Does Kerala CM Fear Accountability? War With Centre Over Allowing CAG To Audit Kannur Airport Company’s Finances

The Ministry of Corporate Affairs on Thursday (28 November) asked the Kannur International Airport Ltd (KIAL) to allow the auditing of its accounts by the Union government’s auditing authority Comptroller and Auditor General (CAG).

The Ministry also told KIAL that any failure on its part to do so would invite prosecution of its officials, especially board members.

A tug of war has been going on between the Union government and the Left Democratic Front (LDF) government in Kerala led by the Communist Party of India-Marxist (CPM) on who should audit KIAL accounts.

The Pinarayi Vijayan government in Kerala, after assuming power in 2016, did not allow the CAG to scrutinise KIAL accounts, arguing that the Centre’s share in the airport holding company was less than 51 per cent — and was not a government-controlled firm.

Instead, the State government appointed private audit firm Deloitte and Touche to scrutinise KIAL’s accounts.

The Corporate Affairs Ministry, in its letter to KIAL, pointed out to the holdings by the government and government-owned agencies in KIAL and said the government’s stake in the company exceeded 60 per cent.

According to the Corporate Affairs Minister, the Kerala government owns 32.86 per cent shares in KIAL, while Central and State public sector companies own 22.54 per cent stake in the firm.

The Airports Authority of India has 9.39 per cent shares in the company.

The rest 35.21 per cent of the shares are owned by qualified institutional buyers, individuals, companies, cooperative banks, societies and other entities.

The Vijayan government stance to keep out the CAG is at variance with the CPM’s stand on such issues. His government has also kept the CAG out of the purview of the Kerala Infrastructure Investment Board (KIIB).

In January 2014, CPM’s journal People’s Democracy had welcomed the Delhi High Court ruling favouring a CAG audit of private telecom companies. The High Court said it favoured such an audit since the companies had an agreement with the government to share their revenue.

The United Democratic Front (UDF), headed by the Congress, in Kerala has been insisting that the CAG audit KIAL and KIIB accounts. Congress member of the Legislative Assembly, V A Satheesan, has termed the CPM government’s stand as ‘unconstitutional’.

In a statement in September this year, he pointed out how the Centre provides a guarantee for the loans these organisations avail of and the bonds they float, to support a CAG audit.

The UDF has alleged that KIAL funds have been diverted and used for Vijayan’s tour in 2016, besides for the election of State Industry and Sports Minister E P Jayarajan. In order to cover up the “misuse of KIAL funds”, the CAG was kept out from auditing the airport company’s accounts.

Satheesan has pointed out how, on an earlier occasion, the CAG had pulled up KIAL for constructing a fence around the Kannur airport. He also contended that the private sector holding in KIAL is only 16 per cent, thus warranting CAG scrutiny of the airport company’s accounts.

KIAL was incorporated in 2009 as a private firm to build, own and operate Kannur airport, which was inaugurated in December last year. The company was converted into a public company in 2010.

The international airport was constructed to help the people of northern Kerala travel abroad and across the country. Until the airport was inaugurated, they had either to travel Mangalore or Kozhikode to take a flight.

Within nine months of its inauguration, the airport has handled over one million passengers.