OREANDA-NEWS. June 24, 2011. Reliance Industries has blasted the national auditor, whose stern remarks about capital spending in the company's trophy D-6 oil block have sent its shares tumbling, and said the reported comments reflected "complete misunderstanding of legal and contractual issues" and had hurt its reputation.

The company also challenged the views of the Comptroller and Auditor General (CAG) in a letter to the oil ministry, which itself has responded to the leaked draft report cautiously saying it had an open mind on the issue and would act on valid issues when the final report is released.

"While the actual contents of the report are not available to us, from the media reports doing the rounds, it is extremely disheartening to note that there is complete and basic misunderstanding of legal and contractual issues which we presumed had been sufficiently clarified in our responses," Reliance said in a letter to the oil ministry on June 21. The company declined comments on its letter.

The CAG has been in the limelight after its estimate of losses to the government in the 2G spectrum scam fanned the controversy surrounding the sale of airwaves and culminated in the arrests of former telecom minister A Raja and top executives of several telecom companies. The CAG's latest report is significant in light of ongoing investigations by the Central Bureau of Investigation ( CBI )) into the dealings of the oil ministry officials with energy companies, including RIL.

The draft report, submitted earlier this month, scrutinised the accounts of Reliance's D-6 block and questioned its move to raise capital expenditure, which the director general of hydrocarbons, the oil ministry's technical arm, had approved.