Controversial Report

An audit gone awry?

Print edition : January 19, 2018

At a protest in New Delhi by Congress workers, led by Ajay Maken (centre), against the BJP after the trial court’s verdict in the 2G spectrum case. Photo: THE HINDU Archives

Vinod Rai, former CAG of India . Photo: PUNIT PARANJPE/AFP

The verdict in the 2G spectrum case was just what the Congress needed to turn the focus on Vinod Rai’s controversial audit report and away from the scams in the UPA regime.

Whether by coincidence or by design, Vinod Rai, the former Indian Administrative Service (IAS) officer, best known for his stint as the Comptroller and Auditor General (CAG) of India, has continued to feature in the national news at frequent intervals over the past decade.

On December 21, when Special Judge O.P. Saini of the CBI Court passed what many felt was an astonishing verdict in the 2G telecom spectrum case, the former CAG’s name resurfaced in the country’s political discourse. Particularly, the judge’s strong remarks in his order about how “some people created a scam by artfully arranging a few selected facts and exaggerating things beyond recognition to astronomical levels” turned popular attention once again towards Vinod Rai and the findings in his controversial audit report.

Estimate of ‘presumptive loss’

Tabled in Parliament on November 16, 2010, the report estimated the maximum “presumptive loss” to the national exchequer due to the manner in which the 2G licences were granted at Rs.1.76 lakh crore. This estimated figure gave the decision to allot the 2G licences to private businesses the unenviable distinction of being called “independent India’s biggest financial scandal”.

The report presented a range of four estimates which could be classified as the total “presumptive loss” to the national exchequer, from Rs.57, 666 crore to Rs.1, 76, 645 crore. But the bigger figure endured in public memory. In his book Not Just an Accountant, which was released in late 2014, Vinod Rai dwelt upon this aspect at length.

Explaining how CAG officers had computed the “astronomical figures”, Vinod Rai wrote, “The formula applied for computing the loss was used after requisite deliberation, and based on a logical understanding of tax laws in India and abroad. The other option before the audit team was to use mathematical or econometric modelling. Such models are premised on certain assumptions, which may or may not hold true in real life market situations and would thus be vulnerable to criticism. Hence, the modelling methodology was given the go. Audit was also aware that too much was at stake for far too many important and influential people, and it could not take the risk of having its computation being vulnerable to the intense examination it was bound to be subjected to. It was thus decided to use data and other indicators which were already in the public domain.”

And for the specific figure of Rs.1.76 lakh crore, the data from the public domain that formed the basis for calculations were the rates which were discovered for the 3G spectrum after its auction in mid 2010. Since the 2G spectrum which was being auctioned, according to a Telecom Regulatory Authority of India report of 2010, was comparable with the 3G spectrum, the former CAG wrote, the national auditor used the rates discovered by the 3G auctions.

However, as Judge O.P. Saini’s written remarks in his December 21 order showed, a lack of consensus about the exact “presumptive loss” from the 2G auctions persists among informed circles.

Notwithstanding these technicalities, the politics of the 2G scam took a sharp U-turn following the court order. On December 21, it emboldened the Congress party, which trained its guns at both the Bharatiya Janata Party (BJP) and the CAG. Kapil Sibal, who succeeded A.Raja as Telecom Minister in the United Progressive Alliance (UPA) government and who had been mocked for claiming that there had been “zero loss” in the award of 2G licences, was among the first Congress leaders to pounce upon the opportunity. Speaking soon after the verdict, he told reporters, “Today, my argument has been proven right. There was no corruption and no loss. If there is a scam, it is a scam of lies peddled by the [then] opposition [BJP] and Vinod Rai. Today, Vinod Rai should apologise to the nation.”

Another former UPA Cabinet Minister Manish Tewari, who was also a member of the Joint Parliamentary Committee (JPC) which looked into the matter, joined the chorus. He tweeted, “Mr. Vinod Rai Former C&G [sic] must apologise to the nation for throwing presumptive sensational corrosive numbers into public discourse. He was author of imbecile 1.76 thousand crore [sic] loss theory that I had destroyed during my cross examination of Rai in JPC. Court has affirmed JPC Report.”

It was not the first time that the former CAG was being attacked by senior members of the Congress party. While serving as the CAG from January 2008 to May 2013, he had faced the heat several times from senior Cabinet Ministers. Senior Congress leader Digvijaya Singh had even compared Vinod Rai to T.N. Chaturvedi, the CAG during Rajiv Gandhi’s prime ministerial tenure and who had raised questions in his report about the Bofors deals. On retirement from service, T.N. Chaturvedi joined the BJP, which made him a Rajya Sabha member and Governor of Karnataka.

But the accusations were not confined to the political realm. In fact, on at least one occasion, the then Prime Minister Manmohan Singh publicly upbraided the CAG. Speaking with a group of editors in June 2011, less than a year after the 2G report, Manmohan Singh said, “Well, I think the CAG also leaks. It is not the function of the CAG. It has never been the case that the CAG has held a press conference as the present CAG has done. But nobody is commenting on all this. It is not right for the CAG to go into issues which are not the concern of the CAG [sic], it is not the CAG’s business to comment on policy issues. I think they should limit themselves to the mandate given under the Constitution. We are now a permissive society, I think if the media can get away with murder, so can the CAG.”

Characteristically, in his two-page letter written in response to Manmohan Singh’s criticisms, Vinod Rai denied all charges and asserted that both he and the office of the CAG had followed all norms and proprieties. This quality of assertion and visible participation in public discourse by engaging with the media and common citizens through interviews, lectures and talks marked Vinod Rai’s five-year-long tenure. He revamped the national auditor's engagement with the news media, took up headline-generating topics for audits and generally seemed to be aware of the pulse of the nation. Analysts believe that his active public profile was facilitated by the fact that it was a time when both the Union government and Parliament had fractured power centres, which created an opportunity for the courts and institutions such as the CAG to fill in the vacuum.

In the ongoing tenure of the National Democratic Alliance (NDA) government, however, the former CAG’s engagements in the public sphere have not been as frequent and vocal. This is significant because he has now taken over two new responsibilities which are in sync with his self-described role in his book as the “nation’s conscience keeper”. The new responsibilities pertain to reforming the Board of Control for Cricket in India (BCCI) and the Banks Board Bureau (BBB). When this correspondent contacted him for his comment on the court order, he was unresponsive. A few months earlier, when Vinod Rai briefly met this correspondent at a public event, he politely expressed his inability to grant an interview. Clearly, reticence has taken over a once media-savvy public official.

Notwithstanding this reticence, however, Vinod Rai continues to feature in the national news on account of him being referred to either by the politicians, the courts (the Supreme Court appointed him to the BCCI) or the government, which gave him the task of leading the BBB. His silence in response to fresh criticisms and questions raised about his controversial audit report following the 2G verdict has, thus, been uncharacteristic.

This article is closed for comments.
Please Email the Editor