Anil Swarup disputes Vinod Rai’s calculation of loss, saying it did not factor in major aspects of the sector, alleges he was on ‘fault-finding mission’.
New Delhi: Former coal secretary Anil Swarup has told ThePrint that former Comptroller and Auditor General (CAG) Vinod Rai was wrong in “determining loss to the public exchequer” in the coal block allocation scam and had made “a public spectacle relying on half-truths”.
Swarup admitted that there was something wrong in the allocation of coal blocks between 2004 and 2009 but slammed Rai for releasing the CAG report on the issue in a press conference (in 2012), saying that as a civil servant, one’s job is to do work quietly and not “go to town” with reports such as these.
“It is true that something wrong had been done committed and it was the duty of the CAG to detect it and bring it before Parliament,” Swarup said. “However, making it a public spectacle was uncalled for. The grand-standing was inappropriate.”
The former civil servant also tweeted that Rai’s stance had “devastating consequences” for governance.
There was indeed a lot of wrong in the allocation coal blocks but the manner in which it was presented by the CAG led to devastating consequences on governance. There was no need to play to the gallery. Part of my forthcoming book "Un-Civil Servant" https://t.co/cl5I8G2gwr pic.twitter.com/OcLegT3j1X
— Anil Swarup (@swarup58) December 20, 2018
The CAG report on the scam, popularly dubbed Coalgate, suspected illegal allocation of coal blocks between 2004 and 2009 when the UPA was in power under then Prime Minister Manmohan Singh. The CAG initially estimated the loss to the exchequer to be around Rs 10.7 lakh crore but later revised this figure to Rs 1.86 lakh crore.
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Coast of coal mining can’t be averaged out
Swarup disputed the CAG’s figures on the loss, saying the cost of coal mining varies greatly depending on several factors, which include the type of mine, transportation cost and quality of coal.
He underlined that the CAG arriving at an average cost was inappropriate, adding that the “faulty calculations” led to the cancellation of even those mines for which there were no takers subsequently.
“The cost of coal mining by Coal India (CIL) ranges between Rs 400 and Rs 4,000 a tonne,” he said. “Every mine is different and the cost of production is different, so the audit of each mine too should be different. One cannot average it out.”
Swarup said that the cost of mining is usually determined by “overburden”, which he explained as the rock or soil above a coal mine.
“The deeper the coal, the more expensive the mining process gets,” he said. “So each mine is different and when one talks of auditing, then for a proper calculation, each mine has to be looked at individually, something that was completely ignored by the CAG.”
He also stated that despite the then coal secretary mentioning before the Parliamentary Committee about a significant difference in the quality of coal in the blocks with the CIL and those given to private parties for captive mining, CIL numbers were used as the benchmark.
Swarup said that the average numbers were used in a rush to give a report.
“If they would have done a mine-wise analysis, allocation of only those mines where there was a windfall gain would have been cancelled,” he said. “There were mines where there were huge margins and their allocation deserved to be cancelled but since all mines were treated the same and we ended up dumping all the allocations.”
CAG on a fault-finding mission
CAG Rai, Swarup alleged, appeared to be on a fault-finding mission, even in situations where none existed.
“The CAG was trying to find differences where they did not exist. Some of the mines did not even have any losses but still they were taken into account, which shows that he was deliberately trying to find faults where there were none,” he said.
He stated that Vinod Rai wrote in his book, Not Just An Accountant, that “all the records showed was that the committee met, deliberated and merely recorded the name of the block allotted to a company, and the state where the end-use plant existed”. This, Swarup said, is how the minutes of a meeting are actually recorded.
‘Ridiculous to have booked civil servants’
Swarup said that the arrest and conviction of officers such as Harish Chandra Gupta, former coal secretary, was “ridiculous” as the law he has been booked under has been amended and there is no evidence of him having received any gratification.
“The law under which he (Gupta) was arrested stands changed. It was amended because it was unjust,” Swarup said. “Also, the substantive part is that there is no evidence in the case of any quid pro quo.”
He further stated that Gupta could have been booked for an “administrative lapse” but cannot be booked for criminal liability.
“To book him under a criminal case like this, there has to be some ill intent, malafide intent, which cannot be proven in this case,” he said. “So, it is absolutely unjustified to arrest a civil servant and shatter his confidence.”
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The biggest bloomer made by Rai at that time was not so much in averaging out the notional profits to be made from each coal block.
Maybe he had no choice but to make a rough computation. Rai’s mistake was to not factor in the long term inflows to Govts , even if no immediate gains via auctions were made. The long term inflows consist of corporate taxes on profits , excise / GST, and local area development cess which was mandatory for all coal mining. All of this can be quantitatively estimated and comes to a much higher figure than 1.86 lakh crore , but accrues over a longer period of time. The Congress at that time was too confused to even show the public such computations but it is not difficult to make them, using data from Rai’s own report.
There is nothing in Shri Vinod Rai’s career profile to suggest that he was a vindictive, capricious or irresponsible civil servant. Both coal and spectrum were allotted during the UPA I years in a manner that caused huge financial losses to the public exchequer. The legality of the exercise was struck down by the apex court, which reaffirmed the salutary principle that natural resources should be disposed of transparently by tender / auction. That recent coal auctions have proved to be duds, producing a pittance, does not invalidate the judgment. Similarly, the CAG’s calculations of loss have an element of imprecision to them – Mr Rai did not claim he had got it right down to the last rupee. The fact that the commodities boom went bust would make calculations made at the peak look unrealistic today. 2. One shares completely the columnist’s outrage over what happened to Shri H C Gupta. The remedy lay in the amendment having been made with retrospective effect.