A fraud involving the embezzlement of Rs544 million from the general provident (GP) fund and pensions of the Hyderabad District Accounts Office (DAO) has been unearthed, The News learnt on Friday.

The fraud was detected by an inquiry committee headed by the Defence Audit (South) Karachi DG, and the case is now with the National Accountability Bureau (NAB) for further investigation and recovery of the misappropriated money.

After interviewing three officers familiar with the case and obtaining crucial documents, The News came up with many revelations.Three successive inquiries were ordered by the controller general of accounts, (CGA) Islamabad that came up with mixed findings.

The first inquiry was “compromised” in nature, the second lengthy and extremely detailed on the basis of which NAB initiated the probe, and the third aimed at “nullifying” the impact of the second inquiry as the auditor general of Pakistan’s (AGP) office was accused of interfering in it for some “obvious” reasons.

The Sindh government, whose money was usurped, was not kept in the loop and informed about the scam “very late”. Subsequently, the provincial government has suspended around one dozen officers of the finance department and initiated an inquiry against them.

However, the Sindh accountant general (AG) and the AGP are “reluctant” to take action against their officers, who were involved in the fraud.The finance department has written a letter to the AG and the AGP to this effect. As preliminary evidence indicated embezzlement of government money across the province, NAB has initiated an inquiry in the major cities of the province.

Three inquiries

The first six-member inquiry committee, headed by a Sindh deputy accountant general, was formed on September 21, 2011 vide the Sindh AG’s letter No Admn/Conf/Discip/O.O./163. It came up with ‘highly compromised findings” after three months, an official requesting anonymity told The News.

He said despite the available and accurate information of the fraudulent payments, the committee concluded that certain irregularities amounting to Rs20 million were “noticed” in the GP fund and pension payments and justified a suspected adjustment entry of Rs24.266 billion that was posted in the Hyderabad DAO’s accounts in final account for June. No action was taken on the findings of the first committee.

After learning about the ambiguous manner in which the committee handled the probe, the high-ups ordered another inquiry under Defence Audit (South) DG Ahsan Ali Kehar, a grade-20 officer, on January 4, 2012 vide the CGA office letter No 1843/CGA/Vig/11-7/2011/24.

After one-and-a-half months, the two-member committee concluded that an established embezzlement of Rs378.290 million had been committed with a suspected embezzlement of Rs165.840 million.

The CGA forwarded the inquiry report to NAB authorities on March 7, 2012 for necessary action. Curiously, after it was sent to NAB, the AGP’s office termed the report unsatisfactory and asked the inquiry officer vide its letter No 235/Dir(A)2-9/2012 dated March 16, 2012 to include the name of the then Sindh AG in the scam.

When the inquiry officer refused to obey the orders terming them unfair, the high-ups expressed their “displeasure” vide letter No 310/Dir (A)/2-9/2012 dated April 27, 2012 and later transferred him as “punishment” to Islamabad from Karachi.

The third inquiry committee, comprising seven members, was formed on April 6, 2012 by the CGA, headed by the director (vigilance) of the CGA’s office, a grade-19 officer, to further probe the matter to the “satisfaction” of the high-ups. The previous inquiry was termed unsatisfactory for the reason that it gave “overlapping findings”, much to the relief of the officers held responsible for the embezzlement by the second committee.

Inclusions and omissions

The third committee included the names of the then Sindh AG and the additional AG were included in its report without documentary evidence for allegedly accepting the adjustment entry of Rs24.266 billion.

The committee only discussed one issue - the transfer entry - posted in the accounts of the Hyderabad DAO in the final account for June.

The committee deliberately excluded the name of the deputy AG (accounts), who is the supervising head of the accounts section. At another place on page 13 of its report, the committee stated its observation regarding the adjustment entry, “There is nothing on record to suggest that the DAO had obtained the required approval from the Sindh AG after fulfilling the prescribed procedure for the adjustment entry.”

In addition to the self-contradictory observation, the committee totally ignored the findings of the first inquiry committee in declaring the adjustment entry of the huge amount of money justified.

The last committee also excluded the names of the “powerful” supervisory officers, whose role was questioned by the second committee.

The official said the worst part of the proceedings was the deliberate and willful ignorance of the role of the audit and Project for Improvement of Financial Reporting and Auditing (PIFRA) consultants in the detection of the fraud and abnormal bookings.

The three inquiry reports did not contain a single word about the failure of the audit consultants in discovering the abnormal practice during the course of the certification audit of the Hyderabad DAO.

Even, the post-audit was conducted without utilising the system support through the audit command language. The PIFRA consultants share equal responsibility for their failure to bring the abnormal trend to the knowledge of the senior management of the Sindh AG or the CGA’s office.

The official said it was the main responsibility of the PIFRA consultants to generate and analyse different reports and submit them to the management for corrective action, if required.

Besides, a clearing house meeting was regularly held in the last week of every month under the auspices of the CGA at the office of the Auditor General of Pakistan Revenues, Islamabad to clear and make necessary adjustments in the accounts. But, it also failed to point out the malpractice.

The AGP or CGA’s office did not take departmental action against the defaulters. The Sindh finance department was informed at a very later stage about the plundering of their funds by the accounts staff in Hyderabad.

“The inaction and apathy on the part of AGP or CGA’s office are beyond understanding,” the officer said. At present, the NAB is investigating the case and has recovered a substantial amount of the embezzled money from the defaulters.

An official of the finance department said two police officers and few others have entered into a “plea deal” with NAB and submitted Rs60 million. He said the finance department had suspended five officers for the Hyderabad scam. When another fraud was reported in Sukkur, the department suspended seven more officers.

The officer said as there were abnormalities in the GP fund almost everywhere, the finance department had recently centralised it, meaning that the AG’s office would not issue funds until the department gave its approval.