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CAG audit of RIL books yet to begin

Last Updated: Tuesday, October 13, 2009 - 15:53

New Delhi: Caught in a web of rules relating
to vetting of books of private firms, the Comptroller and
Auditor General has not been able to start scrutiny of Mukesh
Ambani-led RIL`s accounts, even after the company agreed to
special audit of gas field expenses nearly two-months ago.

CAG was asked by Oil Ministry to audit the accounts of
RIL, which is facing allegations of gold-plating gas field
costs that has increased four-fold to USD 8.8 billion.

The auditor has so far sought from RIL only a list of
relevant documents for KG-D6 fields, as issues like legal
tenability of audit of Production Sharing Contract (PSCs) and
enforceability of corrective steps are being debated.

CAG had earlier complained that it could not make any
headway in the last two years in the absence of access to the
books of private operators, including RIL.

According to an October 3 note signed by VK Dewangan,
director (exploration) in Petroleum Ministry, the September 22
meeting between CAG`s Principal Director of Audit (PDA), oil
regulator DGH and RIL that was supposed to be the `entry
meeting` signifying beginning of audit, was later converted
into a clarificatory meeting because of internal issues.

PDA has held three meetings to deliberate if the special
audit of KG-D6 and other fields sought by the Oil Ministry was
as per the provisions of PSC and who - RIL or the ministry -
would be the auditee, it said.

While the ministry wanted special audit of accounts from
2003-04 fiscal, CAG wanted the scope of examination to records
be restricted to 2006-07 and 2007-08 only.

RIL had on August 17 agreed to a CAG audit. Oil Minister
Murli Deora too had on August 31 promised CAG unfettered
access to account books of private firm.

As per CAG`s Regulations on Audit and Accounts for
Special Audit, the request made by oil ministry for KG-D6 did
not fall under the relevant rules, the note said.

To overcome this, the request may be covered in terms of
reference framed in consultation with the CAG.

On the issue whether the proposed corrective actions in
CAG`s audit could be enforced if they are not as per the
provisions and spirit of the PSCs, it was agreed that the Oil
Ministry would be the auditee, it said.

The government had in 2002 asked CAG to audit PSCs like
the one for KG-D6 block with RIL, signed under the New
Exploration Licensing Policy (NELP), but the premier auditor
had then stated that its charter neither permitted audit of
private accounts nor did it have the manpower to do so.

Subsequently, the government with the concurrence of CAG,
appointed independent third-party auditors on the basis of an
open bidding process. These auditors have been operating on
behalf of the government and auditing the accounts of
companies like RIL.

However in 2007, CAG was asked to audit the exploration
spending and the agency conducted audit of all the private
company reports, copies of which were available with the DGH.

To close the audit, they needed to seek originals which
would now be made available to them.

Bureau Report

First Published: Tuesday, October 13, 2009 - 15:53
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