Are your books cooked, Mr Clean?

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Where has Rs 11,854 crore of Bihar’s emergency funds vanished? A CAG report has tough questions for Nitish Kumar’s government

Trouble ahead: If the high court orders for a CBI probe, Nitish’s image will be dented
Photos: Vikas Kumar

THERE IS a hole the size of Rs 11,854 crore in the Bihar government’s accounts, and the Nitish Kumar administration, in power since November 2005, is struggling to explain the massive gap.

Minister PK Sahi
Sweeping it aside Minister PK Sahi says the missing money is a simple case of bureaucratic error

When the Comptroller and Auditor General’s report for 2009-10 was tabled in the Bihar Assembly this July, there was an uproar in the House. According to the report, Rs 14,272 crore had been spent from the Abstract Contingency (AC) fund from 2002-03 to 2009, but Detailed Contingency (DC) bills worth only Rs 2,418 crore were submitted to the Accountant General’s office. No bills were presented for the remaining Rs 11,854 crore. To make matters worse, the majority of the bills were improperly made and no procedure was followed.

So what exactly are AC and DC bills and why is there such a brouhaha over it? “If there is an unforeseen expenditure during a financial year, the state government can withdraw money from the Abstract Contingency fund,” says lawyer Deenu Kumar, who filed a PIL in the Patna High Court against the Bihar government for embezzlement of funds. “The Drawing & Disbursing Officer (DDO), who takes out the money, has to deposit a DC bill within one month along with a countersignature from the Controlling Officer. A copy has to be sent to the Accountant General as well.”

But this rule was seldom followed in Bihar. From 2002 onwards, money withdrawn from the AC fund kept on increasing and nobody in the government deemed it fit to furnish any bills to explain this expenditure. While the money drawn from the AC fund during Lalu Prasad’s reign was Rs 1,100 crore, it kept on spiralling during the Nitish Kumar regime.

Coming hot on the heels of the Bihar Industrial Area Development Authority scam in which the NDA government allegedly gave away prime industrial land at throwaway prices to relatives of ministers and bureaucrats, the CAG report has dented the clean image of Nitish Kumar.

The CAG repeatedly notified the government about the non-submission of bills but nobody bothered to act on the missives. In its 2007-08 report, the CAG cautioned the government that “until the adjustment of the first AC bill is done, don’t withdraw money from the third AC bill. The Andhra Pradesh government has put a similar system in place and it is advisable that the Bihar government also does the same.” But nothing happened. Instead, on 13 October 2006, the state government changed the initial rule of submitting the DC bills within one month and extended it to six months.

Based on the 2008-09 CAG report, a PIL was filed in the Patna High Court in January 2010 alleging that Rs 11,000 crore has been siphoned off and no bills have been submitted to the treasury and the Accountant General’s office. The state government reacted angrily and remarked that the PIL was politically motivated and asked the court to dismiss it.

THE HIGH court thought otherwise. In a scathing ruling on 15 July 2010, the court remarked, “Bihar’s financial rules provide that advances drawn on Abstract Contingency bills should be settled by submitting Detailed Contingency bills to the Accountant General, not later than 25th of the next six months. In spite of audit regularly pointing out regarding adjustments of AC bills, outstanding bills were an increasing trend. An example is 2007-08 during which a total of Rs 3,860 crore was drawn from the AC fund. Out of this, DC bills of only Rs 49 crore were submitted, leaving Rs 3,811 crore unaccounted for.”

Coming down heavily on the state government, the high court added, “The material placed before us shows abysmal performance of the state government by way of corrective measures. There is a strict time limit prescribed in the code within which the provisional withdrawal has to be accounted for. On the contrary, we are prima facie left with the impression that the state government, the powersthat- be and its functionaries purposely nursed the issues because they are the beneficiaries. The state government has placed on record an exhaustive counter-affidavit, but convincing materials establishing bona fides of the government have not been brought to our notice. For example, there is no material on record to show the schemes formulated by the government, the extent of their implementation, locations of the projects so that there could be a physical verification. The counteraffidavit of the government is extremely unsatisfactory and is bereft of facts.”

‘If the spending is genuine, why is the government unable to submit bills?’ asks petitioner Kumar

Rejecting the argument that the PIL was a motivated one, the high court said that “a PIL exposing alleged embezzlement of Rs 11,412 crore, meant for the poorest of poor of the country, the speechless and the downtrodden among the teeming millions, is surely a genuine and a bona fide PIL. We express our strong sense of unhappiness that the state government has chosen to put such a spirited opposition to such a meaningful PIL. A responsible government would have instead readily agreed to a thorough investigation.”

Stung by these observations, the Bihar government filed an Interlocutory Application on 21 July 2010, asking the high court to recall, modify and amend the order as it has no jurisdiction in this matter as the CAG report is pending before the Public Accounts Committee (PAC).

However on 15 April, the high court rejected the application. And after hearing the arguments on whether the case can be handed over to the CBI or not, the court reserved its judgment on 11 July.

While the high court had expressed its displeasure known to the government, the affidavit filed by the CAG showed the extent of the rot that was prevalent in the making of DC bills. In a shocking admission before the high court, the CAG stated, “Out of the DC bills worth Rs 6,190 crore submitted by the government after 15 July, the amount that we were able to adjust was only Rs 38 crore. Not to mention that around 80 sacks containing DC bills are being checked. While the DC bills are required to be submitted in Form 39 with all required information, many bills have been submitted enclosing a forwarding letter of the department without indicating the purpose of the AC bills. The other defects in the DC bills are:

1. Bills were not countersigned by the Controlling Officer when it is mandatory under the Bihar Treasury Code

2. Photocopies of vouchers were enclosed instead of the originals

3. Name of the AC bills, date and amount not mentioned

4. Same officer signed and countersigned the DC bills

5. The number of vouchers enclosed as claimed by the department is not found enclosed along with the bills

6. Arithmetical errors are also found in totalling of vouchers

7. There is no standardisation of vouchers to ascertain who is giving the money and who is receiving and for what purpose/services/commodity. This is not in accordance with Rule 210 of the Bihar Treasury Code”

The CAG also pointed out that “the figure of non-receipt of DC bills stands at Rs 22,800 crore, instead of Rs 11,400 crore in the report for financial year 2009-10”.

“This is a complete embezzlement of funds,” says Deenu Kumar. “If the spending is genuine, why is the government unable to submit bills? If an ordinary citizen submits fake bills, won’t you arrest him for fraud? Let me share an instance of how DC bills are being arranged. The welfare secretary wrote a letter to the finance secretary that the receipt of the money sent to the post office by the state government should be treated as a DC bill. The money belongs to widows under the Lakshmibai pension scheme. When you have not spent the money, there is no detail of the spending, so how can you treat it as a DC bill? It is in complete violation of the Bihar Treasury Code and out-and-out fraudulent action by the Nitish government.” Instead of subduing the administration, the CAG’s damning report has put the government on the offensive. According to HRD minister and former advocate general PK Sahi, “Bills that have been submitted are sizeable and the CAG hasn’t been able to check them due to its deficiency, lack of manpower and other problems. My department has submitted bills worth Rs 7,000- 8,000 crore. The CAG cannot handle such a large number. It is a peculiar situation.”

Concurs Advocate General Lalit Kumar, “The CAG office is not well-equipped to handle such a huge amount of bills. They have requested the government to help them with manpower and the government has sent its officers to do that. The CAG lacks infrastructure to deal with all of this. Nonetheless, whatever shortcoming we have noticed, we have rectified it.”

Asked about improper bills issued without any checks and whether this is tantamount to fraud, Sahi has a different take. “The CAG has no capacity to scrutinise bills, therefore they have taken a view that the bills are not genuine,” he says.

There is also a discrepancy in the number of bills that have to be submitted to the high court. While in its affidavit filed before the court, the CAG has said that bills worth Rs 22,800 crore are yet to be received from the government, the Advocate General and the HRD minister strongly disagree with this assertion.

“Of course, there was some slackening but the government has come out of it. Out of Rs 11,000 crore, I think only Rs 500 crore or so is pending. The entire DC bills have been submitted,” says Lalit Kumar. “Compared to the previous financial year, the amount drawn from the last financial year from the AC bills will be negligible.”

Minister Sahi claims that a majority of DC bills have been submitted. “A huge amount of bills have been submitted to the CAG. If the CAG is able to do its verification then the remaining amount will get reduced to around Rs 5,000-6,000 crore. We are continuously monitoring it. Each month, every department meets twice and the work of bill submission is in full swing. But the bills that have been submitted by us have to be verified by the CAG.”

With both the government and the CAG refusing to blink first, all eyes are on the high court to make its move. If the court orders a CBI probe, it will turn to be a real embarrassment for Nitish Kumar.

Brijesh Pandey is a Special Correspondent with Tehelka.
brijesh@tehelka.com

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