Does the CAG leak defence secrets?

Air Chief Marshall PV Naik, inaugurating the Phalodi air base on 6th April 2010. From the infrastructure in the photo, this was clearly a hurried job!

The first IAF fighter landing at Phalodi after the inauguration. The runway was still not fully prepared then. Was it the coming CAG report that hastened the inauguration?

by Ajai Shukla

Business Standard, 24th Aug 10

Perhaps this question relates to how inept, corrupt and incompetent the defence establishment appeared in the audit reports that the Comptroller and Auditor General (CAG) tabled in parliament on 3rd August. Within days, the Times of India carried a news report about the military’s secrecy concerns about the CAG’s public assessment of its operational readiness.

The military was particularly incensed, or so ToI suggested, by the CAG’s exposure of its poor readiness for war. The report hints darkly that the enemy would gain strength from the secrets that the CAG had unthinkingly leaked. Rather than going public about the decrepitude of our national defence, complained an anonymous military officer to the ToI, sensitive CAG reports must go only to “a select few of decision-makers” (sic).

This insidious argument raises important questions. Are there tangible benefits from our openness about military readiness? Does the public need to know what the CAG unearths? And do our potential military adversaries, China and Pakistan, pore over the CAG’s reports to discover secrets they do not already know?

To put the military’s complaints in context, remember that it is highly sensitive to public criticism. With its holy-cow status under enthusiastic attack from an activist, and often sensationalist, media, the uniformed community reacts to criticism with a defensiveness that is baffling in India’s most respected government organisation. As part of a largely unaccountable government, the military’s growing siege mentality translates into a reflexive impulse to shut out public scrutiny by citing secrecy.

That notwithstanding, there is a reason why the military --- comprising of 16 lakh citizens drawn from an increasingly corrupt societal milieu --- remains a functional and honest organisation. The credit goes to a finely structured system of checks and motivations. The motivations are mostly internal, such as the institutional process of imbuing recruits and cadets with the ideals of izzat (self-respect); imandari (honesty); and wafadari (loyalty) from the day they join. But equally important is the system of checks and balances, which includes multiple layers of audit, culminating in that of the CAG. Diluting CAG oversight, especially the audit of functional performance, would disturb a balance that has evolved over time.

To examine the questions raised let us look at two of the audits tabled by the CAG on 3rd August. The first case details how Defence PSU, Bharat Electronics Limited (BEL), obtained an MoD order to indigenise radars in India, but then simply bought them from a foreign vendor and sold them to the MoD for a premium.

That DPSUs like BEL don the cloak of “indigenisation” to obtain preferential MoD orders is an open secret within the military, the MoD and the analyst community. Soldiers joke that the only BEL-made part of an ostensibly BEL-made radar is the “Made by BEL” plaque that covers the original “Made in France” stamp.

Proving that is difficult and the MoD and the DPSUs stonewall any questions. But this CAG audit painstakingly documents how the MoD paid BEL Rs 870 crore for 22 radars in 2007, Rs 41.39 crores more than the cost of buying from the original manufacturer, Italian company Selex. The rationale for this largesse: indigenous production. But then, within three months of that contract, BEL ordered 13 radars from Selex, in CKD (Completely Knocked Down) kits, “in gross violation of its own commitment of manufacturing these radars indigenously”.

The MoD, unusually, has admitted that BEL has effectively fronted for a foreign vendor and handsomely profited from it. What use would have been served by placing this audit before the MoD, when the ministry itself is a part of this charade? The CAG report has provided a public tool (howsoever apathetic our jaded janta and media might be towards it) to pressure the government for a level playing field in defence production.

A second CAG audit dissects a two-decade delay by the Indian Air Force (IAF) in building and commissioning a strategic airbase at Phalodi, near Jaisalmer. Sanctioned Rs 29 crores in 1985, little happened until 2000, when the IAF reinvented Phalodi’s importance. This time Rs 227 crores were sanctioned --- 8 times the original cost --- including Rs 25 crores for fast-tracking the project. Then apathy again replaced urgency. By Sept 09, only Rs 85 crores had been spent. The runway, a key asset, was only 71% complete.

What happened next illustrates the power of such an audit. With a CAG indictment imminent, the Air Chief hastily flew to Phalodi in April 2010 to “inaugurate” the incomplete base. The official press release on that occasion falsely claimed, “the base is ready to undertake all types of operations of IAF.” In fact, as recently as Sept 09 (the CAG report notes) essential facilities for an air base --- radio communications, bomb dumps, blast pens, etc --- had not been sanctioned, leave alone constructed. And few noticed that the IAF photos of Phalodi depicted a runway without lighting.

The sorry Phalodi tale is hardly news to Pakistan. Commercially available satellite imagery would have kept Pakistani intelligence fully informed about the IAF’s sluggishness on what it had advocated as an essential counter to Pakistan’s stepped up construction of airbases across the border. But this is news to the Indian taxpayer. And, importantly, the CAG audit has goaded the IAF into action; once populated, Phalodi will quickly be completed.

CAG performance audits are an essential step towards greater public scrutiny of India’s closeted and hidebound defence establishment. They supplement the MoD’s own Annual Report and the reports of parliament’s Standing Committee on Defence, in throwing light on the handling of a massive chunk of taxpayer money. Whether the public and the media can use this information to pressure the MoD into positive action is another question.