-: [rti4empowerment] Appeal to the Prime Minister about transparency in selecting C&AG

FORUM OF RETIRED OFFICERS
OF
INDIAN AUDIT AND ACCOUNTS SERVICE
20-03-2013
To,
Shri Man Mohan Singh,
Hon'ble Prime Minister of India

Subject: Appointment of the Comptroller and Auditor General of India

Respected Prime Minister,

The present CAG will complete his term of office, in May this year. The process of selecting the next CAG might already have been initiated. In this context, we would respectfully like to submit for your kind consideration, the following observations and the need for transparency and appropriate criteria and procedures for selection of the next incumbent to this high constitutional position, on behalf of the Forum of Retired Officers of Indian Audit and Accounts Service.

1. Nature and importance of the post:
1.1 The constitutional institution, through which the financial accountability of the Executive to Parliament is ensured in India, is the Comptroller & Auditor General of India (CAG). It is the CAG who examines whether the Executive authorizes and incurs expenditures in accordance with the budget grants voted by Parliament, conforms to the Parliamentary authorizations for raising revenue through taxation and other measures, observes the prescribed financial rules and procedures, and maintains proper accounts. The CAG also examines whether the money is spent with prudence, economy and propriety.
1.2. The CAG has been given an independent position under the Constitution so that he may discharge his duties without fear or favour. Under Article 148, he is appointed by the President under his hand and seal and cannot be removed save by a motion in Parliament. Dr B R Ambedkar, Chairman of the Drafting Committee of the Constituent Assembly, had described the CAG as the "most important functionary under the Constitution, even more important than the judiciary".
1.3. The constitutional importance of the position becomes even clearer from the fact that the oath of office prescribed for the CAG is similar to that laid down for Supreme Court judges: it requires the CAG to "uphold the Constitution and the laws" whereas Cabinet Ministers swear an oath to "act in accordance with the Constitution".

2. Need for Selection Criteria and Procedures:

2.1. It is obvious that great care must go into the selection of such a functionary not only because of the crucial role of the CAG in the Constitutional scheme, but also because once appointed, the incumbent will have a long tenure of six years.
2.2. Good selection would require appropriate selection criteria and procedures and their implementation. The fact that the Constitution and the CAG's Act 1971 do not lay down the criteria and procedures. for the selection does not mean that criteria and procedures are unnecessary. The Constitution mandates the post; an appointment has to be made to that post; an appointment necessarily implies a selection out of several names; and selection necessarily implies criteria and procedures. The Constitution and the CAG's Act do not prohibit selection criteria and procedures. In any case, some kind of internal system is being followed at present. We suggest that it be replaced by a better and a more transparent system.

3. Opacity of the present system:

3.1. It has been argued that the existing system has been working well; that the CAGs, by whichever ruling party chosen, have been able to function independently; and that no change is called for. However, there are no carefully formulated job specifications, no formally laid down criteria, no known procedures for preparing a long list and a short list, and no Selection Committee. The system, if there is one, is entirely internal, and unknown to anyone outside except perhaps a very small group within the Government. Suddenly one day the media announce that a particular person has been selected as CAG. Parliament and the people do not have the slightest idea of the manner in which the most important functionary in the Constitution is chosen. On what grounds can one say that the `system' is working well? It is impossible to draw any such inference from the successive appointments that have been made so far. The appointments have varied from outstanding to undistinguished, and these results have been entirely accidental; no design can be discerned from them.
3.2. Given the importance of the office, it is obvious that the selection process should be transparent and credible. Parliament, the Public Accounts Committee, and the people in general, are entitled to know how the CAG is appointed. The lack of transparency in regard to the appointment to the office of the CAG has been adversely commented upon by the Public Accounts Committee from time to time.

4. Need for Broad-based Selection:

4.1. If the selection of the enforcer of accountability is left to the discretion of those whose accountability he or she has to enforce, and if the processes are non-transparent, Parliament and the people can have no confidence that a fair, rigorous and objective selection has been made. The apprehensions in this regard are not ill-founded. It may be recalled that not very long ago an appointment to the post of Chief Vigilance Commissioner was quashed by the Supreme Court on the ground of failure to take material facts into consideration. If such a failure is possible even with a selection committee procedure in force, it is far more likely in the absence of any such procedure, and with a non-transparent selection system.
4.2. Selection by a high-level broad-based committee has been considered necessary in the case of the Chief Vigilance Commissioner (CVC) and the Chairman National Human Rights Commission (NHRC). It is rather strange that while there has been much concern with criteria and procedures of selection in the case of the CVC and the NHRC, little interest has been shown in the manner in which such a crucial functionary as the CAG of India is chosen.

5. Selection Committee:

5.1. It is respectfully suggested that a Selection Committee be constituted for the selection of CAG which should consist of the Prime Minister, the Finance Minister, and the Leader of the Opposition in Lok Sabha, the Speaker of Lok Sabha, and the Chairman of the Public Accounts Committee. Having regard to the fact that the Constitution requires the CAG to "uphold the Constitution and the laws", there may be a case for including the Chief Justice of India or an eminent jurist in the Committee, but this is a matter for the Government's consideration.
5.2. It is desirable that the selection should be unanimous and not by the majority principle. The rationale of a broad-based selection committee will be negated if the Government retains a majority in the Committee and the majority view prevails.
5.3. It is also desirable that the reasons for the selection should be recorded in writing.

6. Envisioning the CAG:

6.1. Before considering the criteria for the selection, it is necessary to have a clear idea of the kind of person the Committee will look for. Keeping in mind the kind and range of responsibilities involved, the CAG should clearly have:
* professional knowledge and expertise in accounts and audit;
* a willingness to point the finger at irregularity, impropriety, imprudence, inefficiency, waste, and loss of public funds, at whatever level this occurs, but tempered by a scrupulous judiciousness in criticism and comment;
* the ability to weigh the legal and constitutional aspects of some of the issues that come before him;
* a capacity for understanding complex technical, contractual commercial, managerial, or economic matters and forming careful judgments, particularly when dealing with large government schemes or appraisals of public enterprises;
* management abilities for running the vast Department under him; and
* Underlying all these, a passionate concern for rectitude and propriety, and impeccable personal integrity, accompanied by much tact and wisdom.
It will certainly be very difficult to find a person who combines all those elements; but the selectors need to keep that ideal picture before them, and the person selected should meet at least a significant part of the above requirements.

7. Criteria for Selection:

7.1. It must not be forgotten that the selection to be made is that of a Comptroller and Auditor General, i.e., a high-level professional. The CAG, whose responsibilities include the audit of both the Union and the States and of public sector undertakings as well as many institutions which receive public funds (both at the Centre and in the States), besides the compilation and consolidation of the accounts of many States, and who has to ensure uniformity in accounting in the country and presides over the Accounting Standards Board, cannot possibly be one with no professional background and knowledge.
7.2. Shri T. T. Krishnamachari's observation in the Constituent Assembly debates that the CAG is more than an accountant has been misunderstood, and perhaps this explains the appointment of a succession of generalist CAGs. The fact that the CAG is more than an accountant or auditor does not warrant the conclusion that the CAG need not be an auditor at all. Considering the nature of the duties of the CAG, one would expect that the person appointed to this post would be a person of professional competence in the field.
7.3. At the highest level, all positions, in whatever area, transcend their professional content and require larger abilities, vision and wisdom. This does not mean that the professional aspect is irrelevant. It is inconceivable that a person other than a legal expert can be appointed as the Attorney-General of India or as Chief Justice of India, though in each of these cases, the selected person is expected to be a person of vision and wisdom.
7.4. In recent years there has been a tremendous increase in the nature and range of functions calling for high professional competence. No person without a substantial accounts and audit background can really begin functioning effectively as CAG without a prolonged learning period: two years out of the six-year term might be lost in this process. The assumption that any generalist can discharge the duties of CAG as a Super Manager who can get all the technical support that he or she needs from the organization below is erroneous.
7.5. A criterion that seems to have come to be applied over the years is that the person to be selected should have served as a Secretary to the Government of India. As there are very few non-IAS Secretaries, this criterion virtually limits the field of choice to retiring IAS Secretaries. The appropriateness of this criterion is open to question. Apart from the fact that most IAS officers are unlikely to have the knowledge and experience needed for the position of CAG, it could be argued that a background as a Secretary to the Government of India is very likely to lead to questions of conflict of interest, as the CAG may find himself or herself having to audit decisions taken by him or her earlier in the capacity of Secretary. It may be recalled that a question of possible conflict of interest did arise recently in the case of the CVC. There is in fact a case for holding that service as a Secretary to the Government of India should disqualify a person from consideration for the position of CAG of India.
7.6. It may, however, be stated that no reflection is intended on the merits of the individuals selected as CAG so far, from whatever Service drawn. It is also not being suggested that the field of choice should be confined to the Indian Audit & Accounts Service (IAAS) in the future. What is being argued is that professional background and experience are very important for this high office; and that it is more likely to be found in the IAAS than elsewhere? As this point may be misunderstood as special pleading on behalf of the Service to which the signatories of this memorandum belonged, it needs to be explained further.
7.6.1. When we say that the CAG is a constitutional functionary, we are talking about an institution, not an individual; that institution is the apex of a large organization (the Indian Audit Department or IAD), and it discharges its constitutional responsibilities through that organization; the two cannot be separated; it is the entire organization that performs the constitutional functions. The officers of the Department are trained, motivated and orientated to perform those constitutional functions, and spend their entire working life in doing so, at both the Central and State levels. If one is looking for knowledge and experience of government accounts and audit, a firm belief in the importance of rectitude and propriety, a deep commitment to the constitutional values of the institution, and so on, one is likely to find these in the IAAS more than anywhere else. At the top of the pyramid, immediately below the CAG, there are several Deputy CAGs of the rank of Secretary to the Government of India. That group should surely be the first and the preferred source to look into for a good CAG.
7.6.2. The inter-Service angle, which we would have preferred to avoid, needs to be taken note of because it involves an important question of organizational morale. In the early years, it was perhaps tacitly assumed that the CAG would be an IAAS officer. An IAAS officer of outstanding merit could have reasonable expectations of becoming CAG at the end of his career (if the post was likely to become vacant at the time of his retirement or soon thereafter). That position has undergone a dramatic reversal. This will be clear from the following.
7.6.3. The convention that an officer with an accounts and audit background would be appointed as Auditor General antedates independence, and continued after the Constitution came into force. The first three CAGs came from the IAAS; the fourth was an ICS officer; the fifth an IAAS officer; thereafter, all CAGs, i.e., six successive CAGs, have been from the IAS. It is indeed possible that in all these cases IAAS officers were also considered, and that in each case, the IAS officer who was selected was the best possible choice, though that proposition strains one's credulity. Considering the high standing of the Indian Audit Department in the international community of Supreme Audit Institutions, and considering also the present CAG's frequent praise – high praise - of the quality of the personnel of the Department, it is extremely difficult to believe that in the last six selections, not a single IAAS officer was found suitable for selection as CAG, or that the selected IAS officers were exceptionally brilliant and far outshone the IAAS officers. A more credible explanation is that there is a tacit preference for the IAS. For more than thirty years now, the Indian Audit Department has been continuously under CAGs coming from the IAS. From the point of view of the IAAS this looks like the systematic exclusion of that Service and the virtual absorption of the post of CAG in the IAS cadre. Whether that feeling is right or wrong, it exists; and it has had a demoralizing effect on the IAAS.
7.6.4. The `edge' or `preference' for the IAAS suggested above does not imply that the high office of CAG should be treated as a promotion post for the Deputy CAGs. The field of choice should be wide, and should include not only the IAAS but also exceptional names from the IAS and other government sources, and perhaps a limited number of outstanding names from outside the Government. (The last point is discussed further below.) All that is being argued here is that other things being equal, the Selection Committee should first look at the IAAS as a source; and that a non-IAAS officer should be considered only if none of the IAAS officers in the field of choice measures up to the picture of the CAG presented earlier.
7.6.5. The question (referred to above) whether the field of choice should be expanded to include professionals from the private sector was in fact considered by the Constituent Assembly. It was in that context that Shri T. T. Krishnamachari made the observation that the CAG is more than an accountant. The responsibilities of CAs in the private sector are indeed important but they are very limited in comparison with those of the CAG. Besides, the necessary knowledge of governmental functioning, which all officials develop during the course of their careers, cannot be expected in a person from the private sector. T T Krishanmachari ruled out this source on that ground. It is only in exceptional circumstances, and in the case of a person commanding great respect, that one can envisage an appointment from a non-government source.

8. Modality of change:

The criteria and procedure for selection could be introduced into the CAG's Act by amendment, but this might not be necessary. There is no statutory basis for the present internal and opaque system of selection, and there should be no need for a statutory basis for the adoption of a more open and transparent system. It can be brought into being by convention immediately, and later incorporated into the CAG's Act by amendment, if that is considered necessary.

9. Conclusions:

In conclusion, we submit the following for the Government's consideration.
* There is a need for an open, transparent, institutionalized selection mechanism for the post of the CAG similar to the arrangements that exist for NHRC and CVC. The mechanism can be adopted immediately by convention.
* The Selection Committee should consist of the following:
1. Prime Minister
2. Finance Minister
3. Leader of the Opposition, Lok Sabha
4. Speaker, Lok Sabha
5. The Chairman of the Public Accounts Committee in Parliament.
6. Possibly the Chief Justice of India or other eminent legal luminary.
* In making the selection of the CAG, professional knowledge and background, ability of an exceptional order and impeccable integrity should be among the essential requirements. The picture of an ideal CAG outlined in paragraph 6 above should be kept in view.
* Other things being equal, the choice should be of an officer from the Indian Audit and Accounts Service, but in the absence of a suitable officer as defined above from that source, an officer from the IAS or other source who comes close to that ideal picture may be selected.
* The selection should be unanimous and not by majority.
* The rationale of the selection should be recorded in writing.

With deep regards,

Yours Faithfully,

J. N. Gupta Dr. B. P. Mathur R. Parameswar Ramaswmy R.Iyer
Former Dy. CAG Former Dy..CAG Former Dy.CAG Former, Secretary, Govt. of India

S. Krishnan,
President,
Forum of Retired Officers of Indian Audit and Accounts Service,
Tel. No.: 22755390; Mob: 9811334738
E-Mail: vasun_krish@hotmail.com