Manmohan insisted KG D6 CAG audit shouldn't hurt private sector, says Vinod Rai's book

New Delhi: As CAG found Reliance Industries was being favoured in gas exploration deal to the government’s detriment, former Prime Minister Manmohan Singh told the then top auditor Vinod Rai that audit should not hurt the private sector and RIL was one of the biggest and most respected.

“Our refrain was that every time matters were settled between the government and the operator (RIL), it was to the government’s detriment,” Rai has said, while talking about the government-ordered audit by Comptroller and Auditor General (CAG) of KG-basin blocks awarded to an RIL consortium.

[caption id=“attachment_99447” align=“alignleft” width=“380”]  Vinod Rai.[/caption]

Elaborating on the matter, which had snowballed into a major controversy with CAG accusing RIL of not being given access to books of accounts required for this audit, Rai said during one of his meetings Singh “felt that audit should not act as a dampener on the enthusiasm of the private sector to partner with the government”.

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“The Prime Minister was very emphatic that Reliance was one of our largest, most respected and best-known companies possessing a global reach. Reliance, therefore, had the professional and financial capability to undertake such large projects and compete in global bids,” Rai said.

The former CAG, whose comments in his new book about Singh’s role during 2G spectrum and coal block allocations have already created a flutter, said that he agreed with the then Prime Minister and told him that that auditor generals in all democracies audit such public-private partnerships and do not comment on any “private party making only normal profits”.

“However, it was the government that had taken the step to invite CAG to conduct audit, ostensibly with the objective of assuring the public and the Parliament that its interest werebeing adequately protected,” Rai has written in the book titled ‘The Diary of the Nation’s Conscience Keeper – Not Just an Accountant’.

About CAG audit that generated a major controversy with regard to second-generation spectrum allocation, Rai said that a “template response” was given by the Prime Minister to the then telecom minister A Raja, showing a “distanced dealing of the issue”.

“Unbelievably, the Prime Minister chose to ignore the red flags of deviation from policy, and questionable facts and figures offered by the minister (Raja),” Rai said.

“It is obvious from the exchange of these letters that the Prime Minister was indeed aware of Raja’s attention as far back as November/December 2007. He chose, for reasons which can only be speculated, to ignore the warning signals. He failed to direct his minister to follow his advice…”.

“Mr Prime Minister, people wonder, if you were indeed convinced that spectrum allocation should be transparent, what prevented you from executing your wishes? Had you, in fact, stood steadfastly by your beliefs, the fate of UPA II might have been different. In fact, the fate of Indian economy itself might have been very different,” Rai has written.

Raising questions about the way “a leader is foisted upon us”, Rai also said that it was not because of his proven leadership qualities or dynamism, “but by virtue of his loyalty to an organisation or its high command.”

The ex-CAG has raised similar concerns about selection of top bureaucrats, saying it was mostly decided on the basis of number of years served in the establishment.

About Commonwealth Games scam, Rai said the preparations for such a high-profile sporting event was being done like a “Punjabi baraat” and not on the basis of professionalism, while the government, from its highest echelons, was not just prescribing “jugaad, but applauding it too”.

On Air India, Rai said the national carrier purchased aircraft at a price of Rs 1,300 crore each in 2005, but sold them within five years at roughly Rs 427 crore each to Etihad.

Detailing the bad financial position of the national carrier, Rai pointed out that the first airline of the country – Tata Airmail – earned a profit in its first year of operation. This was later rechristened as Tata Airlines, which eventually got nationalised and became Air India in 1953.

Regarding coal allocation issue, Rai said the “coal mining saga is a remarkable case study of people in power who, when provided the mantle to lead, faltered the moment a challenge arose”.

Talking further about this particular audit in a chapter titled ‘A slippery deal: Gas exploration’, Rai said the management committee for these blocks had no voice in the operational control of the exploration and production operations" and therefore the government could not influence capital or any expenditure patterns.

There had been allegations of ‘gold-plating’ worth billions of dollars by RIL in this project, while it has also been alleged that the contract was biased towards the company.

“Not only was the PSC (Production Sharing Contract) stipulation not well suited to the government interests, but the intensity of over-sighting exercised by the government officials to protect officials to protect government revenue also appeared to be very lax.

“Every time the operator made claims, it was acceded to by the management committee, DGH (Directorate General of Hydrocarbons) or MoPNG (Ministry of Petroleum and Natural Gas). Each time it was acceded to, the action was detrimental to government interest,” Rai said.

He also rejected apprehensions that CAG did not have technical knowledge in such technical areas and its auditors had worked in the supreme audit authorities of Oman and its oil exploration agency.

“These auditors were auditing exactly what would be defined as NELP-type models in India. If these auditors could acquire knowledge to audit issues of the International Atomic Energy Agency and highly specialised scientific and defence installations, gas exploration would not be rocket science to them. Indeed, they had already mastered rocket science,” he said.

PTI

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