By Major General Mrinal
Suman
Elements inimical to the
services are at it once again. Senior army commanders are being accused of
wasting crores of rupees through improper purchases made under Special
Financial Powers of the Army Commanders. As per the press reports, a post-audit
has been carried out of 55 transactions pertaining to financial years 2009-10
and 2010-11 by the Controller of Defence Accounts. The audit report has
estimated the total loss to be to the tune of Rupees 103.11 crores. It is a
serious indictment and deserves elaboration.
With a view to impart
enhanced autonomy in administrative and operational functioning, various
financial powers have been delegated to the Army Commanders. As per the
recommendations of the Committee on Defence Expenditure, the Ministry of
Defence decided in November 1991 that exercise of such delegated financial
powers should be with the concurrence of local financial advisors. It implies
that such delegated financial powers are neither absolute nor discretionary, and can
be exercised by the Army Commanders only with the prior consent of their
Integrated Financial Advisor (IFA).
The system of IFA aims to
reduce delays and provide pre-contract expert advice to the executives for
ensuring financial prudence and prevent irregularities.
Role of Financial
Advisors
Commanders have to
obtain prior financial concurrence of their IFA before incurring any
expenditure asthere is no provision for ex-post facto acquiescence.
IFAs are tasked to carry
out a careful and intelligent scrutiny of all proposals involving expenditure
from the public funds to ensure economy, efficiency and propriety in public
finance. Before according financial concurrence, it is their duty to seek
complete and comprehensive justification for the proposals. They are authorised
to even challenge the necessity for incurring projected expenditure for a given
purchase.
Unless IFA accords
Acceptance of Necessity and approves the quantity to be procured, no proposal
can be progressed. He questions the proposed mode of tendering and checks the
list of prospective vendors. All tender documents are vetted by IFA prior to
their issuance.
Most importantly, IFA is
always a member of the Commercial Negotiation Committee and participates
in the following functions:-
Appraisal of bids as regards commercial
terms, delivery schedule, performance warranty, guarantee terms and acceptance
criteria.
· Determination
of fair and reasonable price of the product.
- Preparation of a ‘Comparative Statement of Tenders’ to determine lowest bidder.
- Undertaking negotiations with the lowest bidder to obtain best possible terms.
- Diligent drafting of contract to safeguard Government’s interests.
- Post-contract management to monitor adherence to the terms of the deal and timely invocation of penalty provisions in case of default.
As is obvious, IFA exercises
total and all-encompassing oversight over the complete procurement process.He
can stall any procurement proposal if not convinced of its financial propriety.
The Question of
Culpability
The said audit report
faults the Army Commanders for disregarding guideline while buying foreign
equipment, procuring equipment from Indian agents, accepting equipment rejected
by another army entity and purchase of Chinese products which may have been
embedded with malignant software.
As seen above, IFAs guide
commanders at every stage of the procurement process and keep a close
oversight. If that be so, onus for rendering faulty financial advice
or clearing faulty cases rests on them. They should be asked to explain alleged
irregularities and infirmities. How can an Army Commander be blamed for
adhering to the advice of his IFA? If that be so, why have IFAs at all?
Most outrageously, the
audit report states that the local financial advisors are
intimidated by military officers in command. One
has not come across a more preposterous and bizarre statement. No IFA ever gets
intimidated. On the contrary, they are overbearing, domineering and suffer from
an acute ‘rank-equivalence-complex’. They keep comparing their pay
scales with those of the service officers to draw equations with different
ranks. This complex manifests itself in their condescending attitude as they
tend to assume the role of dispenser of favours while according financial
concurrence. Therefore, the question of their getting intimidated is all
baloney.
Inadequacies of the
Current Dispensation
It is incongruous that a
duly pre-audited procurement process is found to be flawed in post-audit.
Interestingly, both pre-audit and post-audit are carried out by the officials
of the Defence Finance and their roles are inter-changeable.
Unfortunately, the prime
reason for the current weakness of the system is the failure of the Defence
Finance officials to deliver. They are expected to act as defence financial
advisors but are ill-equipped for the task.
They know nothing about
the armed forces, their equipment and functioning. Worse, most are equally
ignorant of financial management tools. During a survey of the educational
qualifications of the top 50 Defence Finance officers, it was seen that most of
them did not possess even elementary knowledge of finance/economics – only 8
percent had studied economics at the post-graduate level. Most were
post-graduates in subjects like Political Science, English, Sociology and
Sanskrit. Such officials cannot be expected to grasp minutiae of financial
imperatives and perform defence economic advisory functions.
Finally
Let us look at the
unenviable position of the Army Commanders. They have been asked to follow the
advice of their IFAs while exercising their delegated financial powers. They
are justified in assuming that all procurement proposals vetted and cleared by
IFAs are in consonance with the Government rules and regulations. Therefore, it
is absurd that the Army Commanders be held responsible for any alleged
irregularities or omissions.
It should be for IFAs to
justify the procedure followed. They and they alone should be held accountable
for faulty advice and oversight. Quite appallingly, IFAs disown any
responsibility under the plea that decision making is the prerogative of the
executives and they cannot be held accountable for the same. It is a most ludicrous
excuse.
The fact of the matter is
that the armed forces are a soft target. The said audit report is a part of the
well-orchestrated campaign to denigrate them through planted selective leaks.
Comments about Maj Gen Mrinal Suman
Respected Veterans,
Jai Hind.
Posted above is an excellent article, CULPABILITY FOR WASTAGE OF FUNDS BY THE ARMY
COMMANDERS by Maj Gen M Suman, AVSM, VSM, Ph D - a Bombay Sapper.
Gen Suman is a soldier, a scholar, a thinker and a prolific writer
on matters Military and National Security. He is known for being frank &
forthright in expressing his views; and, his articles are a reader’s delight.
Regards,
Col Rajan
Bangalore, 9449043770
Comments
on the article of Maj Gen Mrinal Suman by Brig V Mahalingam
My dear Colonel Rajan,
Grateful for sharing the article. Views put across with all sincerity and
anguish. I am appending below my view on the subject.
Gen Mirnal Suman has very appropriately brought out the accountability
of the IFA in the purchases made under the Army Commander’s Special Powers. He
has however missed to spot the intention behind the whole exercise which is to
clip the wings of the Army.
Special Financial Powers have been delegated to Army Commanders to make
purchases which are operationally required urgently. If the urgency and
operational necessity factors were not there, the normal central purchase
procedure would have met the need. In such purchases, there may be a necessity
to cut down procedure, bring down GSQR or make some minor changes. Since I do
not know the details of the case, I cannot comment on the specific instances.
Incidentally, even in regular central purchases made by the MOD, compromises
are made in the GSQR.
Since the issue has been brought up with patchy information and both the
present and the past Army Commanders of the Eastern Command (Past and present
Army Chiefs) have been targeted, it appears more as a motivated effort to
subdue them. The public have been given an impression that the Army too is corrupt
in the wake of the spate of corruption issues that has come up in the public
domain in the recent past.
It is therefore imperative that the Government comes out with the entire
audit report for the public to understand the issues brought out by the auditors.
Once that is done an impartial enquiry consisting of a member from the Army
with operational background should be constituted and the findings of the
enquiry made public. Should any Army Officer be found guilty, he should be
court-martialed. The role and accountability of the IFA in the purchases and
losses reported should be established and if found guilty punished as per the
laws of the land.
Regards,
Brigadier V Mahalingam
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