Vinod Rai exclusive: How Rs 1.76 lakh cr 2G loss became an item number

One lakh seventy-six thousand crore (Rs 1,760,000,000,000) is a number seared into our collective consciousness, thanks to the efforts of one man: former Comptroller and Auditor General (CAG) Vinod Rai. His 2010 report on the flawed 2G spectrum allocations by Andimuthu Raja, Communications Minister in Manmohan Singh’s government, offered this high figure as one of four estimates of how much the country may have lost by selling spectrum in 2008 at 2001 prices. Raja made the allocations arbitrarily and the PM failed to stop him, but, strangely, Rai himself has been made out to be a villain of sorts for pointing this out.

Both lionised and pilloried for putting out such a high loss number, Rai was unapologetic about it when Firstpost met him to discuss his recently-published book, Not Just an Accountant: The Diary of The Nation’s Conscience-Keeper. He agrees that the figure was large and had caught the public’s attention for that very reason, but “we didn’t do it with the intention of sensationalising it.” Now under renewed Congress attack, Rai says putting out an eye-popping number was worth the abuse he has been heaped with because it has generated a debate, and “going forward, nobody will have the guts to do this kind of a thing (the 2G scam) again”.

Firstpost editors R Jagannathan and Akshaya Mishra met Rai to get him to talk about the big number and other issues raised by him in his book. Excerpts from the interview:

FP: CAG’s 2G report has been criticised for exceeding its basic audit brief and putting out high presumptive loss figures. Also, you have been accused of encroaching on the executive’s policy domain. If a government decides to, say, give away spectrum for free, how is it CAG’s business?

Vinod Rai: We won’t question it.

But isn’t calculating a loss figure of Rs 1.76 lakh crore indirectly about telling the government it should have sold spectrum by auction…

They decided their policy was first-come-first-served (FCFS) in 2008 (when Raja allotted spectrum). But much before our report came out they had switched the policy (from FCFS) to auction. We said fine. It was not we (who talked about policy). In fact, I had written a letter to the PM (asking him) where have we got into the policy domain, please tell us? Nobody told us. I went and met him also. He never said why…

Our logic was simple. In 2008, the policy was FCFS. You got X amount. In 2010, on your own accord, you changed the policy to auction and you got Y amount. Y minus X is Rs 1.76 lakh crore. That was all we did. Nothing else.

You gave three other calculations of loss, too…

Yes, we gave three calculations based on three other parameters.

But it was Rs 1.76 lakh crore that caught the public imagination.

Yes, it was a large figure.

Was that deliberate, the idea of giving out a large number to catch the public imagination?

You see, the capacity of this country to endure malfeasance has become so substantial that when you talk of Rs 30,000 crore or Rs 40,000 crore loss, nobody even looks back. We have presented any number of reports where the loss has been Rs 18,000 crore; in the import of pulses the loss has been Rs 24,000 crore. Nobody even bothers about it and the PAC (Public Accounts Committee) doesn’t even discuss it.

So, at the least (we felt), if the figure was large…We didn’t do it with the intention of sensationalising it, but since the figure was large, at least it caught the imagination of the public, of the PAC, and it has become a huge debate. Going forward, nobody will have the guts to do this kind of a thing again.

So there was some calculation in hitting the public with a big number…

Not hit the people. The calculation was whether to bring the figure out or not. Well, we felt we are giving the basis for the figure, so why fight shy of it?

But in the coal blocks case, you did the opposite. Your draft report talked of an unlawful gain of Rs 10.7 lakh crore, but your final report said only Rs 1.86 lakh crore.

There is a difference (between 2G and Coalgate losses). When it (the draft coal report) came to the figure of Rs 10.7 lakh crore, I had not seen the report. My deputy CAG had not seen the report. In that he (the DG who prepared the draft) had added the public sector allocations. Public sector coal is sold at administered prices. So you can’t add that - that was wrong. It was methodologically wrong. When we removed it, the DG did not even protest.

What was the PM’s role in the coal case…

It goes to the PM"s credit that the moment it (the flawed coal allocation process) was pointed out by the coal secretary, he took a decision that, yes, we must switch to auctions.

But that did not happen. Do you believe he backed off from going due to coalition pressure?

I don’t know whether he backed off, or what. I feel what happened was, when the Coal Minister (Shibu Soren) came back (to the ministry), he (the PM) didn’t get into this issue. A PM has 10 different crises every day. His secretariat never pointed it out, and his minister was never interested in this (auction).

In 2G and Coalgate, was CAG also responding to the growing public mood against scams, including the Anna movement against corruption?

Our first report came in 2010 (before the Anna movement). We had to think a lot. In fact, I checked and cross-checked and introspected with colleagues time and again since we were going to bring to the public domain something that was very big. And the feeling all along was: Are we going to bite more than we could chew? But then I looked back at my colleagues and found that their procedures were so robust and the facts were so definite. When they had done so much hard labour, it would have been unjust to them if we were not going to bring it out in the public domain. If I had not done that, I could not have lived with my conscience. That’s when we said let’s bring it out.

In 2010, we brought out something and in 2011 we brought out something. The Anna movement started towards the end of 2011. So we were not responding to the Anna movement. We had started this earlier.

Given that you came under personal attack after the reports, did you ever think of quitting?

The thought of quitting never came. In fact, my resolve became much stronger. Even my wife supported me on this. We were fully prepared for a reaction, for a hit-back. No problem about that. We were prepared for it. What took us by surprise - I won’t say I was ever bitter or disappointed - was when that hit-back became personal. That is what surprised us, when it became personal.

I didn’t mind it at all when Kapil Sibal went to the national media and said, no, there was no loss. That was fine. But to be called “the bhumihar from Ghazipur”, that he has political leanings, that his reports are fraud, that he has a larger political agenda… that surprised us.

You were also accused of leaking some reports…

Leaking deliberately means stealing my own thunder. Why should I do it? Some press conferences were held, and we were held responsible for it. But look, I didn’t do it. The policy says that if it’s a report on the central government, the deputy CAG will do it (hold a press briefing). We were faulted for that. I explained to the PM that this is not a policy we created. It has been the policy since 1988.

Your book also brings attention to how the Civil Aviation Minister (Praful Patel) influenced board decisions at Air India. You published excerpts from a letter written by a former Managing Director (Sunil Arora) that complained about the minister influencing board decisions…

I could not bring it in the audit report on Air India, because it was post-audit. I had information about this letter, but only after it came into the public domain - some time about a year back - I decided this letter needs to be in the book.

People may say anything about Sunil Arora - and people have done so - but when you are the managing director of a company, and you are saying something against your own minister, it requires guts. For, if you are making any false claim, you are going to be fixed. And what else can you do? Whom will you write to? He (Arora) did the most correct thing. He wrote to the cabinet secretary. What came of the letter I don’t know. Nobody even called him to talk to him.

Isn’t this (ministerial interference) corporate misgovernance of a high order?

Not only that, I have quoted one board note which says that the issue has been brought to the board at the behest of the minister. I mean, how can you (do this)? It means things had become so bad that even Air India people were fed up. That is why they blatantly wrote that, damn it, there’s no budget, no proposal, but eight Airbus 310 aircraft have to be refurbished because the minister wants it. It is clearly written in the board note.

How come this aspect never raised a storm…

The surprising thing is, when this issue came to the public domain nobody gave it much coverage. It was discussed in the PAC, but nobody gave it much coverage. Beyond that, we are auditors and our role finishes. It is for investigation or for some other body to establish accountability.

In your book, you deal only with four or five of the CAG’s reports. But there were several others - like the Delhi airport privatisation, the NREGA audit, and the farm loan waivers - which you don’t even talk about…

It would have become bulky. I picked up these (scams) for two reasons: one, these had caught the public imagination. And each one of them has a different kind of failure (to highlight). One is a leadership failure, another is rules not being applied…

For example, 2G is leadership failure. The coal case, if not about leadership, is about how any person sitting in a high position can totally make government dysfunctional. A minister came back and did not allow a decision taken by the PM to be implemented. If your intention is wrong, you can destabilise the set up.

This happened in 2G too - where the PM was thwarted.

Despite his (Raja) informing the PM, he chose not to interfere - that’s why it’s a leadership failure

What about the Air India decision to buy 68 planes, reportedly at the instance of the minister?

The airline thing is totally misplaced decision-making. I don’t want to comment whether this was an act of omission or an act of commission. It was a decision taken by Air India and the ministry which went horribly wrong. The then minister also accepts it went wrong. But he is trying to say, look, even I didn’t take the decision, it was the eGoM (empowered group of ministers).

But the then finance minister (P Chidambaram) was concerned; he said the proposal for purchase of 68 planes was not driven by demand, but a supply-side initiative…

He just washed his hands off it, saying it is supply side. But if pressure is being brought on me, I am pushing it ahead, but I will give my comments…

Since the FM is involved in all financial decisions, did he have any role to play in 2G, coal blocks, etc?

Coal mines no question, Commonwealth Games no question, KG Basin no question. This leaves only 2G and the airline (plane purchase). In the airline, I have mentioned that the decision was finally taken by eGoM. In 2G, it goes to his (Chidambaram’s) credit that he repeatedly kept saying that please bring it for auction, index the price, the price applied is wrong. But what I have not mentioned is his famous note of 15 January (2008) to the PM, which says close the chapter.

So, why did you write this book?

You see, when I had retired (in mid-2013) I had no intention of writing a book. In fact, I didn’t even have much material except for copies of my (CAG) reports. It must have been in November or early December (2013) that I decided to write. I decided to write for a simple reason. I thought the CAG saga was behind me, and I might as well close the chapter and move on, but in the media the same things kept getting repeated. People were raising innuendoes. The government kept saying (the CAG is responsible for) policy paralysis, the CAG has gone rogue. Those kinds of expressions were used. My close associates and my friends in accounts and audit said this was very incorrect. Nobody is speaking up so you must come into the public domain and give a perspective to all this rubbish that is talked about. In some way it (the public criticism of CAG) was hitting their morale, which is very unfair. That is when I decided (to write). And they wholeheartedly helped me with all the documents and the records.

Did you use RTI to get some of the documents out?

No, I did not. These things (the 2G and coal block scams, Praful Patel’s role in Air India’s purchase of 68 planes, and the KG basin gas issue that the book deals with), I am very familiar with. If you wake me up at 1 am in the middle of the night, I will be able to rattle it off. Basically, I wanted to put out a summary of these (CAG) reports in very simple language. I have addressed it to young people - college going people. The younger generation has started showing greater concern and is much more demanding on governance. And that generation should be told what ethical governance is all about. That’s why I wrote the book.

What next for you? Politics? Public advocacy?

Politics, certainly not; public space, certainly I will remain in it. In what way I contribute my expertise that I really don’t know - let us see. Time will tell.

Were you happy in what you did as CAG? And about writing the book?

If somebody asks me, Are you very happy with what you have done, I am not happy. But I am very satisfied. The only intention of writing this book is this: No country can develop irrespective of what the private sector does, unless you can nurture ethical governance.