People's Democracy

Refusal To Produce CVC Report On Defence Deals

Affront To Parliament, Cover Up Move

 Somnath Chatterjee

THE latest report of the Public Accounts Committee of Parliament on the subject of procurement of supplies for OP Vijay (Army) clearly exposes once again the NDA government’s anti-democratic and anti-people attitude and deliberate affront to the parliament, and also its desperate and well orchestrated attempt to cover up gross acts of corruption.

The Constitution of India expressly provides that the central council of ministers shall be collectively responsible to the House of the people and that all the revenues received by the Government of India and other moneys received by the government on account of loans etc. shall be deposited in the Consolidated Fund of India and that no moneys out of the consolidated fund shall be spent expect in accordance with law and for the purposes of and in the manner provided in the Constitution.

Under the Constitution, the Budget, which is the annual financial statement of Government of India is presented in Lok Sabha and placed in Rajya Sabha and all payments out of the consolidated fund will have to be authorised by the parliament of India except expenditure charged under the Constitution. Thus, the established position is that the union government is totally accountable to the parliament in respect of all its activities and functions and particularly, with regard to the income received and expenditure incurred by the central government.

The Indian parliament, which has been assigned under the Constitution, authority to sanction expenditure and the right to information with regard thereto, appoints a committee on Public Accounts (PAC), which is one of the most important and prestigious committees of parliament to examine the accounts of the central government showing the appropriation of sums granted by the House, its annual financial accounts and such other accounts placed in parliament as the committee may decide.      

The Constitution further provides for the appointment of the Comptroller and Auditor General of India (C&AG) by the president, who can be removed only in similar manner as a judge of the Supreme Court, which indicates the great importance of the Constitutional post. The C&AG’s responsibility is to prescribe the form in which the accounts of the union government will be kept and it is the authority and duty of the C&AG to scrutinize the accounts of the central government. The reports of the C&AG relating to the accounts of the union government have to the submitted to the president, who has to cause the same to be laid before each House of parliament.

ROLE OF THE PAC

According to the rules of Lok Sabha, the duty of the PAC is to scrutinise the Appropriation Accounts of the central government and the reports of the C&AG and in particular, it has to satisfy itself, inter alia, that money as shown in the accounts have been correctly disbursed according to the authority granted by the parliament and also to examine the facts of such cases where money has been spent on any service in excess of the amount granted by the House for that purpose and the circumstances leading to such excess expenditure and make such recommendation as the committee may think fit.

The PAC comprises of twenty-two members, of which fifteen members are elected of Lok Sabha and seven members of Rajya Sabha, with ruling party members always constituting overwhelming majority. The rules expressly disqualify a minister from being a member of the PAC. By convention, a member of the opposition is appointed as the chairman of the PAC.

The above narrative shows the importance and the exclusive role of the parliament to examine every item of expenditure of the central government based upon C&AG Report, which is exercised through the PAC. The very basic postulate of parliamentary democracy is the accountability of the government of the day, most particularly in matters of expenditure because the government realises revenue primarily by imposing taxes on the common people and the parliament comprising of the peoples’ representatives zealously protects its right the authority to scrutinize government’s expenditure and Public Accounts to see that no money realised from the people is spent by the government unauthorisedly or wasted or misappropriated. Thus the PAC is one of the most important committees with extremely vital job assigned to it by the Rules of Parliament, which get their sanction from the Constitution itself.

The country is well aware of the Kargil War, where the country had to deal with aggression from Pakistan and had also to take military actions (called OP Vijay) to flush out intruders at Kargil. The government stated that it had to rapidly boost the combat capability of our troops who were deployed in this operation in May 1999 to fight back the Kargil intruders. According to the union government, to deal with the developing situation, eight brigades and one division headquarters had to be inducted and for the said purpose, according to the ministry of defence, the procedure for procurement of supplies in the context of a ‘war like situation’ had to be modified, so that procurements of arms and equipments etc could be done expeditiously, specifically required for OP Vijay.

For the said alleged purpose, namely, expeditious procurement of arms equipments and other supplies, the defence minister substantially simplified the procurement procedure, inter alia, by the modification of the usual terms of contract, by doing away with the provision of submission of Performance Bank Guarantee by the vendor of the stores and of the condition of making advance payment by the vendor against Bank Guarantee and also for continuance of Warranty Bank Guarantee.

The procedure was further simplified by the defence ministry by its order dated June 21, 1999 allegedly to expedite processing and speedy approval of cases by the Competent Finance Authority (CFA), which were prescribed to prevent misuse of funds and for selection of proper quality of stores. A new procedure was prescribed for the preparation of the Price Negotiation Committee (PNC) Report and with regard to release of foreign exchange and monitoring of post contractual work.

SHADY PROCUREMENT

As numerous allegations of grave irregularities in defence procurement, especially with regard to OP Vijay, came to light, the matter was raised in parliament and the defence minister gave an assurance in Rajya Sabha on December 23, 1999 that he would have the matter thoroughly investigated. On February 10, 2000, the ministry of defence wrote to the C&AG to take up a Review/Special Audit on the allegations made in parliament regarding Defence Procurement Procedure and also with regard to the allegations made regarding irregularities in the emergency procurement of items for Kargil related operations and other important issues like non-transfer of technology although paid for. On the basis of such reference, C&AG decided to assess the efficiency, economy and effectiveness of the defence procurement system and identify the major cases of irregularities. The C&AG, after a study and scrutiny made over a period of about two years, ultimately submitted its report on “Review of Procurement for OP Vijay (Army)” which was placed in parliament on December 11, 2001.

In brief, the Audit Report of C&AG highlighted that nearly all the supplies were either received or contracted and received well after the hostilities ceased and thus were of no use to deal with the hostilities, which ended in July 1999. Supplies valued at Rs 2150 crores were received after July 1999, out of which supplies valued at Rs 1762.21 crores were received after January 2000, that is, six months after the hostilities stopped. Surprisingly, contracts were placed for supplies valued at Rs 1606.26 crores (75 per cent total purchase) after the cessation of hostilities in July, 1999. Thus, according to the C&AG Report, the purported justification given for the immediate procurement of supplies only for the Kargil hostilities was not fulfilled because they were not and could not be used for the purpose of OP Vijay. Surprisingly, even orders for supplies were placed long after the end of the war.

In the report, C&AG further gave details dealing with, inter alia, cases where the government incurred Rs 44.21 crores extra for certain items, placed orders for goods worth Rs 260.55 crores which were not of the required quality, purchased in excess of authorisation/requirement aggregation Rs 107.97 crores, contracts were placed for import of ammunition worth Rs 342.37 crores though such ammunition was being produced in Ordnance Factories/ PSU’s in India and also there was non-deployment of stores aggregating Rs 199.42 crores caused due delays at various stages or processing the cases.

Thus, according to the C&AG Report, “while critical supplies of clothing, ammunition and arms could not reach the troops during the operation (OP Vijay), an amount or Rs 1046 crores, almost half of the total, entirely in foreign exchange, was spent fruitlessly, breaching established principles of propriety”.

PAC & THE CVC REPORT

The PAC as per the provision of the Rules selected the entire report of C&AG for detailed examination. In one of the meetings held by PAC with the Comptroller & Auditor General (C&AG) the latter suggested that PAC may like to refer to the Report of the Central Vigilance Commission (CVC) on Defence Deals in the context of their decision to examine defence procurements of OP Vijay. Accordingly, PAC wanted the report from the CVC but the latter asked PAC to refer to the defence ministry, as the report was allegedly “secret”.

However, though PAC desired that the CVC report should be available to the PAC, most significantly the ministry of defence refused to produce the same on the alleged ground that the CVC report was secret and it would not be in public interest to divulge the contents of the report.

The PAC discussed the issue of denial of the CVC report by the ministry of defence at length. The C&AG stated that mere secrecy not be taken as a plea and observed that while the ministry entrusted both C&AG and CVC to enquire into the defence deals, an anomalous situation has arisen where findings of C&AG have been made public, whereas ‘secrecy’ has been claimed in respect of findings of CVC.

While the ministry of defence refused to produce the CVC report to the PAC, the defence minister provided opportunity to his friend, one R V Pandit, to look into the documents of the ministry of defence in respect of defence deals and the said R V Pandit described C&AG as culprit and criticised those MPs who had raised the issue of corruption in the matter of purchase of Aluminum Caskets of having disgraced their tribe. The defence minister circulated a booklet supposed to be printed by the said Pandit with an Introduction by the minister himself in which he endorsed the pretended findings made by the said Pandit and thereby chose to approve of the reckless and irresponsible allegations made by the said Pandit against C&AG and the members of parliament.

As the PAC felt that there was no proper reason for the refusal to produce the CVC report to the PAC and it was necessary to look into the conduct of the defence minister relating to the circulation of the booklet of the said Pandit, the committee reasonably decided to bring the matter to the notice of the speaker of Lok Sabha. Thereafter, meetings were held between the chairman of the PAC and the minister of defence with the Lok Sabha speaker and it was suggested by the speaker that the views of the members of the PAC should be ascertained in the matter. At a special sitting of the PAC on July 10, 2002, “it was resolved by the members of PAC unanimously that the report should be made available to them by the ministry of defence in the context of the C&AG’s report” and “that the matter regarding possible breach of privilege also amounting to interference in the functioning of the committee by the defence minister be brought to the notice of the Hon’ble Speaker for examination by the privilege committee”.

Even after the unanimous decision of the members of the PAC, the ministry of defence, unreasonably and improperly and in derogation of its accountability to the parliament through the PAC, again refused to make the CVC Report available to the committee. Ultimately, the PAC had no alternative but to express their surprise that a vital document like CVC Report, which was considered essential for scrutiny of the procurements, has been withheld on the alleged ground of secrecy and in view of the refusal by the ministry of defence in supplying the CVC Report, the committee regretted “their inability to give their findings on the defence procurement transactions”.

The Central Vigilance Commission (CVC) is the most important organisation, which has been statutorily authorised to enquire into cases of corruption in the administration. The Supreme Court has emphasised the right and duty of the CVC to discharge its functions without governmental interference.

In the case of defence deals, CVC enquired into the same on being referred to it by the ministry of defence and has submitted its report to the ministry. CAG had the opportunity to look into the same while scrutinising the defence deals and suggested to the PAC to consider the report as it would be relevant for PAC’s study and conclusions. CAG was of the view that the CVC report could not be considered secret so as to preclude its consideration by the PAC.

CONSPIRACY TO SUPPRESS TRUTH

The conduct of the ministry of defence and thereby of the Government of India provides a sordid chapter in the development of the parliamentary system of governance in our country because of the denigration of the principle of accountability on the part of the government towards the parliament, which is the highest forum of the people of the country. Such denial is a deliberate attack on parliamentary democracy and is an insult not only to the parliament but also to the people as a whole. Parliament on behalf of the people is entitled to exercise the peoples’ right to information which cannot be denied on the false plea of alleged secrecy of a vital document, which would have no doubt exposed acts of monumental corruption. The production of document was withheld although a high Constitutional authority like the C&AG wanted to get the CVC report, which had been made available to the C&AG. Obviously, there is a conspiracy at the highest level of the central government to suppress truth and protect a minister who has already been under the cloud for his various acts relating to defence deals and for disclosure of defence documents to his friend.

Obviously, the primary intention of the NDA government is to suppress the truth relating to serous acts of corruption at the highest level. The council of ministers’ accountability to the parliament has been jettisoned for petty political purposes and to provide a cover to a discredited minister. CVC Report is a public document and if the report had exonerated the ministry or the minister of defence, surely it would not been suppressed from the PAC. Clearly the government and the ministry of defence want to hide the truth and avoid the exposure of glaring acts of corruption and squandering away of public money, when on the plea of dearth of money, many important public welfare activities are being discontinued and important central public sector undertaking are being closed down and the workers are being thrown on the streets to face starvation.

It is necessary to highlight that the findings and the decision of the PAC have been unanimous, where members representing the ruling combination are in the majority in the PAC. Obviously with a view to extricate the NDA government from public exposure and criticism, some of the members of the BJP have, in an extraordinary conduct, subsequently tried to challenge the report on the floor of the House. This is the first occasion when such a manoeuvre has been made in total derogation of the well-established norms of parliamentary behaviour and conduct. In desperation, the BJP has not stopped even in its attempt to scuttle and denigrate the entire process of parliamentary functioning, thereby weakening the very foundation of our polity, which the people of the country should resist at all costs.