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  CAG  
  Publicity by all means  
   
  WHEN Prof Omcherrry N.N. Pillai invited me to deliver a talk on the reports of the Comptroller and Auditor General of India, which have paralysed Parliament, I could not say no because I respect him so much. Perhaps, he wanted to know how a journalist with no axe to grind reacted to the ugly goings-on in Parliament. The talk was at the Kerala Club, an institution almost synonymous with his name.

Prof Omcherry was also concerned over the inability of Parliament to transact any business because of the CAG reports. The day I delivered my talk was the fourth successive day that Parliament remained stalled. Parliament is the right forum to discuss any subject that has a bearing on the welfare of the people. Far from debating the pros and cons of the CAG reports, some MPs were just shouting slogans.

While accepting the invitation, I warned him that I had a poor opinion of the way the CAG has been creating controversy after controversy. It was my way of telling the professor that he could invite another person to give a contrarian viewpoint. Alas, that did not happen, though with his vast knowledge and experience, Prof Omcherry filled the gaps I left in my extempore lecture.

During my talk, I emphasized the role the CAG plays in the Constitutional scheme of things. Without such a watchdog organisation like that, corrupt politicians and bureaucrats can make mincemeat of rules and regulations. It's the fear that the CAG will detect any hanky-panky in government transactions that keep the big bosses on their toes. In fact, no organisation can function properly without an audit mechanism in place.

One problem with auditors is that they look for only errors, deliberate or otherwise. They feel happy when they detect something fishy, not when they find everything in order. Have you ever noticed a cashier at the bank? He is forever counting currency notes because an error can cost him money. He does not even see the face of the customer. Numbers are all that matters to him. He is like the number-crunching CAG.

The institution of CAG is as old as the Constitution. The British also had their own audit organisation. As many as 11 persons held the post of CAG since 1950. The CAG is also head of the Indian Audit and Accounts Department of the government. I asked all those present what the name of the present CAG was. Almost all of them knew his name: Vinod Rai, appointed on January 7, 2008.

Then I asked them to mention the name of any of his 10 predecessors. One of them, an occasional short story writer, mentioned the surname "Mishra". No person with such a surname held the post. But when I mentioned the name of T.N. Chaturvedi, many of them had heard his name because he was made a Member of Parliament and later Governor.

At that time I wondered why a person who superannuated from a constitutional post was favoured, when the BJP had many grassroots leaders who deserved some limelight. I also wondered what services Chaturvedi could, perhaps, have rendered to the party while holding the post and auditing government accounts. That may never be known.

To return to Vinod Rai, he will go down in accounting history as the first person who articulated what has come to be known as "presumptive losses and profits".

I spent most of my time dealing with the concept of presumptive loss. To explain the phenomenon in simple terms, I turned autobiographical. I wanted to study law after my graduation but the law colleges in Kerala were far away and I would have had to stay in a hostel. Sadly, due to a reversal in business fortunes, my father had lost everything he had acquired by dint of hard work.

Though he said he would support my higher education, I knew he could not and left Kerala in search of a job, first in Bombay and then in Delhi. I was also active in a students' organisation reaching the position of joint secretary, Quilon district unit. My president at that time is now a former minister and MLA.

I can say that if my father had helped me become a lawyer, I would have been practising law in the Supreme Court now and earning fees in tens of thousands of rupees for every appearance in the court, instead of waiting for my next cheque for my articles, as is currently the case. Had I pursued politics, I would have been a Union or state minister and if I were like some politicians, I would have had an account in a Swiss bank. All the millions of rupees I could not earn and the millions of dollars I could not deposit in foreign banks just because I did not study law is the "presumptive loss" I suffered.

Whom can I blame? Since my father would turn in his grave if I blame him for the huge loss, I refrain from doing so. But Mr Rai has no such problems because he can blame the government of the day for all the presumptive losses the nation has suffered. I then told my audience how an organisation I head made a huge loss: actual not "presumptive loss".

We approached DDA for a plot of land to run a school for the poor. The land cost at that that time was about Rs 6 lakh. Some middlemen suggested that we pay Rs 2 lakh as bribe or speed money to get the land. No, we were not prepared to take that route. We repeatedly approached the organisation citing the not-for-profit features and the objectives of our project. Finally, we got land after nine years without paying a single paisa by way of bribe.

But by then the land cost had shot up to Rs 90 lakh. Had we paid Rs 2 lakh as bribe, we could have built the whole school building with the money we paid for land alone, nine years later. This is the actual loss we suffered. As regards the presumptive loss, hundreds of students from the slums were denied an opportunity to study for nine long years. Alas, a businessman cannot afford to take the line we took vis-à-vis the bribe demand.

A few years ago when I visited Istanbul, I was impressed by the international airport there. It was much better than the New Delhi airport. Since I reached the airport early, I looked around and found to my pleasant surprise that it was built by an Indian company, GMR. It is the same company that built the Indira Gandhi International Airport in New Delhi.

I am happy that the airport is one of the best in the world, spacious, neat and clean with all passenger amenities. But the CAG says GMR caused the country a huge "presumptive loss". The term entered the political lexicon when Vinod Rai calculated that the 2G Spectrum allocation during Minister Andimuthu Raja's time caused the nation a presumptive loss of Rs 1,76,000 crore.

I explained to my listeners how wrong the calculation was. CAG says this staggering amount would have been in the exchequer if the government had taken the auction route. Let us assume that the government got this amount from Airtel, Tata Indicom, Reliance etc. These telecom companies will not pay from their pockets. They will charge every rupee -- even more -- from mobile telephone subscribers like you and I.

In other words, the "presumptive loss" the government suffered is the "presumptive gain" the telephone subscribers made. I once wrote about a beggar in Kerala secretly using his mobile phone, perhaps to check how much his wife had earned by that time. Today telephone rates in India are one of the lowest in the world. It would have remained unaffordable if the telephone companies had paid Rs 1,76,000 crore to the government.

The whole world can condemn Raja as corrupt but it was he who democratised the telephone business in India. I compared one of my friends who started an intercom business in Delhi around the same time Sunil Bharti Mittal started a telephone instrument company with the brand name Beetel from Ludhiana. Technology-wise my friend was superior because he supplied customers an integrated telecom service whereas Mittal supplied only an instrument.

Because of his political connections, undisputed ability and management skills, Mittal managed to get in 1992 a licence to run a mobile phone service in Delhi. He did not have enough money at that time. He, therefore, persuaded Swedish Ericsson and American IBM to set up infrastructure like towers and transponders for which he paid rent.

When he obtained a licence for 3G services in 13 circles about two years ago, he paid the government Rs 12,300 crore. Within a month of signing that cheque, he made a payment of $10 billion (Rs 45,000 crore) to buy Africa's largest telephone network owned by Zain. Today, in comparison, my friend makes a living by practising acupuncture.

One thing is very clear. Almost all billionaires in India owe their success to the patronage they obtained from the government. In other words, government is the milch cow for businessmen. In Bhopal I managed to get a small house from the MP Housing Board. When I left the city, I sold it and earned a sum which was larger than the salary I earned in the three years I spent in the city of lakes and hills as a reporter. For once I realised that real estate was more profitable than the fourth estate, though I did not pursue the latter.

Many people have the wrong impression that it was the competition among private telephone companies that brought the call rates down from Rs 16 per minute in 1994 to what it is today. Actually, it was the intervention of the government-appointed regulatory authority that forced them to reduce the rates and made mobile telephony affordable for even the beggar on the street.

Raja's contribution was the breaking of the monopoly some telephone companies enjoyed. They functioned like cartels. He also allowed new players like Uninor and Loop Telcom to enter the field. Recently, one newspaper had an interesting headline mentioning the total amount of "presumptive loss" the government suffered in 2G Spectrum allocation, Delhi airport, and coalfields allocation in figures with so many zeroes in it. The amount was Rs 3.8 lakh crore.

If, as the CAG says, the 57 coalfields were given at throw-away prices and they are worth Rs 1,86,000 crore, how come they have not started mining 56 of them? Or, are they waiting for coal prices to go up like gold, which became dearer by Rs 560 per 8 gms in the week ending August 24? The CAG's calculations are completely wrong. In order to make Coalgate appear bigger than 2G scam, he added Rs 10,000 crore to make it Rs 1,86,000 core.

Sorry, this is not auditing. It's the job of the auditor to audit and if he finds errors and frauds in the accounts, he has a duty to check with the people concerned and seek their explanation before rushing to publicise his report. It all started with then Chief Election Commissioner T.N. Seshan, a lapdog of the establishment, who showed his true colours when he was given a constitutional post.

Seshan thought all the adulation he received as CEC would help him occupy Rashtrapati Bhavan. Alas, he could not even save his deposit when he contested against L.K. Advani in Gujarat.

At the Kerala Club, I concluded my speech with a Sanskrit shloka:
Ghatam bhindyaat/ Patam chindyaat/ Kuryaat rasabharohanam/ Yena kena prakarena/Prasiddha purusho bhavaet.
(Some people break pots, some remove their clothes, some climb onto the donkey's back: all because they want publicity by any means). Prof Omcherry knew the shloka better than me and was obviously pleased with it. I wish I knew enough Sanskrit to add another line to this verse: "and some calculate presumptive loss".

The writer can be reached at ajphilip@gmail.com

Caption: Prof Omcherry N.N. Pillai listening to a speaker at the Kerala Club

Courtesy: Indian Currents
 
  By  A.J. Philip  
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