secretary general P.D.T. Achary. “The Public Accounts Committee is well within its rights to ask for the assistance of the Comptroller and Auditor General even if it is doing a parallel report that is yet to be tabled in the Parliament, but it is only to assist the committee in terms of understanding the subject. However, if the chairman of the committee has met Comptroller and Auditor General officials individually, then it is a different matter. It does not have the stamp of the Parliament. "
The documents reviewed by Mint do not present a picture as to why the government’s auditor chose to go ahead with the method of using sale of fresh equity by the telcos involved as one of the methods for calculating losses arising on account of the 2G scam. Nor do they shed any light on why, if the government’s auditor was using this approach, it ignored the case of the one telco that received spectrum in 2008, where the promoters sold part of their shares, Tata Teleservices Ltd. When fresh equity is issued in a company, the money comes into the company; when the promoters sell their shares, the money goes to the promoters.
Indeed, the 12 July 2010 note of the government’s auditor about “all members" of PAC wanting the issue of fresh equity to be one of the methods of calculating losses isn’t adequately reflected in the minutes of the committee’s meeting on 30 June 2010. At that meeting, then finance secretary Ashok Chawla explained the difference between issue of fresh equity and sale of a promoter’s stake, and said government policy allowed the former.
To be sure, it is possible that the committee unanimously asked the government’s auditor to use the fresh equity approach in a subsequent or earlier meeting.
Singh, the man who headed the DGA (P&T) team and who has since retired, echoed Chawla’s views in a letter dated 8 July 2010 to the CAG headquarters. Mint reported Singh’s views on 6 September and also cited another note from him where he said the calculation was being included at the instance of the auditor’s headquarters. The story added that Singh did not agree with his headquarters on any of the three methodologies used to calculate the loss to the exchequer in the range of ₹ 57,000 crore to ₹ 1.76 trillion: an offer by telecom operator STel Pvt. Ltd to the Prime Minister for a pan-India licence; the issue of equity by Swan and Unitech; and the price at which third-generation (3G) spectrum was auctioned.
Both Singh and Rai were summoned by JPC following that report. At his last appearance, on 15 November, the committee asked Rai to produce documents where he has countered Singh’s arguments. Rai is appearing again on 22 November. Singh, who appeared on 14 November, reiterated his stand that the loss cannot be quantified.
Interestingly, the same 12 July 2010 note details why CAG headquarters rejected Singh’s objections.