An NGO that played a critical role in transforming the way natural resources are allocated by filing PILs in the coal block allocations and 2G spectrum allocation cases, has criticised the Narendra Modi government for following “exactly the same practice and procedures as the predecessor UPA government in the appointment of the new Comptroller and Auditor General (CAG) of India.”

Common Cause, which has been making interventions in issues of public concern, has said that “Modi government, which claims to have zero tolerance for corruption, has missed a golden opportunity to set a high benchmark to fight systemic corruption by putting in place an objective and accountable system of appointment for the crucial constitutional post.”

Critical of the manner in which a former secretary was selected for the post, Common Cause has noted that “by following the footsteps of the UPA, the NDA government has lost an opportunity to create an institutional criteria to make the selection process impartial and transparent in order to fight the systemic corruption.”

“The prime minister,” the group said, “could have easily opted for an interim arrangement similar to the framework that exists for appointment to NHRC, CVC and CIC.” All that was required were a combination of legislative and institutional reforms aimed at making the selection process objective, broad-based and transparent.

Opaque and arbitrary appointment policy

However, Common Cause noted with concern that “for last many years the government has been following an opaque and arbitrary method in making appointments to the post of the CAG. The criteria on the basis of which the selections are made are shrouded in secrecy. It is understood that the government follows an unwritten principle that only an officer holding the post of secretary to the government of India should be appointed to the post. Notwithstanding the fact that some of the individuals appointed to this constitutional office have acquitted themselves with credit, such a policy is conceptually flawed and may give rise to a serious situation of conflict of interest.”

It said “if the objective is to select the most suitable candidate, the appointing authority ought to consider a much larger field of candidates, who should not only possess the requisite experience of financial management, audit and accounting procedures, but also have a deep understanding of the complexities of governance and a vision of the future of our democratic polity.”

The Centre had on August 31 announced the appointment of then outgoing home secretary Rajiv Mehrishi as the next CAG. Mehrishi, who had earlier also held the post of economic affairs affairs secretary, is now due to take charge as the CAG on September 24. He would be the second home secretary after T.N. Chaturvedi to occupy the constitutional post.

Earlier, the Indian Audit and Accounts Service (IA&AS) Retired Officers Forum had met finance minister Arun Jaitley on August 25 to stress the need for transparency and objectivity in the appointment of the CAG. A memorandum submitted by them to Jaitley had contained demands similar to those raised by Common Cause.

Conflict of interest

The note from Common Cause has been sent by its president Kamal K. Jaswal, vice-president B.P. Mathur and director Vipul Mudgal who have pointed out that a key issue in the appointment of a former bureaucrat to the post remains conflict of interest. “Apart from the fact that the person appointed as the CAG should have a thorough knowledge of audit and accounts, the appointment of an IAS officer who has held the post of Secretary to Government in a sensitive department is likely to lead to a conflict of interest, as the CAG may be called upon to audit the decisions made by him earlier in the capacity of secretary.”

Clarifying that it was not the intention to “cast any aspersion on any individual’s conduct”, the group said “the incumbent of the Constitutional office of CAG must be above suspicion and command the confidence of the public, so that he is able to work without fear or favour.”

Concept of institutional integrity

In this regard, the Common Cause has also highlighted how while adjudicating the legality of the appointment of P.J. Thomas as Central Vigilance Commissioner (CVC), the Supreme Court in its landmark judgment of March 2011 enunciated the concept of institutional integrity. “This concept has wider implications beyond the specific institution of the CVC. The Court proceeded to derive from the skeletal procedural provisions incorporated in the CVC Act the following principles of universal application:

The selection procedure must be open and transparent.

All relevant facts and aspects must be taken into account.

‘Impeccable integrity’ of the appointee is a sine qua non.

The group said although no corresponding procedures in respect of the appointment of the CAG are to be found in the Constitution or any Act of parliament, the guiding principle of the judgment in the CVC case, which enjoins that the selection to high offices must be guided by objective procedures and criteria, should apply fully to the appointment of a Constitutional authority, such as the CAG. “If the CVC is regarded as an integrity institution, then the CAG, whose remit goes far beyond that of the CVC and who has to ensure the accountability of public functionaries at all levels, is no less.”

Preserving integrity through selection criteria

The organisation said “the selection criteria should include possession of the requisite professional knowledge and background, ability of an exceptional order and impeccable integrity” as this was “essential for preserving the integrity and credibility of the institution of public audit.”

Recalling how in the past it had brought this to the notice of the prime minister, finance minister, the Lok Sabha speaker and the chairman of the public accounts committee (PAC), who is also the leader of the opposition in Lok Sabha, for making the process objective, transparent and accountable, Common Cause regretted that “by following the footsteps of the UPA, the NDA government has lost an opportunity to create an institutional criteria to make the selection process impartial and transparent in order to fight the systemic corruption.”

Stating that the CAG examines whether the executive has incurred expenditures in accordance with the budget grants voted by parliament, conformed to the parliamentary authorisations for raising revenue through taxation and other measures, and observed the prescribed financial rules and procedures, it said under Article 148, he is appointed by the president and enjoys the same conditions of service as a judge of the Supreme Court.

As chairman of the drafting committee of the Constituent Assembly, Dr. B.R. Ambedkar had described the CAG as the ‘most important functionary under the Constitution, even more important than the judiciary’. So the significance of the post demands that “only a person of the highest professional competence and unimpeachable integrity should be appointed to that chair.”

Referring to the Constituent Assembly debates in 1949, it cited the observation of T.T. Krishnamachari – who later went on to become the finance minister — in laying down qualifications for the post of the CAG:

We had some very good Auditors General who were administrators and who had been in the Finance Department and who have functioned as Accountants-General in various places and who have held other important responsible positions… All the knowledge of a Registered Accountant is certainly known to a person who hold the position of an Auditor General in Government of India and Accountant General.

Only IAS appointed as CAG since 1978

Stating that “no formal qualifications for the post were eventually laid down”, Common Cause has pointed out that while the first few CAGs appointed after independence were professionals from the Indian Audit and Accounts Service, in the appointments made from 1978, only IAS officers have been appointed to the post of CAG.

BJP leaders demanded PM, LoP jointly select CAG

Observing how on various occasions “the lack of transparency and disregard of professional qualifications in appointments to the office of the CAG have come to the adverse notice of the Public Accounts Committee,” Common Cause recalled how in February 1996 the then PAC chairman Ram Naik had while raising the issue of appointment of a new CAG with the president and the prime minister and suggested that the prime minister and the Leader of Opposition in Lok Sabha should jointly select the CAG and that the criteria be laid down.

Similarly as chairman of PAC, Murli Manohar Joshi had observed that the the process of selection of the CAG needed to be made transparent and the control of the executive minimized, if not eliminated altogether. It was also suggested that a small collegiate or a screening committee could examine the personalities and recommend to the President a panel of three names out of which one should be appointed.

Then the All India Conference of Chairmen of Central and State PACs had in September 2015 recommended that in recognition of the fact that the CAG works on behalf of parliament, he should be made part of the legislature and that the PAC should be consulted while making the appointment of the CAG, and that the CAG (Duties, Powers and Conditions of Service) Act, 1971, be amended to give effect to these recommendations.

International practices

In the United Kingdom, whose parliamentary traditions India follows, Common Cause said the Exchequer and Audit Act was amended in 1983 to provide for the CAG to be jointly selected by the PM and the chairman of the Committee of Public Accounts and for the appointment to be ratified by the House of Commons. Modifications similar to those of the UK, it said, have also been made in the relevant statutes of other advanced Commonwealth countries, such as Australia, Canada and New Zealand.

Thus, it said, in in most democratic countries, the head of supreme audit institution is appointed after consulting the Public Accounts Committee/Parliament. “Nowhere in the world does the executive enjoy an absolute discretion to appoint the CAG.”

High level panel needed for selection

In view of the fact that the state audit works on behalf of Parliament and that it should be independent of the executive, Common Cause has noted that Parliament should have a decisive say in the selection. “It is accordingly suggested that a high level parliamentary committee may be constituted to select the CAG through a transparent and objective process. The Committee may consist of the prime minister, who may chair it, speaker of the Lok Sabha, leader of opposition in the Lok Sabha, finance minister, and chairman of the PAC, who may act as the convener.

It has also been suggested that the speaker, in consultation with the chairman of PAC, may appoint a search committee, which may do the initial screening and short list the names of persons deemed suitable for the post which may then be considered by the high level selection committee that may recommend the most suitable person to the president.