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Oct 24, 2012 at 09:11am IST

No rules were violated: Army on Defence Ministry audit report

New Delhi: A Defence Ministry audit report has raised questions on Army Commanders, on the issue of money being spent for urgent procurement. The audit has found 55 cases where procurements were made without consulting centralised agencies. The Army Commander of the Northern Command has the power to spend up to Rs 125 crore in emergencies, while the Eastern Command has Rs 50 crore limits. And now the scanner is on a questionable Rs 125 crore expenditure. Taking a strong view of it, Defence Minister AK Antony has decided to impose strict checks and balances on the expenditure made.

The Army, however, contested the loss of Rs 100 crore in procurements and insisted that no rules have been violated. The Defence Ministry had ordered the Controller of Defence Accounts (CDA) to audit expenses made by the Army commanders under their special financial powers of up to Rs 125 crore to procure urgently-required items for troops.

The audit report has assessed 55 transactions made by the commands between the period 2009-11 when present Army Chief Gen Bikram Singh was heading the Kolkata-based Eastern Command.

The report suggests that certain equipment, including Chinese communication equipment, has been purchased from grey market. Mismanagement in milk procurement in Northern Command has also been suggested by the report.

It also mentions the procurement of binoculars by the Eastern Command from a foreign vendor when the same were available at lower prices in the Indian market. Ministry officials said efforts are being made by the Defence Minister to streamline the entire financial management system of all the departments under the Ministry.

The Ministry is putting in place checks and balances especially in organisations where no such measures existed. The steps are likely to include appointment of auditors for ensuring that all rules and regulations in financial management are observed and followed.

A budget of around Rs 125 crore and Rs 50 crore for Army commanders of Northern and Eastern Commands respectively and Rs 10 crore each to other four commands, has been provided for meeting the requirements of these unforeseen situations, the report suggested. The internal audit report said there was a loss of around Rs 30 crore in procurement of special packaged milk in the Northern Command.

"Procurement of extra quantities of both tetra packed milk and fresh milk, over and above the authorised quantities as per scales has resulted in excess expenditure of Rs 94 crore during a period of two years and these losses are required to be regularised," it said.

The report has also suggested the review of the special financial powers of the Army commanders and other officials. In its response to the contents of the report, the Army Headquarters said, "On the issue of communication sets with Chinese components, they were procured on DG S&D rates which have been included in the list after thorough inspection by them."

However, it is under arbitration as the vendor was not able to reveal the original equipment manufacturer, the Army headquarters added. The Army said it has already responded to observations raised in the audit report of the Ministry and "no observations have been found to be true".

(With additional inputs from PTI)