AG recovers Rs 98 bn, points out corruption of billions

ISLAMABAD: In its annual report 2016, the Auditor General of Pakistan reported tens of billions of rupees fraud, embezzlement, thefts and misuse of public resources in different federal, provincial and district government departments’ accounts besides making recoveries of Rs98 billion out of irregular expenditures.

The report, released in November this year, covers the financial year 2015-16 and reveals that a total of Rs98.35 billion has been recovered as against the recovery of Rs40 billion in 2014-15. These recoveries were made out of irregular spending of government agencies.

The report only in the taxation side of the government revealed losses of Rs20b due to fraud; Rs4b due to blockage of revenue; Rs8 billion due to non-recovery of adjudged revenue; Rs1.9b due of excess of payment of rebates; Rs5.7b because of non-realization of sales tax; Rs2.8b due to inadmissible adjustment of input tax; Rs1.6b owing to unlawful use of premises export oriented units; Rs1.9b for non-short realization of ICT, revenue receipts etc.

Highlights of the report include that the title of 4147.85 acres land possessed by Railways in DG Khan and not transferred in the name of Pakistan Railways; a commercial plot of a five star hotel near Convention Centre Islamabad was auctioned by CDA at lesser value which resulted into a loss of Rs7,492.78 million; an amount of Rs2.2b for 74,396 beneficiaries of BISP remained undrawn for the concerned two years which should have been deposited into the government treasury. The BISP management violated its own principles given in its payment manual.

Ministry of Ports and Shipping in violation of the contract paid an amount of Rs4.6b to the contractors without imposing the delay damages after expiry of the contract period. KPT had outstanding recoveries amounting to Rs1.2b from 45 government departments and agencies. 84.09% dues pertained to WAPDA and the remaining dues pertained to other 44 departments and government agencies.

Pakistan High Commission (PAHIC) London awarded contract of Rs143.594 million to M/s Gerry’s for processing of visa applicants. The mission failed to provide the record relating to tendering process, copy of contract and integrity pact to audit. Award of contract without PPRA Rules is held unauthorized. Four Pakistani Missions Abroad paid rent amounting to Rs22.742 million for vacant residences, which resulted in loss to the Government. The matter needs to be inquired for fixing responsibility and effecting recovery from the concerned where required.

ERRA did not intimate the closing balance of Rs978.450 million in Annual Financial Statements to the Finance Division, which was violation of ERRA Financial Rules. Furthermore, an amount of Rs292.312 million lying in secondary accounts of PERRA and SERRA, which are lapsable was not transferred to ERRA Fund.

After completion of construction work, assets amounting to Rs34.299 million belonging to ERRA were not handed over by NHA to ERRA. Irregular retention of assets by NHA may result in loss of Rs34.299 million to ERRA.

ERRA made a payment of Rs127.5 million to the contractor against fictitious measurement, which needs to be investigated to fix responsibility and to recover the illegal payment. Project Management Unit Bagh City Development Project (BCDP) deducted an Income Tax of Rs278.6 million from the contractors during 2012-13 and 2014-15 but the amount deducted was not deposited in Government treasury, resulting in loss to the Government. Ministry of Finance granted exemption of Zakat on regular Income Certificates, Pension Benefit Accounts amounting to Rs65 billion which was held as unjustified and doubtful.

In 04 Naval units, A-1 land was let out for commercial entities. All revenue generated from these activities estimated at Rs468.9 million was deposited into shop’s account instead of government treasury. In MEO Quetta, an amount of Rs3 billion was placed for acquisition of land. The payment of the same to the landlord could not be verified due to non-provision of acquaintance roll showing disbursement of compensation. Hence the expenditure considered as doubtful. Loss to cantonment fund due to non-recovery of hoarding charges from CSD- Rs13.3m. Non receipt of deficient stores Rs510m.

CAA Management awarded work Package-III, Passenger Terminal Building (New Islamabad International Airport Project) to JV M/s China State Construction Engineering Corporation- FWO at cost of Rs20.2 billion. The lead partner of the JV was not registered under relevant specialization which was mandatory requirement of the award of work. Non-adherence to PEC Bye Laws caused irregular/unauthorized award of work to a non-specialized firm/JV for Rs20.2b. Authority released the Bank Guarantee of Rs1.5b to the contractor without compliance to the DAC directives regarding settlement of issues, recovery of losses and initiating disciplinary action against the responsible(s).

Additional Mobilization Advance amounting to Rs1.5b was paid to a contractor by NHA beyond the provision of contract agreement. Plant and machinery which were handed over to contractors of Islamabad-Peshawar Motorway (M-1) were not handed over to NHA after completion of work and cost of these items and rent for the period after completion of work up to 30th June, 2014 on current market rates as per contract clause has not been recovered from the contractors. This resulted in non-recovery of Rs2b.

Despite directives of Islamabad High Court, Pak PWD did not receive back the funds paid to M/s NLC against Mandra-Chakwal and Sohawa-Chakwal Roads, on the plea that the contractor filed intra court appeal in the Islamabad High Court against the said decision in April 2013, whereas latest status of the intra court appeal with reference to its acceptance as well as further order was not forthcoming from the record. Moreover, the employer also remained unable to adjust the work done of IPC-I & II amounting to Rs612.61 million.

This resulted into non-receiving of principal amount of Rs2.3b and interest accrued thereon amounting to Rs641.07 million worked out on the basis of 10% interest rate per annum.

In the audit of the provinces’ account, the Audit Department reported major violations and irregularities. In the case of provinces, the recoverable amount pointed out is Rs26.78 billion out of which recovery made at the instance of audit is Rs7.3b.

Following are the major observations pointed out by the Provincial Audit Wing during the course of audit: Irregular expenditure due to violation of tendering process Rs647 million; Un-authorized payment of salary through manual bills Rs535 million; Un-authorized and irregular purchase of plant & machinery and other assets Rs726 million; Irregular procurement of stock Rs4.106 billion; Non production of voucher accounts/record Rs3.947 billion; Less/non realization of Rs212 million on account of usher and abiana from farmers; Executing agency did not obtain the performance/additional performance security for Rs55.5b; Amount of Rs535 million was paid to Land Acquisition collector to acquire land for work, out of which an amount of Rs241 million was misappropriated by the officials/officers LAC; Misuse of the subsidized scheme of sale of tractors to the farmers/growers Rs7.5 million; Amount of Rs32.8 million due from various contractors on account of Shoe Contract, Flower Contract, Car Parking, from sixteen units of Aukaf in Sindh.

In the district government accounts, the Auditor General pointed out recoverable amount of Rs4.8b out of which recovery made at the instance of audit is Rs1.6b. The district government authorities also did not provide record to the auditors resulting in objections involving Rs2.3b.

Following are the major audit observations raised by District Audit Wing during the course of audit: Non-recovery of outstanding Dues amounting to Rs50b by Deputy Managing Director RRG KW&SB and Director Municipal; Non-auctioning of Leasehold Rights for Recovery of Advertising Fees Rs190b by Senior Director Local Taxes KMC Karachi; Unauthorized Maintenance of District Government Receipts Accounts Rs1b by EDO F&P; Non deduction of Price Variation on Account of Diesel and Bitumen Rs22 million by DO Roads; Execution of works without Job Mix Formula Rs178 million by District Officers Buildings and District Officer Roads Faisalabad; Irregular Expenditure in violation of PPRA rules Rs18.8 million by different DDOs; Expenditure without Technical Sanction Rs79 million; Expenditure without maintaining measurement Books Rs116 million; Land Acquisition Collector PDA earned bank profit of Rs94.529 million and did not deposit into Government Treasury; CCO District Council Bannu failed to recover outstanding share/load from Municipal Committee Rs40b.