PAC calls Service chiefs to explain 441cr loss to govt

NEW DELHI: In an unprecedented move, the Public Accounts Committee of Parliament has summoned all three Service chiefs to appear before it on January 12 to discuss the damning report of the Comptroller and Auditor General on the Canteen Stores Department (CSD).

Despite the ministry of defence instructing them, all the three arms of the military had failed to provide accounts of the unit run canteens to the federal auditor. This non-cooperation of the military is believed to be the reason behind PAC move to summon the chiefs of Army, Navy and Air Force.

The three Services received the PAC summons from the MoD on Wednesday. Military sources said the three chiefs may not appear in person, but could depute senior officers to represent them before the PAC. Sources said the defence secretary and the vice-chiefs of the three Services could attend the meeting.

The CAG in its report in August 2009 had come down heavily in the way CSD and unit run canteens function and the lack of transparency in their accounting methods. The military had defended its actions saying they had their own internal audit mechanisms to keep a watch on unit run canteens.

There are some 3,600 unit run canteens, which are set up on soft loans extended by the military, and operate from official military premises. The canteens together have a turnover in excess of Rs 7,000 crores. The CAG had found that the concessions given to the canteens resulted in a loss of Rs 441 crores to the government between 2002-03 and 2008-09.

The CAG had in its communication to the MoD pointed out that unit run canteens are assisted by the Canteen Stores Department, and thus were not private enterprises as was claimed by the military. In response, the MoD had written to the three Services, but still the CAG was not given access to the records of the unit run canteens.

This is believed to be the trigger for the PAC's unusual move.

The CAG report had also heavily criticized the existing methods of procurement by CSD. The procedures ran the risk of cartelization, the report had warned.