Pinarayi rules out CAG audit for Kannur airport, says it is not govt-controlled

Pinarayi rules out CAG audit for Kannur airport, says it is not govt-controlled
Kerala CM Pinarayi Vijayan (R)
SHARE

The clamour for a Comptroller and Auditor General  (CAG) audit is not just for Kerala Infrastructure Investment Fund Board (KIIFB). The Opposition wants Kannur International Airport Limited (KIAL) also to be subjected to the scrutiny of the CAG. The government argues that KIAL is not a government-controlled company to warrant a CAG audit.

In KIIFB's case, there is a CAG audit, and it is on. It is just that the Opposition is not happy with the nature of the CAG audit conducted now. As for KIAL, the government had put an end to the CAG audit. There was a CAG audit until 2013-14 fiscal. But from 2014-15, the audit was taken over by the auditors appointed by KIAL's shareholders.

The Opposition alleged that the CAG was barred to keep under wraps the government's misuse of KIAL funds. Congress MLA V D Satheesan charged that KIAL's money was used for Pinarayi Vijayan's 'Nava Kerala Yatra' in 2016 and to support the election campaign of E P Jayarajan, now minister for industry and sports.

“In fact, an earlier CAG report had criticised the company's decision to erect a perimeter fence around the Kannur airport,” Satheesan said. “If the CAG is kept out, the government can also go ahead with its irregular appointments to the company without any hindrance,” he said.

Chief Minister Pinarayi Vijayan said that KIAL fell outside the purview of the CAG from April 1, 2014, when the Companies Act, 2013, came into being. He said the new Act had taken out Section 619 (B) of the original Companies Act, 1956.

Section 619 (B) had stated that the CAG would audit a company if 51 per cent or more of its shares are held by the government or government-controlled companies or corporations. “Though the Section was taken out, the new Act did not insert a similar clause,” the Chief Minister said.

Now, only the government shares matter. “So as per the 2013 Act, a CAG audit needs to be done only if the government holds more than 51 per cent of the shares in a company,” he said. The Kerala government holds just 32.99 per cent of KIAL shares.

In fact, Central Public Sector Units, State PSUs and the Airport Authority of India together hold 28.08 per cent shares. If the government share is added to this, the total shareholding by government and government-controlled agencies would amount to 61.07 per cent. The Chief Minister said this would not matter as only the government shares needed to be factored in.

The new Act, however, says that government-controlled companies should be brought under CAG scrutiny. Satheesan, too, pointed this out.

The Chief Minister conceded the point but said that section 2(27) of the Companies Act had clearly defined “government-controlled”. “Only if the government has the right to appoint a majority of directors to the director board or if it has control over management or policy decisions can a company be called government-controlled,” the Chief Minister said.

In KIAL's Articles of Association, the government has the right to appoint just one-third of the director board members. “And there are no existing MoUs or shareholder agreements or voting agreements that give the government any special powers,” the Chief Minister said.

MORE IN KERALA
SHOW MORE
The comments posted here/below/in the given space are not on behalf of Onmanorama. The person posting the comment will be in sole ownership of its responsibility. According to the central government's IT rules, obscene or offensive statement made against a person, religion, community or nation is a punishable offense, and legal action would be taken against people who indulge in such activities.