The Auditor-General of Pakistan has detected US $23.11 million (roundabout Rs 2 billion) loss to national exchequer due to (i) failure to open an L/C against a sugar contract and (ii) non-revival of a sugar contract. According to Audit Report-2010-11 available with Business Recorder, Auditor General of Pakistan estimated a loss of US $16.695 million (Rs 1.37 billion) to the nation due to embezzlement and mismanagement attributed to non-opening the L/C against the contract.
The report says that Trading Corporation of Pakistan (TCP) opened a tender on May 29, 2010 for import of 200,000M/tons sugar. As many as seven bidders participated in the bidding. M/s. Simazain International Karachi, the local agent of M/s Yunan Coal Chemical, China submitted the lowest bid of US $558 per M/Ton on C&F basis for supply of 100,000 M/Tons sugar.
TCP management issued Letter of Acceptance to Simzain International on May 31, 2010 requiring them to furnish Performance Bank Guarantee (PBG) equivalent to 2 percent of the contract quantity as per clause 12(a) of the Term and Conditions. The entire quantity of 100,000 M/Ton was required to be shipped within ten weeks from the date of opening of L/C.
The supplier submitted PBG on June 3, 2010 of the required amount which was to expire on August 31, 2010. However TCP did not open the L/C, as it was required to be opened within five days from the receipt of PBG, on the ground that the firm could not arrange the shipment in the previous tender. The audit report further says that due to non-opening of L/C, the supplier could not supply 100,000 M/Tons sugar at the rate of US $558 per M/Ton and the management purchased 250,000 M/Tons sugar from another supplier at the rate of US $724.95 per M/Ton through a tender dated June 21, 2010.
The audit maintained that to make good a previous lapse on the part of the supplier, TCP procured sugar at a much higher rate by causing a loss which could not offset the saving done by encashing PBG of the lowest bid. Due to non-opening of L/C within stipulated time caused a loss of US $16.695 million equal to Rs 1.35 billion
The matter was reported to the management on November 04, 2010 and November 22, 2010. The Audit suggested fixing responsibility on the person(s) at fault. The report says that the matter was discussed in the DAC meeting held on December 15, 2010. The DAC directed the management to provide reply to Audit with documentary evidence. But no satisfactory reply was given. However, the progress was awaited till finalisation of the audit report. In second case, Pakistan faced loss of US $6.412 million (Rs 525.825 million) due to non-revival of a sugar contract.
According to the report, the TCP opened tenders on February 17, 2010 for import of 200,000 M/Tons sugar. Nine bidders participated in the bidding. M/s KZK Industries Commercial Company, the Local Agent of M/s Sadan Trading General (LLC) Dubai submitted the lowest bid of US $585 per M/Ton on C and F basis for supply of 50,000 M/Ton sugar.
According to Audit report, the letter of Acceptance was issued to M/s KZK Industrial and Commercial Co, Karachi on February 19, 2010. The supplier submitted PBG amounting to US $585,000 dated February 25, 2010. The L/C was established on March 06, 2010 in favour of the supplier. According to the contract, the supplier was liable to effect 1st shipment latest by March 27, 2010. The supplier through their letter dated March 29, 2010 informed that due to Easter holidays, the first shipment commencement might get delayed and he would pay the penalty as per tender terms.
The TCP granted the extension but it was decided in the Board's meeting held on April 05, 2010 that as soon as time expires, TCP may cancel the contract and confiscate security of US $585,000. The PBG amounting to US 585,000 was forfeited by TCP on April, 07, 2010. However in subsequent tenders, the management imported the sugar at higher rates.
According to report, M/s Sadan Trading General (LLC) Dubai on May 28, 2010 requested TCP to accept the shipment by revival of the contract. They again reminded/requested TCP on June 14, 2010 for revival of the contract but TCP did not respond as no documentary evidence was available on file.
Audit argued that had TCP accepted the request for revival of contract a sum of US $6,412,500 equivalent to Rs 525.825 million could have been saved. The matter was reported to the management on November 08, 2010 and November 22, 2010. The Audit suggested fixing responsibility on the person(s) at fault. But no progress was reported by the management till finalisation of the audit report.
Comments
Comments are closed for this article.