Flawed Development

AGP finds huge irregularities in the accounts of Sindh’s five development authorities

Karachi: The Auditor General of Pakistan (AGP) has reported financial irregularities worth over Rs 15.8 billion in the five main development authorities of Sindh province during the last two fiscal years, 2019-20 and 2020-21.

The five authorities are responsible for planning and coordination of public housing schemes, low-cost housing schemes, beautification of urban areas and management of land records within their respective geographical jurisdictions.

Below is a brief account of the nature and volume of those irregularities identified by the AGP in its audit report for each authority.

Hyderabad Development Authority

The report raises objections on various transactions amounting to Rs 1,585.768 million. According to details, various allowances amounting to Rs 64.484 million were paid to the authority’s officials beyond their entitlement, whereas an amount of Rs 5.166 million paid to employees as advance salary was yet to be recovered.

It also found Irregularities in payment of Rs 72.928 million to a consultant firm, Ms Real Marketing, which had conducted marketing of HDA’s Gulistan-e-Sarmast Housing Scheme. According to the report, payments were made without reconciliation of actual receipts, in some cases for services of which no record was available.

Meanwhile, according to the report, the HDA’s Estate Office failed to remove encroachments over 1,357 acres of its land; its Water and Sewerage Agency failed to recover water charges worth Rs 283.174 million outstanding against domestic, commercial and bulk consumers; and its Planning & Development Control office failed to recover extra development charges of Rs 512.387 million from owners of private housing schemes.

Karachi Development Authority

The report raised objections amounting to Rs 5,204.463 million, including Rs 146.394 million in various taxes which KDA failed to recover. It also made “unjustified” payments worth Rs 146.394 million to its employees in the name of allowances and utility services.

Also, its Accounts and Recovery department failed to recover Rs 2594.813 million on account of bids on plots and occupancy surcharges, besides failing to produce auction and rent receipts.

The audit found that an expenditure of Rs 166.109 million was incurred on payments made for work execution in excess of amounts provided in estimates. It was found that works costing Rs 1952.615 million were awarded to contractors on market-based rates instead of Composite Schedule Rate of 2012 in violation of relevant rules. Also, an amount of Rs 157.863 million was paid to teaching and non-teaching staff of various KDA schools from the Welfare Fund without approval of the Governing Body. And Rs 14.397 million were spent on repairing of water leakages and cleaning of sewerage lines in areas which do not fall in KDA’s jurisdiction.

Malir Development Authority

The report raises objections on transactions amounting to Rs 212.815 million, mostly related to payment made to MDA employees, procurements, management of accounts and service delivery fees.

MDA had shown total recoverable dues of Rs 195.43 million on account of occupancy & utility charges from three residential societies. But on-paper recovery amounted to only Rs 17.999 million. While MDA’s recoverable dues amount to Rs. 122.467 million, its record puts its recoverablke amount at only Rs 55.550.

MDA announced four schemes – Shah Latif Town, New Malir Housing Project, Taiser Town and MDA Master Programme Scheme – over a land area of 37,782 acres. But 24,518 acres of that land were encroached upon and occupied by different elements. No effort was made to vacate this land.  An amount of Rs 27.217 million was paid to MDA officials on account of various allowances beyond their entitlement. Also, the authority suffered a loss of Rs 26.162 million due irregular award of work beyond permissible limits in Taiser Town Scheme-45, a loss of Rs 19.96 million for award of work in violation of procurement rules, and a loss of Rs 17 million due to abandoning work on various projects.

Sehwan Development Authority

The report has raised objections to transactions worth Rs 108.900 million. They pertain to irregularities found in managing SDA’s accounts with commercial banks, service delivery charges and certain payments made to the authority’s employees. The report also found that important offices of the authority were occupied by unauthorized persons.

Zulfikarabad Development Authority

Objections have been recorded to transactions worth Rs 8,761.708 million. They pertain mainly to fiscal 2019-20.

During the audit the AGP found that development works worth Rs 8,757.540 million that were awarded to the military-owned Frontier Works Organisation (FWO) were not executed. This was despite the fact that FWO was also paid a mobilization advance of 10 percent. That amount has also not been recovered, much less an interest of 14.2percent which FWO is required to pay under the terms of contract.