Ads everywhere: Do we want a society where everything's for sale?
Black Friday: Nine arrests in Walmart protest, business still brisk

Corporate Nov 24, 2012

CAG report on 2G scam: How RP Singh muddies the waters

By Venky Vembu

Q: How many auditors does it take to change a light bulb.

A. 100: one to change the bulb, and 99 others to fault the procedure.

Auditors are the subject of some of the slyest jokes going. Much of this relates to the cheerless nature of the profession, which by some accounts is only slightly more exciting than that of a drains inspector. Yet, the current buzz surrounding the topmost auditing body in India, and two of its to officers - one serving and the other retired - perhaps goes to show that there may be more to the profession than just a proficiency in double-entry book-keeping.

And particularly after RP Singh, the former Director-General in the office of the Comptroller and Auditor-General (CAG), went public on Friday with his narrative relating to the CAG report on the 2G scam, it seems evident that even the numbers that an auditor chooss to see can be coloured by political considerations.

The core of Singh's argument was, as Firstpost noted on Friday (here), that the underlying assumptions that led the CAG report to arrive at an estimate of "presumptive loss" from the allocation of 2G spectrum by former Telecom Minister A Raja were flawed. The CAG report had estimated the notional loss to the exchequer as betweenRs 57,666 crore and Rs 1.76 lakh crore - depending on the assumptions made.

RP Singh's charges reveal a political bias. Screen grab from CNN IBN

Of course, it was the Rs 1.76 lakh crore figure that caught the eye of the media, and went on to become the Big Number associated with the 2G scam. But it's worth remembering that the CAG report did not hardsell the Rs 1.76 lakh crore figure; it merely arrived at an estimation based on what the Prime Minister and the Finance Ministers had said was the right way to determine 2G spectrum price: through price discovery by the markets. But it also gave out other estimations, based on other parameters.

The Congress, which was profoundly embarrassed by the CAG report, has of course been doing a hatchet job on the CAG report - and, in some ways, on the office of the CAG too. The party's voluble spokepersons - from Digivijay Singh to Kapil Sibal to Manish Tewari - have for some time now been resorting to vituperative criticism of the CAG, with no consideration for the fact that they were effectively belittling a constitutional office and attributing baseless political motives to it.

If one wants to look for political motives in auditors, there's plenty to be had from RP Singh's estimations, which he has been tom-tomming for a while now, but which Congress president Sonia Gandhi latched onto yesterday with amazing alacrity.

As Firstpost pointed out on Friday, RP Singh himself may have some explaining to do: his choice of timing to speak out - months after his original report was leaked out, and at a time when the recent 2G auctions have failed, and the Congress wants to establish that there was "zero loss" and no scam in the 2G spectrum allocation - does, on the face of it, tell its own story.

But more seriously, RP Singh is guilty of cherrypicking from other official reports from which he quotes, which has the effective of serving a political agenda.

As this report in The Hindu observes, RP Singh's claims effectively contradict not just most public statements that he has made, but also documents that he himself has signed, which actually support the CAG's estimation of presumed loss to the exchequer. Singh is also guilty of selectively drawing from the recommendations of the Telecom Regulatory Authority of India to run down the CAG's estimate of Rs 1.76 lakh crore. And yet, thefar lower figure of notional loss that RP Singh cites - Rs 2,645 crore - is based on estimates that wilfully ignore the TRAI's recommendations.

The political edge to RP Singh's estimations comes from the fact that, as The Hindu points out, Singh selectively invokes the Department of Telecom's report of May 2009 and TRAI's May 2010 recommendations pegging the charge for loss on spectrum awarded beyond the contracted amount to the 3G auction prices. In respect of the licences that Raja gave illegally, RP Singh opposes such a calculation based on 3G prices. But he effectively defends the 3G price linkage for excess spectrum that began in the BJP-led NDA regime.

Arriving at estimates of presumed losses - in the way that the CAG is called upon to do - isn't of course an exact science. A lot of assumptions underlie it. But the credibility of an auditor rests on whether he has been consistent in the assumptions he makes. On that measure, the CAG report - which gave a range of estimates based on various internally consistent assumptions - meets the high watermark.

RP Singh, on the other hand, is merely looking to muddy the waters with his attack on the CAG report, based on selective invocation of official reports and the quasi-political nature of his assumptions.

by Venky Vembu

Related Stories.