Monday Musings: Civic spending needs forensic accounting

At least one citizen’s group must take the help of forensic accountants to closely monitor civic spending

Is anyone paying serious attention to the seemingly massive scale of corruption, mismanagement and wastage of public funds that is taking place in our municipal corporations?

Be it the well-known water affidavit (in picture) scam or the cancellation of the tendering process for the mega, ₹3,300 crore 24x7 water scheme on suspicion of bid rigging; the story is very similar in department after department of the PMC. (HT PHOTO)

There are many indicators pointing to the deep rot in our civic bodies, but there is very little transparency, analysis and control of civic spending.

The Pune municipal corporation (PMC), for example, has an annual budget of nearly Rs. 6,000 crore and there is very little public control or public scrutiny of projects planned and executed.

Take the case of electrical and electronic equipment purchase by the PMC year after year. In June, 2018, HT revealed how the department scheduled rates (DSR) fixed by the civic body were far higher than the central government’s government e-marketplace (GeM) rates. At least three tenders had to be cancelled after the inflated rates were pointed out by a citizens’ group.

In the case of solid waste management, the citizens’ group Nagrik Chetna Manch (NCM) successfully exposed the cartelisation and bid-rigging that had taken place in the tendering process for the waste-to-energy biogas plants. In May, 2018, HT reported how six PMC contractors were fined ₹3.57 crore by the competition commission of India (CCI) for colluding with PMC officials and undertaking bid rigging while filing tenders for thermal composting garbage plants in 2014.

The CCI conducted an enquiry on the basis of a complaint from NCM and in its final order indicted the PMC saying that the civic body “failed to detect cartelisation in its own tenders”.

“It is clear from the investigation that PMC did not exercise due diligence while scrutinising the bid documents,” the CCI said, while noting that this was despite several apparent indications of collusion between civic officials and contractors.

What happened after that? Was even a single probe instituted by the civic body to identify loopholes in the system and punish the civic officials who were guilty of complicity in the scam?

Be it the well-known water affidavit scam or the cancellation of the tendering process for the mega, ₹3,300 crore 24x7 water scheme on suspicion of bid rigging; the story is very similar in department after department of the PMC.

One well-known company from Pune has withdrawn from the lucrative municipal water business because it decided that it did not want to get into projects where bribes and commissions needed to be paid.

While various citizens’ groups are doing commendable work in their chosen areas, Pune needs at least one citizens’ group which will undertake forensic accounting of civic spending with the help of public-spirited chartered accountants and forensic accountants who are specialists in detecting financial fraud. This would mean using a magnifying glass to scrutinise public spending and present the facts before the public.

Forensic accountants do this kind of financial fraud detection work day in and day out for corporate bodies. Driven by a spirit of patriotism and a love for their city, at least some of these experts would be most willing to use their skills to detect frauds in civic spending.

Civic activism in Pune will remain ineffective and incomplete without such an initiative.