Auditor general flags violations in govt employee loans

ISLAMABAD: Responding to concerns raised by President Dr Arif Alvi regarding the lack of transparency and adherence to criteria in granting loans to government employees, the Auditor General of Pakistan (AGP) has conducted a special study, revealing weaknesses and rule violations in the existing system of long-term advances to federal government employees.

The study recommends improvements to the system.

President Alvi had expressed the need to evaluate the loan-granting system to ensure transparency, merit, and fair play, highlighting concerns about the non-observance of criteria, specifically the existence of separate “regular” and “out of turn” lists for granting loans without clear criteria for prioritisation.

The issue surfaced during hearings of representations filed by various government officers and organisations, uncovering incidents of preferential treatment and violations of merit in loan extensions to government employees. These violations were found to be in contravention of general financial rules and approved criteria as of December 7, 2015.

The president had also noted that principal accounting officers of ministries sent employee lists to AGPR at their discretion, leading to preferential treatment and litigation.

In response to the president’s concerns, the AGP conducted a special study on long-term advances to federal government employees, revealing violations and discrepancies due to non-observance of existing rules and procedures. The study recommends eliminating preferential treatment and outlines areas for improvement in the loan-granting system.

It was established in 2015, in consultation with AGPR, that a revolving fund would allocate 10 percent for hardship cases, 25 percent for priority, and 75 percent for the general waiting list. However, the study found loans in hardship cases were granted without the hardship committee’s approval, and the 2015 decisions were not adhered to.

The study suggests that in the presence of a hardship provision, a separate priority list is unnecessary, emphasising strict adherence to the 10 percent quota for hardship cases. It calls for the processing of cases based on the hardship committee’s recommendations, as approved in 2015. Additionally, the study recommends framing proper rules and regulations for advance disbursement, displaying lists on the AGPR website for transparency, observing a minimum waiting period of three months for loan processing, and using the SAP system instead of manual processing.