ISLAMABAD: An audit into the accounts of Civil Aviation Authority (CAA) has found an irregular payment of Rs4 billion to the companies that constructed the runway of New Benazir Bhutto International Airport.

According to the audit report of the CAA for the year 2013-14 presented to the Public Accounts Committee (PAC), the joint venture of M/s Lagan and M/s Technical Associates Pakistan were paid Rs4.08 billion out of the Rs12 billion work that was never part of the contract the companies had signed with the CAA in 2008.

The construction company, M/s Technical Associates Pakistan is owned by Chaudhry Mohammad Munir, whose son Raheel Munir is married to Nawaz Sharif’s granddaughter Mehrunnisa Safdar.

M/s Technical Associates Pakistan entered into the agreement in January 2010 in a ‘dubious’ manner after which the controversy of the irregular claims started.

According to the audit report, contrary to the prescribed rules, the job of the engineer to oversee the construction work was also given to the contractor. As per rules, only someone from the CAA could be given the assignment.

Auditors inform PAC that the irregularity occurred due to an inadequate oversight mechanism, regulations and weak internal control

“Hence the said consultant had to perform a dual role,” the audit report noted. It said the project was awarded to a joint venture firm in August 2008 with the contract cost of Rs11.8 billion. The joint venture firm was irregularly changed to another joint venture in January 2010. After entering into the new joint venture, a series of claims under dispute were raised by the contractor.

“The engineer was required to act as a mediator rather than an adjudicator … (but) the engineer admitted all claims, including those contradictory to contract clauses, and gave inaccurate decisions.”

The audit officials informed the PAC that after the entrance of Technical Assistance Pakistan into the JV, as many as 21 claims worth Rs12 billion (extra contractual assignments) were forwarded to the CAA which resorted to the Dispute Review Board after making payment of Rs4 billion to the contractor.

The report maintained that “the irregularity occurred due to an inadequate oversight mechanism for enforcing relevant rules, regulations and weak internal control.”

A departmental accounts committee (DAC), comprising senior officials of the aviation division and the audit department, at its meeting in January 2014 was informed that “the engineer gave decisions beyond the contractual provision. The CAA management did not evaluate these decisions objectively and implemented them blindly” and paid Rs4 billion to the contractor.

The DAC then ordered the director general CAA to handle the dispute through a review board or arbitration or any other legal forum. In the recent meeting held on January 8, 2016, the audit report said the CAA informed the DAC that the matter had been forwarded to the arbitrators and the preliminary hearing was held on November 4, 2015. The next date of hearing is Feb 12, 2016.

Sheikh Rashid Ahmed, a member of the PAC, suggested to the chairman PAC, Syed Khursheed Ahmed Shah, that the matter be referred to the National Accountability Bureau (NAB). Mr Shah, however, deferred the matter till the next week and directed the aviation division to brief the PAC on the matter.

The audit authorities also informed PAC that the CAA was facing Rs14 billion loss due to the non-recovery of rent, electric charges and aeronautical revenue from PIA, private airlines and government departments.

The CAA stated that the recovery of Rs574 million had been stuck due to litigation.

Mohammad Irfan Ilahi, secretary aviation division, said the total receivable of the CAA towards the national flag carrier was Rs40 billion. He said the total liability of the PIA was Rs320 billion.

Published in Dawn, January 27th, 2016