Kannur airport company not under CAG's purview: Kerala govt

Kannur airport

Kannur: The Kannur International Airport Limited (KIAL) which is run by a public–private consortium won't be audited by the government hereafter. The Kerala government made a decision in this regard on the advice of the Advocate General, the senior law officer of the state. The latest decision is, however, contrary to a circular issued by the Ministry of Corporate affairs and the recommendation of the law secretary.

KIAL, the company which runs the latest airport to be opened in Kerala, was subject to audit by the Comptroller and Auditor General of India (CAG) until 2017.

Its authorities argue that it is not a government company as indicated in a letter issued by the government on January 5, 2018.

A company becomes a government firm only if the central or state government holds at least 51 per cent of the total shares, either together or separately. While the central government has no stake in KIAL, the state government's share is only 35 per cent.

However, law secretary BG Harindranath argued that the stakes held by the public sector undertakings in KIAL should be considered as government shares as per the provisions of the circular issued by the Ministry of Corporate Affairs.

Sixty-five per cent of the stake in KIAL is held by PSUs. Therefore, if the above clause applies, the airport should be subject to a CAG audit.

“The audit of KIAL is covered by the Company Law. Till the financial year 2017-18, auditing was carried out by a private firm appointed by the CAG. However, from 2018-19, a private auditor appointed by the annual general body meeting of shareholders is engaged in the task,” KIAL authorities stated.

KIAL officials also said that as per the Company Law of 1956, auditors appointed by CAG had to carry out the audit of firms in which the government and government companies had a minimum of 51 per cent stake. “However, this clause was dropped in the Company Law of 2013,” they pointed out.

KIAL has chosen the private auditor Deloitte and Touche, which is one among the four largest audit firms in India, the airport authorities said.

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