All is not so clean

AG hints at massive irregularities in expenses on Orange Line, Covid-19

Massive irregularities worth billions of rupees were pointed out in Orange Line Metro Train and Covid-19-related expenditures by the Auditor General of Pakistan (AGP) while authorities are yet to wake up and take action.

As per the special audit report submitted to the Punjab Assembly recently, irregularities worth over Rs258 billion were found in Orange Line, including 71 billion rupees of anomalies in the civil work.

The AGP identified irregularities in contracts, overpayments and tax exemptions. Purchases higher than the market rate and tax exemptions were also noticed, along with irregularities of more than Rs93 billion in payments to Chinese and local contractors and discounts on various issues.

Speaking to Bol News, leading tax consultant and expert on accountability-related matters, Dr Ikramul Haq, said the alleged irregularities of billions of rupees indicate a lack of transparency and rampant corruption in the public spending apparatus.

For him, the report of AGP highlights problematic areas of Punjab government spending in the Orange Line project. There were lapses in granting contracts, abuse of tax exemptions and instances of overpayments.

Dr Haq maintains that it is shocking that a huge amount exceeding Rs 85 billion was earmarked for the early completion of the project and Rs 93 billion were paid to Chinese and local contractors. AGP observed that “the irregularities were mainly due to weak administrative and financial controls”.

Economist Dr Aima Mehdi while shedding light on the audit report said that the Punjab mass transit authority has overpaid the construction cost of the Orange Line due to negligence at the top.

For Dr Mehdi, an audit of financial controls provides evidence of a lack of hindsight in procuring the loan. Repayments have been made on higher, ad hoc rates which do not comply with market conditions. The entire financial prospects for this project appear to be a fiasco with no accountability whatsoever. There have been overpayments, undocumented payment proceeds, and nonpayment of using government-rented land to mention a few.

“The report shows that work was carried out beyond the scope of the project, rendering it inefficient,” she pointed out while adding the question remains why such events recur in Pakistan. Building a transport network is no rocket science in today’s world. The project could have been easily executed efficiently if it wasn’t on a competitive basis.

Agreeing with them, Chartered Accountant Daniyal Baqir Ali, who is an audit expert said, “The audit report can be summarised as a mixture of “bad governance” and “poor contract management”.

For him, the report has shown irregularities, inconsistencies, bad planning, lacking internal controls, awarding of contracts without merit, non-recoveries, non-providence of data and much more, all boils down to the fact that there is a lack of ownership and accountability of public money.

The chartered accountant said government projects the world over directly or indirectly burden the common man. According to him, a modern transportation system is undoubtedly a need of today and countries must plan to provide such facilities but the leadership must act responsibly and should be held accountable.

The AGP also found irregularities in Covid-19-related expenditures including inefficient utilisation of funds up to Rs3.2 billion, unreconciled expenditure of Rs 1.3 billion, irrational distribution of budget without any assessment of Rs 5.2 billion, unauthorised retention of public money in commercial bank accounts of Rs 6.4 billion, irregular mode of payments of Rs 16.6 million, misclassification of expenditure of Rs 3.8 billion under the PTI government.

Commenting on the irregularities Dr Haq said that these observations by the AGP in the audit report are the same as Orange Line.

Agreeing with him, Dr Mehdi said the occurrence of the pandemic was a novel situation for the entire world. However, Pakistan has superseded others in mismanaging the allocation of funds.

“To begin with, funds were released on ad-hoc bases. Even under emergencies, there should have been a rapid response unit responsible for the day-to-day check and balance of how Covid was affecting hospitals, waste management, general employment and so on,” she noted.

From the audit report, Dr Mehdi believes that funds were made available randomly without a clear plan on how they should be spent. It also seems like the managing body did not establish outcomes that were meant to be achieved. “Even under a turbulent situation like Covid permanent health facilities could have been established but there appears no proof of long-lasting investment or future preparedness for pandemics.”

“Funds released during covid could have been used to prepare permanent facilities to fight the spread of contagious diseases,” she opined.

Dr Haq believes that institutions are only used for political engineering by successive governments. “No action was taken. The PTI government refuted the report of irregularities in Covid-19-related spending. The PMLN even went a step ahead earlier when even the record of the orange train project was destroyed,” Dr Haq recalled.

“It is painful that institutions legally responsible to probe these irregularities are not playing their role,” he noted.

”The right course of action would have been accountability through public accounts committees recommending a fair trial through an independent anti-crime agency as is the case in many countries,” Dr Haq concluded.

Speaking to Bol News, Former Parliamentary Secretary Ministry of National Health Services and PTI’s MNA Dr Nausheen Hamid said that the Pakistan Tehreek-e-Insaf government left no stone unturned in fighting Covid-19 and all the resources were utilised in the best effective manner. “Everything was documented and every expenditure related to Covid-19 was on merit and as per rules,” Dr Hamid said while adding that the current Prime Minister Shehbaz Sharif-led coalition government may investigate in the light of AGP’s special audit report.

“We are not scared of accountability because our hands are clean and we will fully cooperate with the government if they decide to conduct an inquiry into it,” she added.