ISLAMABAD, April 11: Mismanagement and irregular payments worth over Rs26.822 billion in the accounts of various departments under the Ministry of Defence, including Military Land and Cantonments, Military Engineering Services and Defence Production Division, have been detected.

According to an audit report laid before the National Assembly on Friday, major irregularities worth Rs23.076 billion were found in the accounts of the Military Land and Cantonments (ML&Cs) Department.

The Auditor-General of Pakistan (AGP) in its report for the year 2005-06 has also detected irregularities of Rs3.304 billion in the accounts of Defence Production Division, Rs254.259 million in Army, Rs150.739m in Military Engineering Services (MES), Rs19.714m in Air Force and Rs15.693m in the accounts of Navy.

Deputy Speaker Faisal Karim Kundi referred the report, which was finalised in July 2007, to the Public Accounts Committee (PAC) for a para-wise discussion on it.

As the report was prepared some eight months ago, there is a possibility that some of the irregularities might have been rectified by the authorities concerned till the time the PAC takes the report for discussion.

“As per record of the director-general Secretariat of Heavy Industries Taxila (HIT), an expenditure of Rs8,494.863 million was incurred under head ‘carryovers’ during the year 2002-03 against budget allocation of Rs5,826.441 million”, observes the AGP in its report.

It says the excess expenditure of Rs2.668 billion has not been regularised yet and no “disciplinary action” has been taken against those responsible for this irregularity. Moreover, it says, the details of the expenditure and special items purchased were not provided by the organisation till finalisation of the report. It says the issue was also raised in September 2005, however no reply was furnished by the authorities.

Cantonment boards in Okara and Walton have failed to recover Rs21.54 billion on account of property tax from Wapda. Under a government decision, all Wapda buildings and poles existing in the cantonment limits should be assessed for recovery of property tax.

An amount of Rs16.42m on account of property tax is still outstanding against Fauji Foundation buildings for the period upto June 30, 2005. Earlier, this amount was about Rs27 million, but the management of Fauji Foundation paid a little over Rs10m during August and December 2005, it says.

The report also highlights irregularities of Rs222.533 million in the accounts of Cantonment Boards of Rawalpindi, Chaklala, Walton and Bahawalpur due to ‘non-recovery of composition fee and lease money, unauthorised commercial use of residential property and encroachments on defence lands, unauthorised construction of commercial buildings and occupation of defence lands due to non-renewal of lease agreement.

It observes that the director-general procurement (Army) paid $2.21 million in advance to a firm in Rawalpindi as the cost of 130 diesel engines for trucks in 2002.

“Certain mechanical problems were detected due to supply of incorrect pressure plates when engines were installed in the trucks. It was decided to replace the same with the correct plates from Korea. This action had not been finalised till November 2005. Thus total amount incurred on procurement of engines remained blocked without useful return needing regularisation, besides expeditious replacement of defective plates,” it says, adding: “the para was examined by the departmental accounts committee (DAC) on October 3, 2006”.

It was stated by the procurement agency that the defective pressure plates had been repaired and delivery of additional pressure plates (45 in number) was awaited. The procurement agency, however, did not produce documentary evidence to confirm rectification of defective plates.

It says that despite the DAC’s directives, a revised reply containing full details was not submitted by the authorities till finalisation of this report.

The report has also pointed out “unnecessary advance payment” of Rs246.961 million to a radio telecom company in March 2004 by the DG Munitions Production (DGMP) for upgradation of 2,100 radio sets.

“Deliveries were required to be made in 12 months after receipt of 100 per cent advance payment of foreign exchange and 50 per cent of local charges and receipt of radio sets from the Central Ordinance Depot (COD), Rawalpindi,” the report says.

It further says that as per record of the DGMP, Rawalpindi, the requisite radio sets were not delivered to the firm for upgradation till June 2005, thus resulting “unnecessary blockade of public money” which was paid to the contractor in advance.

When pointed out by the audit, it was replied that explanation for placing demand without availability of serviceable sets for upgradation was sought from the concerned directorate, which intimated that “PRC-77 Radio Sets” were a main stay of the Pakistan Army operational communications.

Therefore, withdrawal of large number of those sets from the field formation was not considered feasible.

“Reply of the indenter, Service Headquarters, upheld the audit contention that demand was raised without proper feasibility and just to afford benefit to the firm,” it says, adding that the DAC had called for revision of the contract but further action was awaited till finalisation of this report.

The audit report has pointed out a loss of $216,484 to the national kitty due to non-deposit of money recovered by the PAC Kamra and Aircraft Manufacturing Factory (AMF) from the joint sale and marketing account of Karakuram-8.

When pointed out in October 2005, the management stated that the amount was utilised for clearance of advance given to the AMF team for Dubai Air Show and making payment for clearance of outstanding charges. “The reply was not tenable as the amount was required to be deposited into the government treasury,” it says.

Another irregularity of Rs90 million has been pointed out by the report due to “unauthorised investment of government money in profit and loss deposit scheme”. It says that a non-lapsable revolving fund with seed money of Rs100 million was created by the government of Pakistan in Pakistan Aeronautical Complex (PAC) Board, Kamra, for management of commercial activities of various factories.

Citing Article 78 of the Constitution, it says that all moneys received by or on behalf of the federal government should be credited to the public fund of the federation.

“It was noticed from the record held in the PAC Board, Kamra, that an amount of Rs90 million out of the revolving fund was invested in Profit and Loss Sharing term deposit scheme of the National Bank of Pakistan, PAC Branch on October 15, 2002,” it says: adding that “the decision of the PAC Board on its own for investment” without permission of the government was not covered under any rule.

It points out that “in a number of cases, local purchase of stores, acceptance of necessity and contracts were concluded in piecemeal by the lower authorities to avoid sanction of higher authorities” of the MES, thus causing Rs37.425 million irregularities.