Defence divisions spent Rs23bn in excess of budget
By Bhagwandas
KARACHI: The defence division working under the ministry of defence and the defence production division under the ministry of defence production spent over Rs23 billion more than their budget during the financial year 2008-09, says a report prepared by the Auditor-General of Pakistan.
Besides, financial irregularities of over Rs2.5 billion – about two per cent of the audited amount – were detected in the accounts of defence services, according to the audit report.
The report says that the defence services were allocated Rs308.9 billion for 2008-09, but their expenditures went up to Rs332 billion. The overspending of Rs23 billion was a result of pay-scale revision, enhancement in dry ration price and revision in ration scale of the army to bring it at par with other services.
The Rs2.5 billion financial irregularities were found in the audited accounts only, as the auditor-general examined an expenditure of Rs137 billion, which was less than half of the total budget. The report says that Rs73 million dues pointed out by the audit were also recovered during the fiscal year.
Some of the repeated financial irregularities found by the audit were: irregular and unauthorised expenditure (Rs809 million), violation of rules (Rs801 million), non-recovery (Rs379.8 million), diversion of receipts (Rs168 million), misuse of land (Rs82 million), blocked money (Rs75 million), losses (Rs73 million), financial indiscipline (Rs41 million), unjustified payments (Rs35 million), weak contract management (Rs34 million), avoidable/infructuous expenditure (Rs3.5 million), overpayment (Rs3.39 million) and doubtful payment (Rs1.6 million).
Unauthorised expenses
The military dairy farms of Renala spent Rs679 million in 2006-08 for local purchase of fresh milk without government sanction. The audit did not accept the reply of the military dairy farms that sanction would be obtained and produced in due course, as the purchase was to be done after the sanction.
Irregular expenditures
The record of the Garrison Engineer (Army) II Malir Cantonment showed that four approvals – each valuing over Rs1 million – for abnormal repairs were issued by the quartermaster general. Four contract agreements amounting to Rs9.96 million were concluded for repair/renovation of military buildings in the Malir cantonment, according to the audit report. Under the existing rules, the quartermaster general does not have financial powers to allow abnormal repairs.
Similarly, five sanctions amounting to more than Rs15 million for works in the Malir cantonment were issued by the corps commander beyond his financial limits.
Non-recovery
More than 50 officers in the Kharian cantonment drew the house rent allowance while living in a government accommodation. According to the audit, this way they had received an overpayment of Rs2.3 million. Similarly, 30 female staffers of a hospital in Okara were getting the house rent while living in a government accommodation. They received over Rs376,941 extra.
Diversion of receipts
The audit report says that the military farms of Lahore had sold a piece of land costing Rs134 million to the Punjab government for the construction of a ring road but the money thus received was not deposited in the government treasury. According to the audit, the National Defence College (now university), Islamabad, received Rs35.7 million from the cabinet division and its respective divisions between 2001 and 2006 on account of various courses, but it deposited the amount in the Command Fund instead of the public funds in violation of government regulations, thus causing a loss to the public exchequer.
Misuse of lands
Over 147 acres in Rawalpindi reserved for camping, testing and other purposes were given to the army housing directorate for carrying out housing schemes without government permission. Of the 147 acres, 95 acres were reserved to be used as a camping ground near Rawat, 30 acres as a tank testing area and 22 acres for central mechanical transport and stores department. However, the lands were handed over to the directorate for carrying out housing schemes without government permission.
Similarly, 17 kanals and 10 marlas of A-1 class land (meant for active use by military buildings, unit lines, parade grounds etc) in the Rawalpindi cantonment were being used unlawfully by the Blue Lagoon Hotel and Restaurant since 1994. The land was formally leased out to the Army Welfare Trust in 2008 subject to reclassification on prevailing market rates, which has not been done, the audit report says.
Money blocked
The Heavy Rebuild Factory, Taxila, purchased simulators for Al-Zarar and Al-Khalid tanks for over Rs71 million ($1.23 million) in June 2005 from China. The simulators arrived in 2007.
According to the deal, physical layout and space for installation of simulators was required to be provided by the user within two months of signing of the contract. The firm requested the HRF several times to intimate the place for installation, but despite the passage of over four and a half years, the HRF could not initiate the civil works for the construction of place where the equipment was to be kept.
The auditors say the equipment was lying in the open without any shed and was exposed to the risk of being affected by rains and dust. The ministry of defence was informed about the money blocked this way in November 2009, but it neither arranged a meeting to discuss the issue with the auditors nor intimated any progress in the case till the finalisation of the audit report.
Losses
The Cantonment Board Karachi was charging conservancy tax at the rate of two per cent instead of seven per cent as prescribed under Section 30 of the Cantonment Act, 1924, causing a loss of over Rs31 million, according to the audit.
Similarly, the Cantonment Board Clifton could not recover over Rs27 million dues from the DHA Cogen plant, which remained out most of the time since its inauguration, for not delivering the water quota to the cantonment board.
Financial indiscipline
The auditors find that the Cantonment Board Rawalpindi had not been recovering property tax from a commercial building comprising plazas and banquet halls (Survey 540/541, The Mall Road) for the past many years. The tax, according to the audit, calculated since 2005 totalled over Rs12 million.
The Cantonment Board Peshawar that had given advance payments/ loans of over Rs3 million to its various officials had made no serious effort for the recovery, according to the audit.
Unjustified payment
Although a college planned at the Korangi Creek base was shifted to Peshawar, Pakistan Air Force continued construction of the college at the Korangi Creek base and spent Rs13 million which was irregular, the audit says.
Pakistan Navy spent over Rs11 million on repairs of houses at Zamzama and NORE-II under minor works. The audit says that these were in fact abnormal works and had been done this way to avoid seeking government permission.
Weak contract management
The PAF had purchased goods from a US-based firm but when the PAF’s procurement directorate wanted to recover dues ($ 36,464) from the firm, it could not be located, even the defence attache (procurement), Washington, could not trace the firm through State agencies/ authorities. Another US firm had also overdrawn $25,201 against rejected stores, but the funds, outstanding since 2000, could not be recovered. Certain stores worth over Rs13 million were purchased by the HRF Taxila, which were later rejected and were to be replaced. Neither the amount was recovered nor the stores replaced, says the audit. Similarly, 90 per cent of over 200 grinding wheels imported by the HRF were broken/ defective, but no recovery had been made.
Avoidable expenditure
Two contractors of the GE (Army I) Okara cantonment were allowed contractor’s fees of 277.70 per cent and 277.84 per cent above the MES Schedule of Rates 2000, which was exorbitant as compared to rates allowed to other contractors which ranged between 50.97 per cent and 51 per cent.
In the Multan cantonment, small fly-proof wooden doors were purchased at a cost higher than large doors, though it was said the wood quality was different, it was not verified to the audit. The contractor received a favour of Rs645,165, according to the audit.
Doubtful payment
The field veterinary detachment (FVD), Jaglot, (Northern Areas) claimed different ration allowance in respect of 67 junior commissioned officers and other ranks – twice it claimed Rs666,160 and once Rs178,779 totalling over Rs1.5 million, even signatures of officers did not match, but when the audit pointed out the irregularity the FVD commanding officer was asked to deposit the entire amount in the government treasury.
In another case, the FVD claimed TA/DA of Rs155,493 for nine soldiers upon their posting in the unit. However, scrutiny revealed that fake documents were attached as the names and signatures did not tally with each other. The payments were claimed in the name of officer commanding the unit. When the audit pointed out the case, it was informed that a fraudulent payment of Rs136,000 of TA/DA had been recovered from the unit and deposited in the treasury and that the remaining amount of Rs19,493 had been paid correctly.
Cash payment
A lieutenant colonel of the military vehicles research and development establishment, Rawalpindi, was paid Rs1.55 million, which is in violation of standing government orders, in connection with the International Defence Exhibition and Seminar (Ideas) during the fiscal year 2008-09.
Overpayment
The Garrison Engineer (Army-I) Malir purchased 1,631 Malaysian doors at the rate of Rs6,875 though identical doors were purchased at Rs4,796 during the same period. This resulted in overpayment of Rs3 million. The recovery was not reported to the audit.
Recommendations
The audit report says the procurement of supplies and execution work were the weaker areas in the defence ministry and the defence production ministry requiring special attention. The organisations susceptible to costlier errors are the procurement directorate, military estate offices, cantonment boards and military engineer services.
Pointing out to the fairly comprehensive existing financial management advice system in the form of finance advisers, military accounts department and chief accounts and finance officer, the audit stresses that more involvement of these will bring better financial discipline in defence services.
The audit recommends that rules, regulations, procedures and instructions be implemented in letter and spirit and the relevant personnel be trained; internal controls be reviewed and strengthened to stop recurrence of financial irregularities; timely investigations be conducted and responsibility for loss be fixed and amount involved be recovered, where inevitable written off and remedial measures be undertaken to avoid recurrence of such losses.
Auditor-general Tanwir Ali Agha, in his report, emphasises that rules and regulations be studied, system improved and internal controls strengthened to ensure efficient, economical and effective use of national resources.
Source: Dawn
Date:5/31/2010
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