Skip to main content

"Highly irregular" for PSUs to fund Sardar Statue under Corporate Social Responsibility

Counterview Desk
In a letter to I Srinivas, secretary, Ministry of Corporate Affairs, Government of India, former secretary (economic affairs), Ministry of Finance, EAS Sarma, has raised questions on the funding of the Sardar Patel statue in South Gujarat by Central Public Sector Undertaking (CPSUs) relying on the Comptroller and Auditor General report (No 18/2018).
Sarma cites the report to say that there have been serious irregularities in the case of five PSUs under the administrative control of Ministry of Petroleum & Natural Gas (MPNG), suggesting, under "extraneous pressure", ONGC, HPCL, IOC, Bharat Petroleum and Oil India contributed Rs 146.83 crores towards their expenditure under the head of Corporate Social Responsibility (CSR) for the construction of the statue.
According to C&AG, it was "highly irregular" on the part of these PSUs to incur such expenditure under CSR, as envisaged under Section 135 of the Companies Act. Yet, neither the Audit Committee of any of these PSUs, nor the independent directors, nor the other directors have cared to question such irregular expenditure.
Sarma says, whether it is Central PSUs or State PSUs, they are owned by the people of India. There are other shareholders such as public financial institutions and small minority shareholders who have a heavy stake in each of these PSUs. If anyone has arm-twisted the PSUs into incurring such expenditure, not in line with its business activity, it amounts to weakening the public sector.

Text of the letter:

I enclose here a copy of C&AG sport (Report No 18/2018) on Central PSUs. The Report (see Para 4.5.4.4) has brought out serious irregularities in the case of five PSUs under the administrative control of Ministry of Petroleum & Natural Gas (MPNG). Apparently, under extraneous pressure, the five PSUs, namely, ONGC, HPCL, IOC, Bharat Petroleum and Oil India contributed Rs 146.83 crores towards their expenditure under the head of Corporate Social Responsibility (CSR) for the construction of the statue of Sardar Patel in Gujarat.
In addition, 14 PSUs in the State of Gujarat also seem to have spent Rs 104.88 crores under CSR for the same project.
I understand that the project for the construction of the statue of Sardar Patel has cost the nation around Rs 3,000 crores. Sardar Patel's contribution to the unity of India is no doubt immeasurable but he himself would not have endorsed such a huge expenditure of public funds for constructing his statue. What is more important is to respect his views on nation building and do everything that reinforces his idea of a nation.
As pointed out by C&AG, it was highly irregular on the part of the concerned PSUs to incur such expenditure under CSR, as envisaged under Section 135 of the Companies Act. It is surprising that neither the Audit Committee of any of these PSUs nor the independent directors nor the other directors have cared to question such irregular expenditure, apparently in fear of reprisals from those in authority.
Whether these are Central PSUs or State PSUs, they are owned by the people of India. There are other shareholders such as public financial institutions and small minority shareholders who have a heavy stake in each of these PSUs. If anyone has arm-twisted the PSUs into incurring such expenditure, not in line with its business activity, it amounts to weakening the public sector.
I was trying to find out the implications of the statue project from the point of view of the economy. There is very little in the project that is Indian. Mostly, the project in question has benefitted Chinese companies and contributed to employment benefits for the Chinese. To armtwist both Central and State PSUs into diverting public funds into such a project is highly objectionable.
It appears from this that there has been a complete breakdown of corporate governance in the 19 PSUs referred above. The Audit Committees should have played the role expected of them under Section 177 of the Companies Act and prevented the respective managements from yielding to the diktat of the concerned government. Apparently, they have chosen to acquiesce in it. Under Section 149, the independent directors are required to safeguard the interests of the shareholders but they too seem to have failed in discharging their role.
At a time when the ordinary citizen is forced to pay high prices for petroleum products, such irregular expenditure burden on the petroleum PSUs should be looked upon as highly undesirable and regressive.
I request you, as the administrative head of the Ministry of Corporate Affairs, to order a thorough investigation and consider taking deterrent action against the concerned PSU managements, including the members of the Audit Committees and the other independent directors. Inaction on the part of your Ministry will set a bad precedent for the public sector undertakings in general.

Comments

Santhi said…
SBI in Supreme Court agreed to waive 35 crores to the loans taken by Adani and Tata. My agony is why this much partiality when comes to poor and the same banks waive crores of rupees to rich capitalists. No accountability? When it comes to the lives of common man

TRENDING

Telangana govt proposes to give unfettered powers to forest officials, 'help' corporates

By Dr Palla Trinadha Rao*
The Telangana Government is contemplating to replace the Telangana Forest Act 1967 with a new law - the Telangana Forest Act (TFA) 2019, trampling the rights of adivasis ensured under the Scheduled Tribes and other Traditional Forest Dwellers (Recognition of Forest Rights) Act, 2006 (FRA Act 2006) and Panchayats Extension to Schedule Area (PESA) Act 1996 both of which are central acts.

RSS, Hindu Mahasabha were 'subservient' to British masters: Nagpur varsity VC told

Counterview Desk
Well-known political scientist Shamsul Islam, associate professor (retired), University of Delhi, in an open letter to the vice-chancellor of the Rashtrasant Tukadoji Maharaj Nagpur University, Dr Siddharthavinayaka P Kane, has taken strong exception to the varsity decision to include RSS’ “role” in nation building in the syllabus of the BA (history) course, citing instances to say that the RSS ever since its birth in 1925 with its Hindutva allies like Hindu Mahasabha led by VD Savarkar worked overtime to “betray the glorious anti-colonial freedom struggle”.

British companies export 'deadly' asbestos to India, other countries from offshore offices

By Rajiv Shah
“The Sunday Times”, which forms part of the powerful British daily, “The Times”, has raised the alarm that though the “deadly” asbestos is banned in Britain, companies registered in United Kingdom, and operating from other countries, “are involved in shipping it to developing nations”, especially India. India, Brazil, Russia and China account for almost 80% of the asbestos consumed globally every year, it adds.

One lakh schools closed down, draft policy 'seeks' commercialisation: Whither RTE?

By Our Representative
A national consultation on the new draft National Education Policy (NEP) with senior experts, teachers’ association representatives and other stakeholders at the India International Centre in New Delhi on July 11, organised by the Right to Education (RTE) Forum, has expressed serious concern over curtailment in the budgeted expenditure on education year after year, even as closure of more than one lakh schools over the "last few years."

Lynching as state terror? Complete dearth of 'political will' to deal with mob violence

By Fr Cedric Prakash sj*
On Friday July 5, thousands of people had gathered at a rally in Surat to protest against the growing mob lynching incidents in different parts of the country. There are different interpretations at what happened during the rally: with police blaming the rallyists and those in the rally blaming the police for using teargas shells upon them without any reason.

Beijing-based infrastructure bank 'funding' India's environmentally risky projects

By Our Representative
A new civil society note has questioned the operations of the Beijing-based Asian Infrastructure Investment Bank (AIIB), a multilateral development bank that aims to support the building of infrastructure in the Asia-Pacific region, seeking to fund projects in India through the Government of India’s National Infrastructure Investment Fund (NIIF), calling it “a risky venture”.

Gender budgeting? Govt of India allocates just 2.1%, 0.73% for SC, ST women

By Rajiv Shah
The National Campaign on Dalit Human Rights (NCDHR), one of the most influential all-India Dalit rights networks, has taken strong exception to the manner in which the Government of India has undermined Gender Responsive Budgeting in the Union Budget 2019-20 for scheduled castes (SCs) and scheduled tribes (STs), pointing towards “wide gaps” between the goals and the situational reality of “the Dalit and Adivasi women on the ground.”

Mental health: India's 95% patients "deprived" of medical care, treatment gap 70%

By Moin Qazi*
Among the many challenges India faces, the most underappreciated is the ongoing mental health crisis. Mental illness is actually India’s ticking bomb. An estimated 56 million Indians suffer from depression, and 38 million from anxiety disorders. For those who suffer from mental illness, life can seem like a terrible prison from which there is no hope of escape; they are left forlorn and abandoned, stigmatized, shunned and misunderstood.

Universal healthcare? India lacks provisions to 'fight' non-communicable diseases

By Moin Qazi*
Universal health coverage (UHC) -- ensuring that all people receive proper and adequate health care without suffering financial hardship -- is an integral part of achieving the Sustainable Development Goals. It enables countries to make the most of their strongest asset: human capital.

Include all workers exposed to silica dust in anti-TB programme: Govt of India told

Counterview Desk
In a letter, sponsored by well-known civil rights organization, Occupational & Environmental Health Network of India and signed by more than 60 professionals and activists*, Dr Harsh Vardhan, Union Minister of Health and Family Welfare, Government of India, has been told that Indian policy makers shouldn't just acknowledge higher TB risk to mine and stone crusher workers, but also “other silica-exposed workers”.