Home Latest News COVID-19 Audit Finds Glaring Irregularities in Expenditures

COVID-19 Audit Finds Glaring Irregularities in Expenditures

by Newsweek Pakistan

File photo. Courtesy PID

The report, released under pressure of the IMF, raises several questions over government’s utility of funds allocated to combat the pandemic

The Pakistan Tehreek-e-Insaf (PTI)-led government last week made public an audit report on COVID-19 expenditures as part of “prior actions” required to revive a suspended International Monetary Fund (IMF) loan facility. The report, available on the website of the Ministry of Finance, has pointed out Rs. 40 billion in irregularities—despite not having access to all records.

According to the ‘Audit Report on the Expenditure Incurred on COVID-19 by Federal Government’, the Auditor General of Pakistan sought to examine Rs. 354.23 billion expenditures of the Rs. 1.24 trillion approved by Prime Minister Imran Khan for combating the pandemic. However, it did not have access to all the necessary records, limiting the information it could glean.

Utility Stores

The audit has found irregularities of up to Rs. 5.24 billion in purchases of sugar, ghee and wheat flour by the Utility Stores Corporation, with Rs. 1.4 billion of this related to the procurement of “unfit ghee and edible oil” in addition to Rs. 1.4 billion losses due to poorly planned sugar procurement and Rs. 1.6 billion losses due to irregular procurement of ghee/cooking oil.

The Utility Stores Corporation also posted irregularities amounting to Rs. 77.12 million due to contracts with blacklisted flour mills, and allocated excess wheat quota to its preferred flour, leading to a financial loss of Rs. 60.30 million.

Under the Prime Minister’s Relief Package, Rs. 10 billion had been provided to the Utility Stores to provide essential food items at subsidized rates to the most impoverished segments of society. The audit report has recommended that the issue should be probed to fix responsibility for violation of Public Procurement Regulatory Authority rules.

BISP

The Benazir Income Support Program utilized Rs. 133.3 billion during the fiscal year 2019-20, per the audit, benefiting 13.1 million citizens. It said that despite the government’s claims of having “fixed” the list of beneficiaries to weed out individuals who did not meet the criteria for aid, Rs. 6.6 billion payments were made to 484,402 relatively prosperous beneficiaries due to an inconsistent policy. Irregular cash payments to government servants, including pensioners and their spouses who had income over Rs. 50,000/month, equaled Rs. 1.84 billion, with faulty profiling resulting in the release of Rs. 1.6 billion in cash to both spouses.

The audit report noted that more than Rs. 16 million were paid out to tax filers who did not merit the aid, while overlapping lists resulted in Rs. 318.7 million being distributed to certain beneficiaries from both the BISP and Zakat accounts. It pointed out that several beneficiaries, who had been excluded by NADRA, were granted cash amounting to Rs. 6.84 billion.

A finding that the AGP said merited proper investigation was the withdrawal of emergency cash transfers equaling Rs. 12.8 billion by 2,048 agents from districts/provinces.

In a rejoinder, the BISP claimed total disbursement under the Ehsaas Emergency Cash program had equaled Rs. 179.4 billion instead of Rs. 133 billion. It claimed no irregularity was committed during disbursements, adding that the audit had not identified any misprocurement, violation of rules, financial mismanagement or losses to the exchequer.

Defense expenditures

The report states that both the Pak Emirates Military Hospital and CMH Rawalpindi had not provided records of their expenditure for COVID-19. It notes that the Ministry of Defense had allocated Rs. 200 million to the Armed Forces Institute of Cardiology and National Institute of Heart Diseases from the military’s budget for COVID-19, but the facility had utilized the funds for clearing previous liabilities and procuring medicines relating to heart diseases rather than coronavirus. If the military did not require these funds for COVID-19, it said, they should have been surrendered to the government so they could be utilized for more urgent pandemic-related needs.

The audit also notes “wasteful” expenditures of the defense serves. It says that Rs. 376.817 million were used to purchase personal protection equipment, disposable gear, and medicines even though sufficient stock of the same items was already available. Of CMH Rawalpindi, it said that PPEs had been purchased without considering the lowest rates available, resulting in losses of Rs. 27.9 million.

Another concern was that procurements made for the defense services did not deduct withholding tax, which cost the state Rs. 17.129 million. It also pointed that an irregular Rs. 235 million payment was made to the Pakistan International Airlines without fulfilling the required formalities against shipment of the same commodity through the armed forces’ service aircraft.

NDMA

The National Disaster Management Authority was the main coordinating agency for COVID-19 relief activities in the country. It spent Rs. 22.8 billion against the Rs. 33.3 billion allocated for it, with auditors noting glaring irregularities. “During the course of the audit, a number of instances of misprocurements, weak contract management, delays in delivery of procured items, improper storage management etc were observed,” it said, noting that Resource Management System installed by the NDMA had cost Rs. 42.5 million.

Similarly, the exchequer lost $1 million on the purchase of ventilators at higher rates, while China’s donation of $4 million for the construction of a 250-bed Isolation Hospital and Infections Treatment Center was never utilized. It said there were also cases of overpayment to Chinese firms on account of the procurement of ventilators.

The NDMA also appeared to overpay the Frontier Works Organization by not adjusting advances of Rs. 690 million for the renovation of Haji Complex, Rawalpindi; provision of quarantine facilities in Karachi; and the establishment of the National Control Room. The auditor stressed that the NDMA had not provided much of the needed record so its audit had been incomplete.

The AGP report noted that overall procurements of nine items had been made at higher rates causing a loss of Rs. 7 million. It also noted non-delivery of Rs. 1.3 billion of PPE by UNICEF, as well as Rs. 10 million discrepancy in cases of transportation and food items for passengers returning from abroad, handled by deputy commissioner Islamabad.

The report also noted that the finance ministry had ended up releasing Rs. 314 billion less than the amount allocated under the prime minister’s stimulus package “due to which citizens of Pakistan could not avail the complete benefit of the announced package resulting in suffering, economic hardship and many private factories laying off their workers during COVID-19.”

Against Rs. 200 billion promised to daily wagers, only Rs. 16 billion was distributed; vulnerable families were promised Rs. 150 billion but only received Rs. 145 billion; there was a promise to pay Rs. 100 billion electricity and gas bills but the actual payments were just Rs. 15 billion.

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