Under attack, MoD appoints financial advisors for all bodies

Written by Huma Siddiqui | New Delhi | Updated: Sep 29 2012, 09:38am hrs
In a bid to counter suspecting auditors and bring in transparency, the ministry of defence (MoD) has decided to appoint financial advisors for all the organisations under its aegis with immediate effect.

With a view to bring in transparency and accountability in all organisations of the ministry, the government is putting in place appropriate checks and balances, a source told FE, adding that Financial advisors from the Defence Accounts Services are being appointed as earlier there were no clear-cut arrangements as far as the checks and balances were concerned.

The ministry was forced to take immediate action in face of auditors pointing fingers at its organisations for indiscriminate spending. Now, the financial advisors will be deputed with all three services Army, Navy and Air Force, and other organisations like the Defence Research and Development Organisation (DRDO) to guide them with the spend.

The objective is to guide the services and other departments to use the money efficiently when the government is trying to steer the economy clear of rough waters and also to avoid any scams, the source said.

Presently, the three chiefs and the organisations have been given certain financial powers whereby they can take decision on spending within R150 crore and the DRDO chief can decide on expenses within R50 crore without the permission of the MoD.

The auditors, however, have raised questions about the spending especially with respect to scientific advisor to the defence minister and DRDO chief VK Saraswat. The Comptroller and Auditor General (CAG) had recently questioned Saraswat for taking certain financial decisions without proper oversight. Also, the DRDO has been pulled up for consistently delaying projects. The auditor also pointed out that due to the decentralisation of financial powers, most of the projects did not reach the ministry for clearance.

Saraswat holds three positions concurrently scientific advisor to the defence minister, DG (DRDO), and secretary defence (R&D). Under the enhanced provisions, as DG (DRDO) he can approve contracts up to R50 crore without referring it to the MoD.

Apart from the DRDO chief being directed by the ministry to carry out his financial decisions in consultation with the financial division of the ministry, the unaudited Military Intelligence funds of the Army for 2011 had also reported a sharp increase. Discrepancies in the financial management of BrahMos Aerospace, an Indo-Russian JV, too have been noticed.