The government of India on Thursday last week admitted in the Supreme Court that out of 26 cases registered by the CBI on the basis of the Comptroller and Auditor General (CAG) report, relating to Kargil war purchases, the CBI has found criminality only in one while another is pending investigation. In eight cases the ministry of defence imposed penalties or levied liquidated damages on firms for failing to act in accordance with the terms of the agreement. Departmental action was initiated in one case but no criminality was found.
Even in the matter of purchase of aluminium caskets (coffins) the CBI has filed a closure report. The then defence minister had to face the ignominy of being called a “coffin chor” and after thorough investigation and a long wait no irregularity has been discovered.
It may be remembered that the CAG had highlighted irregularities in 35 specific cases in the Kargil purchases. Even before the Public Accounts Committee (PAC) could examine the CAG report, the media and the opposition political parties had taken up the issue in Parliament and boycotted the then defence minister, forcing him to eventually resign.
There was turmoil in the defence ministry as well as the Army headquarters. The CAG report led to suspicion of involvement of all officers in defence procurement and slowed down the pace of procurement. After an agonising period of twelve years no criminality was found in any of these procurement cases, except one.
This brings to the forefront the issue of assumed criminality whenever CAG submits his reports. The public as well as opposition parties firmly believe in the infallibility of the CAG reports. They forget that CAG reports are like chargesheets before the PAC who under our Constitution have to take a final view after hearing both the department as well as the audit report. In the case of the Kargil purchases the PAC members were divided and could not submit a unanimous report.
While the CAG as a constitutional authority mandated to examine all major transactions involving public money and has a right to give an independent report, he must not only examine the files and documents concerned but also try to understand the environment in which the decisions were taken. If the enemy is attacking our borders, is it possible to call for tenders and give the normal six weeks for submission of bids?
Even in the aftermath of several changes in defence procurement procedures, intended to bring improvements in the procurement process, the CAG continues to find deficiencies in them. If such shortcomings identified by the CAG are causing loss of public revenues, is it not better to have all major transactions vetted by the CAG before the agreements are finally signed? The central government should amend the Act defining the duties of the CAG and introduce this provision of prior vetting by the CAG of all transactions above a certain amount. This will reduce losses to the public exchequer and also bring transparency in the procurement procedure.
Audit of defence procurement and submission of the audit report concerned to Parliament should follow a different procedure because of the sensitivities involved.
The audit report relating to defence procurements should be submitted directly to a sub-committee of the PAC which should be tasked with giving its report related to these defence purchases to the main committee of the PAC for adoption and for laying on the table of the House. The sub-committee should examine the relevant officials in camera and only its final report should be laid on the table of the House. This process will only enable the PAC to give an unbiased report, without being affected by media views and without the report becoming an election issue.
Political parties must also evolve a consensus not to politicise reports of the CAG pertaining to defence procurement till the PAC has given its final report and laid it on the table of the House. India accounts for 12 per cent of global arms imports, almost twice as much as China, according to the Stockholm International Peace Research Institute (Sipri). Therefore, defence imports by India will continue to dominate defence expenditure in the near future.
Keeping in view the massive gap between China’s huge inventory of arms and that of India, it is necessary not only to smoothen procurement procedures but also to create an environment in which the defence ministry and the defence headquarters can work without suspicious eyes looking at them all the time.
Recently, it has also been seen that the defence minister has been very quick to cancel contracts at the slightest suspicion of corruption. While it is praiseworthy to be having a clean image, cancellation of a contract which has been negotiated after several rounds of discussions should be a measure of last resort as it stops the speedy modernisation of the defence forces and reduces our striking power.
The delay in the finalisation of the 126 fighter planes deal is one typical example. The Medium Multi-Role Combat Aircraft (MMRCA) project was estimated to be worth around $20 billion, for which the French Rafale won as a lowest bidder (L1). Dassault was expected to provide 18 Rafale fighter jets in “fly-away” condition while state-run Hindustan Aeronautics Limited or HAL was expected to manufacture the rest in India. However, more than a year after the announcement, the Indian government and the French suppliers have not reached an agreement about the responsibilities, schedules and work sharing in the programme. Nobody in the defence establishment can say with certainty if the deal is going through or not.
A study should also be made of the cases relating to defence procurement taken up by the PAC in the last two decades on the basis of the reports of the CAG and the final recommendations of the PAC. It should also be analysed whether all the recommendations made by the PAC have been acted upon by the defence ministry.
The writer is a former defence secretary.