Defence Finance: Authority Sans Accountability

Maj Gen Mrinal Suman (Gfiles Nov 2008)

One of the fundamental principles of management of a mission oriented organisation like the military is that authority delegated must match the responsibility assigned. Many tend to confuse power with authority. Whereas power refers to the ability to achieve certain ends, authority refers to a claim of legitimacy, justification and right to exercise that power. Therefore, grant of unambiguous authority is a prerequisite before any executive can be held answerable for the achievement of assigned objectives. Such delegation of authority must cover all resources, i.e. human, material and financial. On the other hand, accountability suggests imminence of retribution for unfulfilled trust or violated obligation.

Military has a very well structured command hierarchy. Every executive is fully aware of his responsibility and has been given the necessary powers. However, financial powers delegated to him can be exercised only with the concurrence of the designated Defence Finance officials. Every service organisation is wedged between two Defence Finance functionaries – Integrated Financial Advisor (IFA) and Controller of Defence Accounts (CDA). The primary role of IFA is to counsel executives as regards financial prudence to prevent irregularities to safeguard Government’s interests. CDA, on the other hand, handles functions related to budgeting, accounting, payments and internal audit. It also carries out Performance Audit and Super Review of Accounts of major units. Whereas the institution of CDA has been in existence for long, the concept of IFA is of comparatively recent origin.

Not withstanding the high sounding taxonomy, IFA is incapable of rendering any financial advice. Financial advice is generally defined as a well-considered economic counsel that offers multiple options to the decision maker with cost implications duly spelt out. IFA is neither educationally qualified (many do not know even elementary economics) nor trained (no training in defence economics or military matters is ever imparted to them) to provide any worthwhile financial advice. Many see their creation as a ploy to create additional appointments for the cadre.

Lack of Accountability

It is claimed that IFA have been co-located to ensure that executives take financially prudent decisions as every proposal gets vetted at the outset to ascertain that proposed expenditure is in consonance with the rules. Executives are thus bound to act as per the advice rendered by IFA. However, if any financial irregularities or omissions are noticed later on, IFA disowns any responsibility under the plea that decision making is the prerogative of the executives and they cannot be held accountable for the same. It is a strange and totally untenable logic.

If IFA has been positioned as an expert and if its advice is binding, no executive can be held responsible for any act of omission or commission. The onus should be totally on IFA for rendering flawed advice. The position of an executive is most unenviable. He cannot go against the counsel of his IFA. On the other hand, if he follows IFA’s advice, he is held responsible if any mistake comes to light later on. IFA decline to attend courts of enquiry proceedings, washing their hands off all faulty transactions, though done at their behest. Unfairly, executives are left to fend for themselves.

Usurping of Executive Powers

Over a period of time, IFA has acquired overriding powers by usurping executive functions without any answerability. It has taken upon itself to scrutinise technical aspects of proposals as well, a role which is totally outside its domain or competence. A few years ago, Border Roads Organisation (BRO) faced immense difficulties in achieving assigned targets due to the intransigence of an IFA who insisted on checking technical aspects of every proposal, though well beyond his competence. He wanted to be convinced as to why the proposed thickness of a road surface was 35 cm and as to why 25 cm would be inadequate. Soon he realised that his office could not even comprehend technical details and requested BRO to lend him some technical officials. He thus, usurped the powers of BRO and assumed excessive control of the whole organisation. He was commonly referred to as the Big Boss.

Exploitative Approach

A senior Defence Finance officer used to often compare his cadre with orchids. “We look pretty but we thrive on the very organisation we are detailed to serve,” was his common refrain. In one case, when a proposal to purchase staff cars was put up to IFA for his concurrence, he withheld concurrence on one pretext or the other till he was assured that the first car would be put at his disposal. It is common knowledge that every proposal for computers/laptops has to include their requirement to get through, thereby putting additional load on scarce financial resources of the organisation.

Such an approach also has an adverse effect on the standing and reputation of Defence Finance officials. They enjoy little respect in the organisation as they are seen as freeloaders who have to be tolerated.

Lack of Integrated Functioning

Defence Finance functionaries never identify themselves with the organisation that they are supporting. They are neither concerned with the performance of the organisation nor the wellbeing of troops. IFA can stay proposals for months together without any answerability. One functionary made lakhs of troops in a field area go without fresh meat as he declined to accord concurrence. As the service officers are intimately concerned with mission accomplishment and welfare of their troops, it is a common sight to see them pleading with Defence Finance official to progress their cases.

An interesting aspect of CDA functioning is performance audit under which it reviews the performance of selected units. It is totally unjustified. CDA is a part of the organisation and its own working has a major influence on the overall performance of the organisation. Therefore, it is ethically incorrect for it to assume the role of an examining authority. Many consider it to be a ploy to keep units under its thumbs. An adverse performance audit report can prove to be a big irritant and the unit gets hard pressed to explain all observations, howsoever innocuous and irrelevant they may be.

Condescending Attitude

The attitude of Defence Finance functionaries towards executives is always patronizing and haughty. They come to see themselves as granters of favours and not joint partners. They get more involved in comparing pay scales to draw equations with service officers rather than on achieving organisational goals. Rank equivalency seems to have become an obsession with most of them. While attending National Defence College course, one officer made a laughing stock of himself by frequently quoting his pay scale to claim seniority over military attendees.

The Way Ahead

While discussing indifferent attitude of Defence Finance officials, a senior bureaucrat opined that IDAS officers suffer from acute inferiority complex vis-à-vis IAS officers “Whereas IAS is at the top of civil services list, IDAS appears at a much lower slot. Having failed to qualify for IAS, they have to settle for IDAS cadre and generally are a demoralised lot. It is only after joining the service that they become aware of the power they wield through the purse strings,” he added. Another bureaucrat admitted candidly, “It is IDAS that calls the shots. IAS officers may pretend to be the bosses but they know that they cannot move an inch unless allowed by IDAS.”

IFA was introduced to reduce delays in obtaining financial concurrence by positioning and co-locating Defence Finance functionaries with major defence organisations. Sadly, the concept has degenerated into an alternate power centre with concomitant problems. They wield overriding authority but are not held accountable at all. Similarly, CDA, though part of the organisation assumes the role of assessor of performance. The whole arrangement is totally unfair to executives. No wonder they view IFA and CDA as impediments rather than help.

As IFA system has failed to deliver, it should be abolished. Rather than burdening organisations unnecessarily, we should revert to the earlier system. Moreover, financial advisers at all levels must be held accountable for the advice rendered. The concept of performance audit by CDA is antithesis of collective responsibility and must be done away with. Finally, a code of ethics should be evolved to ensure that Defence Finance functions with its own resources. This single step will help them redeem their standing.