Soldiers aren’t meant to run canteens: Panel

Rajat Pandit.

Soldiers should train for war, guard borders and respond to emergencies. They are not meant to be deployed as “sahayaks” or orderlies of officers, nor help in running CSD and unit-run canteens (URCs) or other menial tasks.

With this principle in mind, the parliamentary public accounts committee (PAC) has asked the defence ministry (MoD) to “completely withdraw the combatants” engaged in running URCs around the country to “preserve, protect and spur their martial spirit”.

However, MoD as well as the 13 lakh- strong armed forces are unlikely to agree to this, much like they have repeatedly rejected strong recommendations by different parliamentary committees to do away with the “demeaning and humiliating” practice of using soldiers as sahayaks.

The Army contends that officers get sahayaks basically for upkeep of their uniforms and weapons as well as to act as their radio operators and “buddies” during combat operations. Critics, however, slam the sahayak system as a vestige of the colonial era. They argue many officers blatantly misuse their orderlies, getting them to do household work, walk the dogs and take children to school.

Similarly, the PAC said as many as 80,000 service personnel are deployed on “a full-time basis” in URCs in clear violation of Army orders which specifically state “no military personnel or free transport is to be used in the running of canteens”. The 3,730 URCs, which serve as a network for CSD goods and liquor down to the battalion level, have an over Rs10,000 crore annual turnover but employ just about 5,400 civilian employees.

The committee said using soldiers to run URCs in disturbed or insurgency-hit areas “may be justified” at one level. But their use in “day-to-day mundane business activities” of URCs in undisturbed areas “defies logic” in view of the “undisputed fact” that the “primary job of combatants is to guard the frontiers” and respond to emergencies.

“The government spends huge amounts of money on the selection, rigorous training and development of regular combatants to keep them in a state of full-preparedness. Obviously, the deployment of combatants on a regular basis to run URCs leads to colossal waste of public money and defeats the very purpose for which the uniformed cadre is created, besides impinging on the nation’s security,” it said.

Criticizing the defence establishment’s persistent refusal to allow CAG to audit the URCs on the ground that their profits constituted “non-public funds”, the committee also asked the MoD to reconsider the matter for “greater transparency”.

via The Times of India.

Army Major accused of assaulting female canteen employees

The striking employees of Unit Run Canteens today complained to Defence Minister A K Antony about an alleged assault on their female colleagues by an Army Major posted in New Delhi.

“We have complained to the Defence Minister about the assault on two of our female colleagues by one Major-rank officer, who is the Secretary of the Army Headquarter Canteen near South Block here,” President of All India Defence Civilian Canteen Employees Union said.

He said the minister has also been provided the copy of the FIR lodged with the Chanakyapuri police station against the officer.

For over one week, canteen employees are on strike for various demands including renaming of the Unit Run Canteens as CSD canteens and operations being taken over by the Defence Ministry.

The union has demanded that since all the 4500 CSD canteens have a consolidated turnover of more than Rs 10,000 crore, these should be recognised as retail outlets integral to CSD. Also, the workers demanded that the Comptroller and Auditor General should be allowed to audit the turnover.

The members further state that the pay, allowances and perks of the employees working in the CSD canteens (retail) should be at par with those working in CSD (wholesale).

-via Business Standard.

Finally, CAG to audit profits earned by Army’s canteens

Ending years of resistance by the military establishment against any external audit of its unit run canteens (URCs), the ministry of defence (MoD) and military leadership have agreed to CAG audits of profits earned by URCs.

A senior official said the profit earned by the 3,730 URCs under the quantitative discount would be audited by the Comptroller and Auditor General of India. “The military has also agreed to the suggestion. The MoD has now conveyed the decision to the Public Accounts Committee (PAC),” a senior official said.

Sources explained that the profit earned by the CSD ( Canteen Stores Department) is utilized under two heads. The first part is given by the MoD proportionately to the three Services for welfare activities, which are, in turn, passed on to various station commanders. “There is a clear laid down procedure on how to use this money. After CAG recently pointed out some concerns regarding the CSD canteens we have reaffirmed the guidelines. There is no concern on this part of the profit,” an official said.

The other part of the profit is the quantitative discount that has been earned by the URCs. These canteens get their supplies at wholesale price from CSDs and sell them at retail rates, earning for themselves on an average about 4%-5% profit, another official said. The sum is at the discretion of the local unit commanders, and a part of it is used to pay salaries of URCs’ employees and also upkeep of the canteens’ premises. The remaining amount is used mostly for common unit welfare activities, and in many instances there have been allegations of misuse of this sum.

Sources said the willingness to open up the URC’s account books was conveyed to the PAC recently.

There has been a running feud over the issue for the past several years, with the military top brass refusing to let the URCs be audited by external agencies, claiming they were running on non-public funds. In fact, the URCs give money in advance and procure goods from the CSD, they argued. The military leadership at one time offered not to take any money from government’s consolidated fund for even the CSD procurement in order to avoid audit intrusions.

In 2010-11, the CAG in its performance audit of CSD had recommended that the URCs should be recognised as retail outlets integral to the former and be subjected to audit by the state-run auditor. During that audit, CAG was denied records of URCs.

After analysing the CAG report, PAC slammed the military for denying access to auditors to the URCs’ accounts.

-via The Times of India.

Defence Ministry defies CAG, PAC

J Gopikrishnan.

Ignoring the directions of the Comptroller and Auditor General (CAG) and the Public Accounts Committee (PAC), the Ministry of Defence has allotted Rs210 crore to Unit Run Canteens (URCs) of the Armed forces despite their non-submission of utilisation certificates for an amount totaling nearly ‘900 crore over the past nine years.

The dole of Rs210 crore is known as Quantitative Discount, which is the money transferred by the Government to the forces for the items sold through the URCs at discounted rates to the personnel.

The Army, Navy and Air Force have vehemently objected to the CAG audit of their canteen network across the country and have not yet provided the mandatory utilisation certificate for Rs884 crores — the money transferred by Defence Ministry as Quantitative Discount during the last nine years.

Forces, CAG lock horns over canteen’s audit

The armed forces and Comptroller & Auditor General of India (CAG) are at loggerheads over the auditing of the 4,500 unit-run canteens which have an annual turnover of Rs 10,000 crore.

Documents available with The Pioneer show that the chiefs of the Army, Air Force and Navy have refused to comply with the direction of the Defence Secretary to permit the CAG to audit the unit canteens.

The Secretary had conveyed the direction of Defence Minister AK Antony, who had received a complaint from the CAG on the denial of audit by Army Headquarters.

“Since no headway has been made in this regard, the CAG has written to the Raksha Mantri on this issue and has requested his intervention for providing audit parties access to unit-run canteens (URC) as early as possible,” noted the Defence Secretary’s letter to the three service chiefs, marked ‘secret’.

“It has been observed by the CAG that considering the facts that URCs are located in Government premises, are run in most cases by service personnel, use Government transport and, most importantly, receive substantial funds from the Consolidated Fund of India, such denial violates provisions of the Constitution of India regarding the powers and duties of the CAG,” it added.

“It is, therefore, requested that necessary instructions may kindly be given to the concerned for allowing audit personnel to access information from the URCs under their control so that RM is apprised of them,” the Defence Secretary wrote.

Meanwhile, on September 7, Public Accounts Committee chairman Murli Manohar Joshi summoned the vice-chiefs of the Army, Air Force and Navy and directed them to provide access to the CAG for auditing unit-run canteens.

Earlier, in the second week of January, Joshi had summoned heads of the three forces on the same issue.

According to sources, the Vice Chiefs, who were representing the heads of the three Services, vehemently objected to the auditing of CAG in the Unit Run Canteens and claimed that each canteen is audited by chartered accountants. At this point Joshi told them that this argument was not tenable and questioned the reasons for preferring Chartered accountants over the Government Auditor.

While Vice Chiefs contended in the meeting that it was not possible for CAG to audit all 4,500 canteens, the CAG officials countered that they would audit on random basis and if they found irregularities, would consider further auditing.

Joshi directed the three forces to submit a detailed report on how to make way for audit of unit run canteens within a week and suggested for a high level committee of auditors and forces to resolve the issue.

For the past two years CAG and forces are locking horns over the auditing of Unit Run Canteens. In India, the forces supply system is managed by 34 depots of Canteen Stores Department (CSD), which is distributed through the 160 lakh end users through more than 4500 canteens, controlled by each unit. The Unit Run Canteens would take a margin at an average of four percent on the supply and the profit is expected to be around Rs.500 crore in the annual turn over of more than Rs.10000. Though CAG got access to audit the 34 CSDs, forces object the auditors when they demanded to check the accounts of Unit Run Canteens, where the actual sale takes place.

The forces get the money from the Consolidated Fund of India and enjoy Quantitative Discounts approved by the government, apart from the avoidance of taxes on most of the supplied items.

The CAG has argued out that as the fund is made available from the Consolidated Funds, they have the right to audit where as the forces claim that the affairs of the Unit Run Canteens are “purely private ventures of each units” and hence no need of auditing.

-via Daily Pioneer

Cheap booze comes for a price

When the Comptroller and Auditor General (CAG) tried to audit the accounts of the Canteen Stores Department (CSD) of the armed forces for the first time in late 2008, it was in for nasty surprises. First, the CAG’s right to probe the way public funds were being handled was questioned. Then, it found that considerable sums of money — about Rs. 80 crore per year — went missing from the system. And that there was resistance to the idea of accountability.

First, the facts about how the system works. The large network of 3,600 Unit Run Canteens (URCs) are given soft loans at subsidised rates of interest (4.5-6.5 percent) from the Consolidated Fund of India via the CSD for setting up retail outlets and stocking up.

All of them function from government premises, which are made available to them free of cost. Transport of goods is done by defence vehicles using service personnel.

Second, the kind of money involved. Gross turnover of the CSD at the depot level was approximately Rs. 6,900 crore. The auditors found that the concession doled out to the outlets resulted in a loss of Rs. 441 crore for the government from 2002-03 to 2008-09. What is worse is that despite a clear-cut instruction from the Ministry of Defence (MoD), the department refused to allow the CAG to audit the URCs.

No wonder, the CAG report submitted to Parliament two months ago reveals various flaws plaguing the CSD, pointing out that the armed forces are running a parallel system.

This observation was provoked by the fact that the integrated headquarters of MoD and the CSD denied the CAG request for a performance audit on the grounds that the outlets are a private venture of the armed forces.

To counter this, Gautam Saha of the Director-General of Audit, Defence Services (DGADS) office wrote on 23 November 2009 to additional secretary of MoD RK Mathur, “Despite the claim of URC being private, we have come across enough evidence that URC are assisted by the CSD in many ways. In fact, through quantitative discounts, soft loans and other assistances, considerable amount of money has been transferred from the Consolidated Fund of India to a non-public fund.”

In response to this letter by CAG, the MOD wrote a letter to vice-chiefs of the army, navy and air force and also to the Quarter Master General on 3 December 2009.

In the letter, Binoy Kumar, a Joint Secretary in the MoD, wrote, “A considerable amount of Central government funds are provided to the URCs every year from the budgetary provisions of CSD by way of quantitative discount. A proposal for disbursement of quantitative discount for 2008-09 to the tune of Rs. 200 crore is under consideration. In order to have a better view on the overall services being provided by CSD to the URC, it is imperative that the audit personnel of DGADS are allowed to have access to information maintained by the URCs.”

But CSD officials maintained that the outlets are managed primarily as a regimental institution. Further, that the Commanding Officers are solely responsible for their functioning and financial aspects are audited by various internal audit boards as well as registered chartered accountants.

But the CAG pointed out that the trade discount given to the outlets was never passed on to the consumer. This adversely affected the CSD’s profitability and therefore government revenues.

Since 50 percent of the CSD profit should accrue to the government, treating the discount given as a charge to the trade understated the profit and thereby deprived the government of revenue worth hundreds of crores.

To top it all, CSD doled out grants given out of its profit to various organisations without even insisting on application for funds. Utilisation certificates were never insisted on from major recipients, namely army, navy or air force, for the grants provided.

The CAG discovered other anomalies in the course of its audit. For instance, that the “base depot had not shifted to the new location even after 13 years of taking over the land at Taloja (Navi Mumbai) and continues to occupy the premises leased by the Indian Navy from Mumbai Port Trust. Not only this, rates of transportation paid by the base depot for ferrying of stores to other parts of the country were exorbitantly high compared to the rates set by Mumbai sub-area”.

Moreover, several units under the jurisdiction of five area depots were drawing liquor in excess of that authorised on the basis of the strength of the unit. CSD and the army authorities allowed excess withdrawal of concessional liquor worth Rs. 7.82 crore, the market value of which was Rs. 19.45 crore.

CAG has now suggested that URCs should be recognised as retail outlets integral to CSD and its operational results should be disclosed in CSD accounts. But right now, the armed forces seem reluctant to loosen their grip, irrespective of the fact that the exchequer is losing hundreds of crores.

-via Tehelka

Video – Scam hits army’s Unit Run Canteens