New Delhi, October 23
An internal audit of the Ministry of Defence has revealed that items purchased by senior Army Commanders in two financial years — 2009-10 and 2010-11 — had caused a “loss” of Rs 103 crore.

Army commanders in each of the six regional commands have been delegated special financial powers to make emergency purchases. The in-house auditing team of the ministry has reported that it studied 55 cases in which this “loss” has been assessed.

The Northern Army Commander has special powers to make purchases worth Rs 125 crore per annum, including that for the counter-insurgency teams of the Rashtriya Rifles. Similarly, the Eastern Commander has powers to spent Rs 50 crore while the remaining commanders — of Western, Central, Southern and South-Western zones — have powers to make purchases up to Rs 10 crore each.

Apart from raising questions on use of funds, the report points to the use of suspected Chinese equipment for communication and the resultant security threat. The report says “mobile phones, satellite phones and certain communication (equipment) of suspected Chinese origin, need to be followed closely by the Military Intelligence to ensure that the software does not contain any spyware”.

The fact that the model and name of the foreign vendor has not been disclosed by Indian suppliers raises apprehension that these have actually been purchased from the “grey market” and are perhaps of Chinese origin, the report says. “Communication sets were procured on DG S&D rates. However, it is under arbitration as the vendor was not able to reveal the original equipment vendor,” said an Army PRO.

The report — a copy of which is with The Tribune — was submitted in December last year. The Army Commanders, the report claims, carried out purchases even as the Master General Ordinance (MGO) branch advised “not to procure” the proposed equipment as it was available in the central inventory or for which orders were being placed.

The report does not spare the MGO either and says: “In some cases, despite the availability of surplus stock in central inventory, the MGO branch authorised Command Headquarters to purchase ordnance stores and equipments… substantial quantities have been purchased, from the intermediaries acting as trading outfits for importing the product from some foreign vendors”.

Auditors have slammed the purchases saying “ these have been made from trading outfits instead of from indigenous/foreign vendors concerned.”

Pointing out at such expenses, the report says: “Tetra pack milk was purchased in excess causing a loss of Rs 30 crore”. The milk is purchased in areas where procuring fresh milk is a problem. “Procedurally, the demand for items is originated from the field formations and the same is deliberated at all levels - Brigades, Divisions and Corps,” said the PRO.

The report slams the integrated financial advisors from the Indian Defence Accounts Services (IDAS) who are attached with each of the Army Commands. “It has been noticed during scrutiny critical questions” were not raised. However, the report probably goes overboard in questioning the purchase of bullet proof jackets by the Northern Command which is tasked with security of Jammu and Kashmir. There has been no central procurement of bulllet proof jackets for the past five to six years as old General Staff Qualitative Requirement of such gear was under review. The jackets are needed on daily basis and the Commander could not have waited as the security situation does not allow such leverages.