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Don’t be lynchpins of crony capitalism – CAG to cos

Any entity that is using public resources in its business and sharing revenue with the government can be audited by the government auditor, Comptroller and Auditor General of India (CAG) Shashi Kant Sharma said at an event in New Delhi today.

While the CAG would “not want to cross our boundaries”, the onus is on everyone that no one “upsets the public trust …” he said at the ASSOCHAM event on “Corporate Frauds”.

“Be it in the audit of the 2G spectrum allocation or coal block allocation, construction and management of Delhi Airports, be it related to exploitation of gas and oil fields, in many of our audits involving private parties, we have found evidences that fall into a pattern of private players trying to distort competition, upset free market fairness, and cause loss to both public exchequer and competitors,” he said.

He said in the coming days as the economy further picks up and avenues for private enterprises further open and “public interest and fairness would be on test”.

Seeking cooperation of private sector for confidence and credibility of the system, Mr. Sharma said “I am certain you wouldn’t want to be known as lynchpins of a crony capitalist economy”.

The recent ruling of the Supreme Court, upholding the judgement of the Delhi High Court was a landmark one since it removed the doubts on the constitutional mandate so far as it relates to CAG audit or revenue sharing.

” …The interpretation of the Constitutional mandate was long overdue and the imperatives of changing scenario in the economy, which I discussed earlier, makes it quite obvious that accountability through Parliament must be enforced on utilization of resources that normally belong to people.”

Quoting the relevant excerpts of the Supreme Court ruling on the issue of CAG mandate on the public –private-partnership projects like revenue sharing of spectrum allocation, Sharma said, “let there be no doubt that the principle which is applicable to spectrum, applies to all natural resources which belong to public and where revenue is to be shared with the Government; and CAG is duty bound to report to the Parliament in all such matters.

“In fact, work on telecom audit is already in progress and I am hopeful that our first report would be ready before the year-end. Similarly, a report on gas and oil exploration will be presented to the Parliament soon. We will be taking up performance audit of some ongoing public private partnership (PPP) projects shortly. None of this is aimed to harass the private firms, but to uphold the constitutional scheme for accountability”.

Answering critics who question the domain knowledge with the CAG, he said, “CAG has expertise in various domains including gas, electricity, transport, infrastructure etc. Our institutional competence is well recognized, even in international audits and the institution takes pride in that…”

However, he said that mandate does not mean taking up audit in all cases. It would be done keeping in view the risk assessment as well as impact on public interest.

The CAG also advised the government to make sensible and simplified changes in the design of contracts so that incentives to fudge revenue are systematically removed.

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