PTA suffers loss of Rs7.6 bn, Gilani informed -Pakistan Press Foundation (PPF)

Paksitan Press Foundtion

PTA suffers loss of Rs7.6 bn, Gilani informed

Abdul Sattar Khan

LAHORE: A senior official of the Pakistan Telecommunication Authority (PTA) has been accused by his own chairman of causing huge financial losses of Rs7.609 billion to the national exchequer by extending undue favours to some preferred telecommunication companies of the country.

In an official report prepared by PTA chairman Dr Mohammad Yaseen and submitted to Prime Minister Yusuf Raza Gilani by the federal cabinet division, it has been recommended that PTA Member (Finance) SNK Ghaznavi be suspended immediately till the completion of an enquiry to be conducted by the Federal Public Service Commission (FPSC) for having committed gross negligence and misconduct, and causing huge financial losses to the federal kitty.

According to the report, which in fact discusses the performance of the member finance, the national exchequer has suffered a huge loss of Rs5.55 billion due to failure in recovery of revenue from Wireless Local Loop (WLL) license holders; Rs530.816 million due to non-encashment of Stand By Letter of Credit (SBLC); Rs628.93 million due to failure in revenue collection from small companies; Rs820.918 million due to erroneous deposit of Federal Consolidated Funds (FCF) and another Rs80 million loss due to embezzlement.

Ghaznavi, however, in response to questions sent to him by The News claimed in a written reply: All the items in the report were properly replied to the Cabinet Division. Regarding the recovery from WLL licence holders they are willing to pay in instalments, but because of the economic conditions in the country and slackness in their business, they cannot pay in lump sum. There is no loss to the state because penalty is charged at the rate of two percent per month on the outstanding amount, he maintained.

Similarly, SBLCs are securities furnished by operators to fulfil the rollout obligations by them as per the licence conditions, which are watched by DG (Licensing) and DG (Enforcement) directly reporting to the chairman. “The SBLC of M/s Telecard, which completed its roll out late, was retained by DG (Finance) because they were not making payment and SBLC of M/s CircleNet it is subjudice in the Islamabad High Court. As per section 12(3) of the act all the surplus at the end of financial year are deposited in the FCF of the government. Audit has objected that in the Audited Accounts for that year the amount to be deposited was Rs720 million, while Rs820.9 million was deposited.

Regarding embezzlement of Rs80 million, it was done by the then DG (Finance) who has fled to the US. On an inquiry conducted by a team headed by Member (Finance) the case has been filed in NAB through Cabinet Division.

And the Member Finance claims all the above cases were approved by the Chairman. Similarly, in a brief written reply provided to The News, the PTA chairman claimed: “All official reports have a background of certain events, facts and figures which are verifiable. In case of PTA, once such reports are submitted to the competent authority, they are dealt with under Section 3(5) of Pakistan Telecommunication (Re-organization) Act”.

Holding Member Finance Ghaznavi directly responsible for making no effort to recover dues under various heads, the report’ however, says: “A huge amount of recovery/receivables have not been fully collected since 2005 and PTA is issuing belated show-cause notices now and filling the recovery cases in the courts whereas many of the operators have already left their companies and sold their shares which have now made the issue more and more complicated since the recovery cannot be made from them”.

“The number of licences issued by PTA was not reconciled between licensing and finance divisions of PTA as the member finance did not take any action as a result of which the finance division did not even know about so many licensees and therefore did not issue them any demand note,” the report further says.

Tracing this multiple area of recovery which has already caused a huge loss worth billions of rupees, the report says the Economic Coordination Committee (ECC) in April 2006 granted four years moratorium for 50 percent payment of balance spectrum fee of Rs6.703 billion due to be paid by those WLL operators who were using commercially important frequencies of 450 and 1900 MHZ.

In the light of the decision of ECC, the last date for payment of balance amount was March 17, 2010. However, instead of getting this payment in lump sum as per the decision of the ECC, Member (Finance) Ghaznavi issued the letters of instalments for recovery of the same amount in 10 equal instalments without the approval of the authority.

When this issue was brought into the notice of the PTA chairman, he instantly withdrew these letters of instalments against which all the operators have gone into the court as a result of which this huge amount has been stuck up. These letters of instalments were issued allegedly in clear violation of license condition 1.3.1 (b) whereby licensee was required to make the remaining 50 percent of initial spectrum fee in lump sum. This gross negligence was even realised by the Director General (Finance) in his letter. Due to this situation an amount of Rs5.55 billion is still receivable from five WLL operators.

Similarly, the loss of Rs530.816 million was incurred on account of non-encashment of Stand By Letter of Credit (SBLC) deposited by two Long Distance International (LDI) operators. As per the details available in the report, an LDI namely Circle Net deposited an SBLC amounting to Rs530 million valid up to August 2, 2005 as a guarantee for roll out.

On completion of first year of the roll out, SBLC was exchanged with revised SBLC of Rs290 million valid up to August 2, 2006. As the licensee could not meet the roll out target of the second year, SBLC of Rs290 million therefore became en-cashable and should have been forfeited at this stage. The expiry date was clearly given on the SBLC, but the finance division did not en-cash the same nor brought this fact of expiry to the knowledge of the authority which resulted sustaining a financial loss to the tune of Rs335.095 million.

Similarly, another LDI namely Telecard deposited an SBLC amounting to Rs580 million valid up to July 23rd 2005 as a guarantee for roll out. The licensee submitted revised SBLC valid up to August 2, 2006. As it could not meet the roll out target for the third years, SBLC of Rs174 million became en-cashable according to the conditions of the SBLC.

Once again the finance division under the direct supervision of Member Finance did not en-cash the same upon its expiry despite being mentioned on the SBLC nor bothered to bring the same in the notice of the authority thus conveniently allowing a financial loss of Rs195.721 to PTA.

Likewise on the insistence of Member Finance, the workflow has been changed as a result of which DG Finance and DG Commercial Affairs have been placed under the direct supervision of Member Finance instead of the PTA chairman. When both officials started directly reporting to Member Finance, the former Finance DG managed an embezzlement of around Rs80 million by opening of fake bank account and deposited PTA revenue recovery cheques. The case is now under investigation of NAB. Since the information of all bank accounts was suppose to be in the knowledge of member finance who was suppose to take preventive measures to stop such possible frauds, he was cross-examined in this particular case by NAB on various occasions and the final decision by the court in the case is still awaited.

The report has mentioned another loss of Rs623.93 million to PTA due to failure in various type of revenue collections from various companies. In this connection the non-issuance of Numbering Demand Notices (NDN) is figured prominently as the Service Division PTA duly collected the processing fee and first year annual charges on account of NDN in advance and passed the same on to finance division for deposit. However, in spite of repeated requests by Services Division PTA, the finance division time and again refused to take responsibility for either issuance of Demand Notices for subsequent annual charges or for pursing the resultant recovery cases.

Resultantly, PTA suffered a loss of millions of rupees as demand notes were not issued for subsequent years and therefore no recovery was made. Similarly an amount of Rs66 million was short demanded by the finance division in case of five different operators. In the cases of Radio Based Station (RBS) licensees alone, demand note of Rs242.456 million were issued in this financial year which were due to be issued in previous financial years.

While referring to an audit para, the member (finance) has also been charged in the report for not depositing a surplus of Rs702.177 million in Federal Consolidated Fund (FCF). When the point was raised by the audit authorities, member (finance) replied that Rs820.918 million was deposited in public account. On this the report quoted the audit authorities for observing that ‘the amount due to government of Pakistan (Federal Consolidated Fund) was deposited in the public account due to procedural lapse’.

Since the member (finance) approved deposits in public account instead of Federal Consolidated Fund without the approval of the authority, the case was taken up by the FIA and the investigations are under way.
Source: The News
Date:3/14/2011