The highest levels of accountability must be ensured when public sector units invest in joint ventures in foreign lands, the Comptroller and Auditor General (CAG) said today.
"Good corporate governance requires the highest level of accountability, particularly wherever substantial public funds are invested in highly risky overseas ventures entered into by PSUs," the CAG recommended in a report tabled in Parliament.
On March 31, 2009, 29 government companies and one statutory corporation had invested Rs 4,371.06 crore in 129 incorporated JVs and Rs 8,959.69 crore in 167 joint ventures.
Apart from these 29 firms, ONGC made an investment of Rs 22,160.48 crore in 17 JVs outside the country. The oil major has three wholly-owned subsidiaries and one partially owned subsidiary in foreign countries.
ONGC Mittal Energy, a JV between ONGC Videsh and billionaire industrialist L N Mittal, incorporated in Cyprus, had to forego Rs 90.8 crore as it violated certain laws while prospecting in Nigerian exploration blocks.
"It is, therefore, desirable to devise an appropriate regulatory and oversight mechanism by government agencies to safeguard the interest of PSUs and ensure adequate accountability and transparency," it said.
The CAG said that in case there is gap of one year or more between the original due diligence performed and the actual date of an investment, another exercise should be carried out to ensure that there are no material changes in respect of the relevant factors for entering into the venture before making the actual investment, it said.
