Say no to crony capitalism, CAG tells industry captains

Declaring ‘crony capitalism’ as bad for economic growth, Comptroller and Auditor General (CAG) Shashi Kant Sharma on Tuesday cautioned industry captains against following a capitalism model based on rent-seeking.

Such an approach was not just unfair, but also bad for long-term growth, Sharma told a summit on corporate frauds organised by industry chamber Assocham here.

“I am certain that you (captains of industry) wouldn’t want to be known as lynchpins of a crony capitalist economy,” Sharma said, adding that there was need for industry captains to appreciate the fact that the economy had to grow into a mature market economy, which would present opportunities for them to maximise profits and expand across the globe with confidence and credibility.

Sharma also came down heavily on the private sector for trying to distort competition and resorting to rent-heavy capitalism that upset free market fairness.

CAG, in many of the audits, has found evidence of private players trying to distort competition and upset free market fairness, causing loss to both public exchequer and competitors, he said.

“Be it the audit of the 2G spectrum allocation or coal block allocation, be it the construction and management of Delhi Airport, be it related to exploitation of gas and oil fields, we have found very distinct trends that must be of concern to all of us,” Sharma said.

Sharma said the recent Supreme Court judgment had vindicated a long-time stance of CAG that it had the Constitutional mandate to audit private firms as long as there was revenue sharing with the Government.

Asserting that CAG was capable of meeting the new challenges presented by the emerging economy, Sharma sought to remove doubts over CAG’s expertise for conducting audit of public-private partnerships (PPPs).

“Let there be no doubt that the principle which is applicable to spectrum, applies to all natural resources which belong to public and where revenue is to be shared with the Government; and CAG is duty bound to report to Parliament in all such matters,” Sharma said.

Before this year-end, CAG will ready a report on telecom, the work for which was already in progress. Similarly, a report on gas and oil exploration will be presented to Parliament soon, Sharma added.

“We will be taking up performance audit of some ongoing PPPs shortly.

“None of this is aimed to harass private firms, but to uphold the Constitutional scheme of accountability,” the CAG said.

Assocham President Rana Kapoor said the serious frauds investigation office (SFIO) needed to be more empowered to tackle the menace of growing corporate frauds.

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