Rs 1,548-cr irregularities in telecom PSUs: CAG

A report by the comptroller and auditor general of India reveals financial irregularities amounting to Rs 1,548 crore (Rs 15.48 billion) in public sector undertakings functioning within the department of telecommunications for the fiscal ended March 2008.

In the absence of these financial irregularities, the six PSUs would have enhanced their cumulative profits by a third of what they made in 2007-08, which was around Rs 4,730.33 crore (Rs 47.3 billion).

The report has revealed that BSNL, which contributed around 98 per cent to the financial irregularities, failed to pay a government loan amounting to Rs 7,500 crore (Rs 75 billion) in spite of having adequate cash reserves in short-term deposits with other banks during the year 2005-06 and 2006-07.

This resulted in extra expenditure of Rs 1,089 crore (Rs 10.89 billion) as the deferential interest on the unretired government loan.

BSNL also enhanced the maximum permissible limit of productivity-linked incentive of its employees from Rs 12,500 to Rs 25,000 which resulted in an excess payment of Rs 20 crore (Rs 200 million) for 2005-06.

"The point to be noted is that these decisions were not simple miscalculations but deliberate unauthorised decisions which are not within the scope of the board. The possibility of recovery is also very limited," said KP Sasidharan, director general, commercial, CAG.

Similarly, MTNL has been pulled up for 'idling investment' of Rs 16.24 crore (Rs 162.4 million) because of a failure to comply with the Mumbai Municipal Corporation for construction of hostel building.

Moreover, a marginal sum was also lost because MTNL failed to avail cheaper Bill Mail Service provided by the Department of Posts and dispatched bills through ordinary posts at higher rates.

Other irregularities included continuation of telephone facilities despite non-payment of dues, extra payment of productive-linked incentive, idle investment on construction and avoidable payment of spectrum charges.

The CAG report has been tabled in Parliament and further action will be recommended by the Committee on Public Sector Undertakings for detailed examination.