The nation was reeling under the impact of two mega scams—the Commonwealth Games scam and 2G spectrum scam—when it was struck by yet another scam now known as the ‘Coalgate' scam relating to the allocation of coal mines. It burst open when a prominent newspaper carried a headline about a ten lakh crore scam in the allocation of coal mines—several times bigger than the notorious 2G spectrum scam. This was when the relevant CAG report was yet to reach the government. A draft report was about to be submitted by the CAG to the government for comments. The final report was submitted at the time when the previous (Budget) parliamentary session was about to end. The government did not place it immediately on the floor of Parliament. It did so only at the beginning of the monsoon session. Though the final report considerably watered down the magnitude of the sum involved in the scam to a sum of one lakh eightysix thousand crore rupees, it was still bigger than the sum involved in the 2G spectrum scam. The CAG observed that there were windfall gains made by some private companies. What added to the seriousness of the scam was the fact that during many of the years in which the scam took place, the Minister concerned was the Prime Minister himself! The Opposition BJP, therefore, started targeting the Prime Minister calling on him to resign. They argued that in the 2G spectrum scam the Minister concerned, A. Raja of the DMK, had to resign and now since the Minister concerned was the Prime Minister himself, he should also resign.
As soon as the monsoon session opened on Monday, August 21, members of the principal Opposition party, the BJP, got up and started shouting with one voice that the Prime Minister should resign, not allowing the House to function. The Speaker of the Lok Sabha and the Chairman of the Rajya Sabha were perforce made to adjourn the Houses till the next day. The same story was repeated on succeeding days of the session. The whole session was wasted. The government hoped that the first day of the second week would have a better beginning. But that was not to be. The BJP members persisted with their shouting, not allowing both the Houses to function. The other parties in the NDA, including the Shiv Sena, did not join the BJP in their protest and shouting. Nor did the other parties like the BJD which had to face similar behaviour of the Opposition Congress party in the Odisha Assembly. The Congress leaders started using the media to articulate their reply to the BJP. Finance Minister Chidambaram, accompanied by his colleagues Kapil Sibal and Salman Khurshid, told a press conference that there was no loss, since the coal deposits were safe in ‘mother earth' and therefore there was no corruption! He did not use the term ‘zero corruption' as used by his colleague Kapil Sibal in the 2G spectrum scam case which turned out to be wrong as subsequent events unfolded. Obivously, there was hardly any difference between Sibal's term ‘zero corruption' and Chidambaram's ‘no corruption', both of which proved to be false.
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THE Prime Minister, on his part, observed that ‘policy issues' are not within the ambit of the CAG who had no business to comment on them in his Audit Report. Policy issues, he insisted, were the exclusive preserve of the government. Manish Tiwari, the spokesman of the Congress party, in his article in The Indian Express, August 28, argued that the CAG had no constitutional mandate to make policy prescriptions and then utilise them to compute the ‘notional' loss. He drew attention to Article 149 of the Constitution which lays down that ‘the Comptroller and Auditor General shall perform such duties and exercise such powers in relation to the accounts of the Union and the States and of any other authority or body as may be prescribed by or under any law made by Parliament'. In 1971 Parliament enacted the Comptroller and Auditor General's Duties, Powers and Conditions of Service Act 1971. Under the provisions of the Act the statutory mandate of the CAG was to audit all money paid into and expended from the consolidated fund of the Union and the States, as well as the contingency fund, subsidiary funds of government companies and statutory corporations and all bodies financed by the government. Tiwari also referred to an OM dated June 13, 2006 saying that the CAG's performances audit is concerned with the audit ‘relating to the economy, efficiency and effectiveness of the receipt and application of public funds'. Tiwari argued that in all this formulation, there was no reference to policy. But by the same token it could be argued that policy issues are not specifically excluded from the ambit of the audit reports of the CAG. If they impinge on the ‘economy, efficiency and effectiveness of the receipt and application of public funds', the CAG is well within his rights to comment on them.
Minister Salman Khurshid in his article (The Times of India, August 28) made out a case for the business firms which got the allocations. ‘Business firms and profits are no longer bad words in our public vocabulary.' He was obviously referring to the policy of liberalisation and privatisation initiated by Dr Manmohan Singh, the Finance Minister in the Narasimha Rao Government, in 1991. He found fault with the CAG's ‘simple exercise' in arriving at a figure of Rs 1.86 lakh crore-loss instead of doing a sophisticated ‘cost benefit analysis'. The Minister further wrote that to ‘judge the honesty of a bargain in proportion to the benefit to a private party is stupid'. The Minister should have known that there is a concept of ‘social cost benefit analysis' which is different from ‘private cost benefit analysis'. As a public servant the Minister should have concern for the former rather than act as an advocate of private business. The CAG took exception to that part of the financial gain which accrued to business as that could have been tapped by the government by “taking timely decision on ‘competitive bidding' for the allocation of the coal blocks”. The Minister argued that delay in adopting the policy of competitive bidding was mainly because of ‘categorical resistance by the coal producing States, mostly ruled by the Opposition'. He also said that legislative amendment required for introducing competitive bidding would have taken time and would have denied coal required for power, steel and cement production; thus he neatly overlooked the fact that the same Ministry of Law changed its opinion later and said that it could have been done by administrative notifications.
What really caused alarm and annoyed the politicians, whether in power or not, is the drastic change in the nature and scope of the audit reports in the last two, three years. Audit reports in the past drew attention to minor financial irregularities such as excessive TA Bills, or expenditure without requisite budgetory provisions. These were handled by the officers of the departments concerned who had to appear before the PAC where the CAG was present to ‘assist' the PAC calling the department to account for failure to take suitable action on audit objections. The scope of the recent reports—whether relating to the 2G spectrum case, CWG case, Delhi International Airport case or Coal mine allocation case—was much broader and the politicians in power like A. Raja, Suresh Kalmadi and Praful Patel had to take responsibility. The former two had even to go to jail on the orders of the courts and CBI filed cases against them. In the coal mine allocation case the Prime Minister himself was involved as the Coal Minister during the years the allocations were made.
Having waited for a week, the Prime Minister —who was to leave for Iran the next day for attending NAM Conference in Tehran—read out a statement on the floor of the Lok Sabha and Rajya Sabha on the coal allocation on August 27, the first day of the second week (after the first week of the Parliament session was washed out). He had to read the statement amidst disruption in the Houses. It was drowned in loud shouting from the members of the BJP. But the statement was still laid on the floor of the Houses.
The Prime Minister in his statement said: “I take full responsibility for allotments by the Coal Ministry.” He found fault with the findings of the CAG on ‘multiple grounds'. He asserted that there was no ‘impropriety or irregularity'. The so-called benefits to private firms were clearly notional.
Coal mines, the Prime Minister said, were allocated to 142 private parties to meet the energy needs of the country. But the fact that all the mines save one remained un-exploited even after the allocation showed that the objective for which the allocations were made remained unfulfilled. This made a mockery of the case for urgency in allocating the mines.
The present Coal Minister Jaiswal argued that the auction procedure would have increased the price of power leading to increase in the form of electricity for the consumers—a strange argument by a government which has accepted the market mechanism as the best for the allocation of resources!
BJP leader Arun Jaitley made fun of Chidam-baram's ‘no-loss' doctrine similar to Sibal's zero-loss statement in the 2G spectrum case. ‘If I give corruption money to a public official who simply puts it in his procket but does not spend it, could it be construed that there was no corruption?” The zero-loss theory proved to be a zero-sum gain for the UPA.
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THE Prime Minister's assertion that there was ‘no impropriety' was soon falsified by the investigations of the CBI which unearthed ten cases where companies fudged facts and gave wrong information to qualify for coal blocks. Due diligence was not exercised to prevent such companies from getting mines. Such cases had led to prosecution of these companies as in the 2G case. Amongst those mentioned by the CBI, FIR was filed against Vijay Darda, a Congress MP, and Manoj Jaiswal, whose name was linked to the Minister, Shri Prakash Jaiswal.
The proceedings of the screening committee, which made the allocations, were not transparent and gave no cogent reasons for the allocations leading to the suspicion that the allocations were made in an arbitrary manner and perhaps under the influence of private parties and political pressure both in the 2G case and in Coalgate.
Having made his statement of ‘no-impropriety', the Prime Minister asked an Inter-Ministerial Group (IMG), under the chairmanship of the Additional Secretary, Department of Coal, to go into the allocations made. The IMC recommended cancellation of allocations in those cases where companies had given false information or undertaken no work or had sold their licenses soon after the allocations and made windfall profits. In several cases the Group recommended confiscation of the guarantee amount. Obviously the Prime Minister was in too much of a hurry in asserting “no improriety' in his statement in Parliament. Both in the 2G and Coalgate scams, big companies had made an entry in public administration in the wake of the policy of privatisation, liberalisation and public-private partnership which has given rise to ‘crony capitalism' and the influence of big corporations on public policy. A striking example of the politician-business nexus was the SKS case in which Minister Subodh Kant Sahay wrote to the Prime Minister recommending one firm called SKS wherein his brother Sachin was a Director and who had represented the firm in the meeting of the screening committee. Instead of finding fault with the Minister for misuse of public office, the Prime Minister marked that as ‘most important' and sent it to the Coal Department. SKS was one firm which the IMG has now recommended for deallocation. Public institutions like the CAG, not to talk of the integrity and will power of the civil service, are being sacrificed under the influence of politicians and big business. The Public Accounts Committee, through presided over by a Chairman who is a senior member of the BJP, has witnessed the spectacle of the Congress members putting the CAG himself in the dock! Objectivity and independence of even a constitu-tional authority are sacrificed at the altar of greed and avarice let loose by the policy of liberalisation.
The greatest tragedy was that Parliament, the supreme democratic institution where a debate on ‘public issues' is expected, was made non-functional. The BJP justified their obstructive action by saying that such debate serves no purpose (as was seen in the 2G case) since the government gets round the Opposition by manipulating the vote to get a majority. This gives short shrift to the cogent points made by the Opposition. This may be so, but making Parliament non-functional can never be justified.
The ‘Coalgate' scam took place because there was no policy framework to guide individual allocations. The Government of India should well take a lesson from South Africa, where mines with very valuable minerals like diamonds exist. As De Clerk, the former White Prime Minister, said in the course of an interview to a TV channel in India, there were no scam, no irregularities, no corruption, no political interference because there were clear-cut guidelines and procedures prescribed which gave no scope for such malfunctioning. We should do well to follow their example.
Dr Dubhashi, IAS (Retd), is a Padmabhushan awardee; a former Secretary to the Government of India and Vice-Chancellor, Goa University, he is currently the Chairman, Bharatiya Vidya Bhavan's Pune Kendra.