‘I Stand 100% By the 1.76 Lakh Cr Number in 2G Report’: Vinod Rai

Video Editor: Purnendu Pritam
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“I stand 100 percent by the 1.76 lakh crore figure,” said former CAG Vinod Rai in an interview to The Quint. Rai asserted that, if given the chance to conduct the CAG audit on 2G spectrum allocation again, he would do it the same way. Speaking about his latest book, Rethinking Governance: Holding to Account India’s Public Institutions, Rai spoke about the mandate of the CAG, the changing roles of public institutions, why acquittals in the 2G report aren’t a reflection of the CAG audit, and the credibility crisis in the CBI. Here’s an edited excerpt of the interview:

So, in the book, you begin the chapter on CAG with a quote from former PM Manmohan Singh where he said, “Never in the past has a CAG decide to comment on a policy issue. It should limit to the office of the role defined by the Constitution.” So then, what do you think is the mandate of the CAG? And because this comment came at a time when the Congress govt was critical of the CAG, do you think you exceeded that mandate?

Well, let me make one thing very clear. At no point of time, has the CAG or the institution of the CAG exceeded its mandate that has been given to us. Mandate of the CAG is very clear, policy formulation is done by the govt of the day. The CAG has no role in policy formulation. But once the policy has been formulated and govt starts functioning – whether it incurs expenditure or it rolls out projects and schemes, it’s the mandate of the CAG to check or to audit whether that policy formulation has been fully followed or not.

This remark probably came in the context of the 2G spectrum allocation, where it was seen as if we were commenting on the policy of “first-come, first-serve” which was adopted by the govt while allocating licences in 2004. Now, if you read our audit report, on the first page of the audit report, it is very clearly stated that policy formulation is the sole prerogative of the govt. Audit’s job is to conduct audit as per the policy which has formulated. So, when we did the audit of the 2G spectrum allocation, we looked at the allocation of licences as per the first come, first serve policy. I had at that point of time, written a letter to the honourable PM of the country, explaining to him that we had NOT exceeded the mandate as prescribed to us under the Constitution or the statute, and performance audit, which is obviously a more modern-day audit, was as per the audit parameters given to us by the govt notification itself of 2006.

Listen to the full interview here:

One lakh seventy-six thousand crores. The figure made newspaper headlines and everyone was stunned. Of course, you clarified at the time, that this is a figure of notional loss to the exchequer. Do you stand by that number in 2019? And do you stand by the CAG report?

I stand by that number 100%. If we were to conduct that audit all over again, I am sure my colleagues at the audit department would do exactly that they had done at the same time. We had used the word presumptive loss at that time, why, because presumptive in audit parlance is an international definition, starting from the World Bank to lots of other audit jurisdictions, that’s the word used. And we totally stand by it. We gave four formulations of so-called presumptive loss. One lakh 76 was the largest figure, so folks like you in the media picked that because it made headlines.

When you look at the impact of the CAG report, there were acquittals in the case. Coming from your position as the CAG, what’s your viewpoint on this? Were you expecting more from the courts?

Let me put this in perspective, it’s like this. The CAG does audit; audit is not investigation. Audit just look as at the records, there are certain guidelines, policies and implementation and then comes up with an audit report which is presented to the Parliament. Now then a PIL was filed which then in the Supreme Court, the SC examined the contents of the PIL in terms of irregularities which had been conducted and found that there were irregularities in the implementation of the policy, so the Supreme Court in its wisdom cancelled the licence. But the SC has made an observation and it has clearly said that we are not referring to or relying upon the audit report of the CAG, because that report is before the PAC.

So, the Supreme Court was guided entirely by the evidence or the documentary material which was brought before it in the Court itself. SC in its wisdom cancelled the licences, now third was an investigation done by the CBI, and whatever evidences, documents, witnesses etc they had, they went before the trial court. Now this is the third aspect of this, this had nothing to do with the CAG audit or the irregularities. Now in the judgement of that trial judge, he has very clearly said that the charge sheet made certain allegations but there wasn’t enough evidence brought forth by the investigative agency which could justify those charge sheet allegations. So where the acquittal took place was in context of criminality of the licencing procedure, and that had nothing to do with either the audit report or with the SC observations. It had to do entirely with the evidence that the investigating agencies brought before it. And that’s why the judge has said that the evidence was not provided.

In the book, you call CBI the “handmaidens of power” before you go on to describe the Rakesh Asthana-Alok Verma controversy as the “nadir” in the reputation of the CBI. Now those are pretty strong words, so my question to you is then, why do you think the CBI is in a credibility crisis and do you think that it’s because of structural flaws in the organisation or political interference from the government of the day?

Allegation of political interference in the CBI have been there for decades. I talked the “nadir” was when the Chief Justice called the CBI a “caged parrot.” That was the credibility crisis I was talking about, and the crisis came about when the apex court of the country is finding flaws in the functioning of the CBI. So, that’s an issue of personnel, or the people involved. Structurally, yes, there is a deficiency in the CBI and this has been pointed out by very many administrative reforms commissions also, that the CBI after the Vineet Narain case, has been put under the supervision of the CVC. But by itself it draws power from the Delhi special police Act. It does not have a statute of its own. So, even the Vineet Narain case, while the court said that the CBI should be supervised by the CVC, the court said that its accountability would be to the government. So, CBI unfortunately is like a charioteer who’s got one leg on one horse and the other leg on the other horse. That is what I call a structural inefficiency, or structural inadequacy in the system.

Going forward, what do you think is that one thing that we as citizens, as well as the executive, as well as the judiciary, need to ensure so that the health of the public institutions is maintained? So that the institutions do continue to perform their function in the future?

See, I would sincerely believe that public institutions should be seen as institutions...their autonomy needs to be protected, the credibility of the people that are being staffed should be maintained, and to a very large extent, the process of choosing those people should be completely aboveboard. As long as the process of choosing those people is transparent, and it is a credible process, I don’t think anyone will question it.