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

Young environmentalist's arrest 'sinister', even parents not told of her whereabouts

By Our Representative  The Coalition for Environmental Justice in India (CEJI), a civil society network, has said that it is “highly disturbing” that Disha Ravi, a young woman climate activist from Bengaluru was “picked up” in what is referred to as a “closely guarded operation” of the Delhi police. Disha, 21, has been remanded to police custody for five days after she was taken from Bengaluru to Delhi.

Mukesh Ambani's earnings during Covid 'can lift' 40% informal workers out of poverty

By Dr Gian Singh*  The Inequality Virus Report released by Oxfam, a non-profit organization, on January 25, 2021 on the growing inequalities in different parts of the world, sheds light on the growing economic, educational, healthcare and gender inequalities in India. The report has revealed that the wealth of billionaires has increased by 35 per cent during the lockdown period in the country.

US forensic revelation enough evidence to release Sudha Bharadwaj, others: Civicus

Counterview Desk  Civicus, a Johannesburg-based global alliance of civil society organisations and activists claiming to have presence in 175 countries with 9,000 members and working for strengthening citizen action, has sought immediate release of Sudha Bharadwaj, arrested in 2018 under the anti-terror Unlawful Activities Prevention Act (UAPA) and accused of having links with the banned Communist Party of India (Maoist).

Swami Vivekananda's views on caste and sexuality were 'painfully' regressive

By Bhaskar Sur* Swami Vivekananda now belongs more to the modern Hindu mythology than reality. It makes a daunting job to discover the real human being who knew unemployment, humiliation of losing a teaching job for 'incompetence', longed in vain for the bliss of a happy conjugal life only to suffer the consequent frustration.

Golwalkar's views on tricolour, martyrs, minorities, caste as per RSS archives

By Shamsul Islam*  First time in the history of independent India, the in-charge minister of the Cultural Ministry in the current Modi government, Prahlad Singh Patel, has glorified MS Golwalkar, second supremo of the RSS and the most prominent ideologue of the RSS till date, on his birth anniversary, February 19. In a tweet he wrote : “Remembering a great thinker, scholar, and remarkable leader #MSGolwalkar on his birth anniversary. His thoughts will remain a source of inspiration & continue to guide generations.”

No Election Commission safeguard against electromagnetic hacking of EVM: Study

Counterview Desk  Releasing a new study simultaneously in Chennai and Kolkata in view of the forthcoming elections in Tamil Nadu and West Bengal, the Citizens’ Commission on Elections (CCE) – a civil society initiative – has regretted “lack of integrity of EVM voting”, pointing out, the Election Commission of India (ECI) does not appear to safeguard against the possibilities of ‘side-channel attacks’, i.e, hacking electronic devices through electromagnetic and other methods.

20% of FIRs against journalists in 2020 alone, targeted attacks in 2021 'too many to count'

Counterview Desk  Condemning what it calls “alarming rise in state repression and clampdown on news outlets and journalists” that “expose” the anti-people nature of the establishment, India's top civil society network, National Alliance of People’s Movements (NAPM) has demanded “immediate release of arrested journalists, withdrawal of arbitrary charges and protection of media persons facing threats.”

'Viability' of agricultural cooperatives vs govt proposed pro-corporate economic model

Dr Gian Singh* The farmer struggle started from Punjab against the promulgation of three agricultural ordinances by the Union government in June 2020 and the enactment of three bills by Parliament in September 2020 to replace these ordinances is unique in many respects. There is no other example of such a peaceful and democratic farmer struggle.

Whither right to food? Social security scheme allocation for woman, child 'reduced'

Counterview Desk Pointing out that women and children have been ignored in the Union Budget 2021-22, the advocacy group Right to Food Campaign (RtFC) has said that the Government of India should have taken into account the fact that even after the lockdown was lifted, distress among marginalized communities continues, with people having lower incomes and reduced food consumption.

NAPM extends support to Indian, Aussie citizen groups 'opposing' Adani ventures

#StopAdani action in Australia  Counterview Desk  The civil rights network, National Alliance of People’s Movements (NAPM), extending solidarity to the global campaign by the Youth Action to Stop Adani (YAStA), held in recently in Australia and India, has said that the effort was to bring more attention to the struggle aboriginal, indigenous peoples, farmers, working class and other oppressed communities against allegedly anti-people multinational corporate conglomerates.