ibnlive » Business

Nov 02, 2012 at 10:58pm IST

KG Basin row: CAG slams Oil Ministry, says RIL's terms unconstitutional

New Delhi: The Comptroller and Auditor General (CAG) has pulled up the Union Oil Ministry for agreeing to the conditions of Reliance Industries Limited (RIL) for the audit of KG-D6 basin. According to sources, the auditing body told the Ministry that it should have been consulted before assuring the company.

The CAG further refused to accept all the conditions that were laid out by Reliance Industries Limited for audit. Sources said that the CAG told the Oil Ministry that many of the conditions by RIL were restrictive.

Expressing its displeasure in strong words, the CAG said that it could not restrict audit to ‘accounting books and records'. The letter was written by the Constitutional auditing body before the Union Cabinet reshuffle on October 26.

The issue dates back to October 23, which is a few days before the Cabinet reshuffle, the Oil Minister, which was then led by S Jaipal Reddy, had written a letter to Reliance Industries Limited and the CAG to go ahead with the audit. In that letter, the Oil Ministry mentioned the conditions laid out by RIL, terming them as acceptable.

Just days after this, on October 26, that is before the Cabinet reshuffle, the CAG wrote back to the Oil Ministry questioning its decision. The CAG, in its letter, asked the Oil Ministry how it could agree to the conditions of Reliance Industries Limited without consulting the auditing body.

The CAG had objections to not all, but many of the conditions, and found it to be restrictive. The constitutional body claimed that the conditions impinged upon the CAG Act and mandate.

It further said that the condition even impinged upon the basic right of the CAG to carry out an audit and place the report before Parliament, and in that sense, goes against the Constitution as well.

Reacting to the controversy, Union Petroleum and Natural Resources Minister M Veerappa Moily termed the CAG report as speculative. He further said that the issue was between the ministry and RIL, asserting that law would take its course on the issue.

The issue has raised some big questions:

- Why did Oil Ministry agree to Reliance's demand for restricted audit?

- Did Jaipal buckle under pressure just before Cabinet reshuffle?

- Did Jaipal buckle or did the PMO intervene?