Audit Report 2010-11: Rs 326.32 million embezzlement detected in USC

The Auditor General of Pakistan (AGP) has detected embezzlement and theft of Rs 326.32 million in Utility Stores Corporation (USC) of Pakistan (Pvt) Limited. According to the Audit Report 2010-11, the national kitty faced loss of Rs 39.703 million due to supply of wheat without advance payment.
The report says that in terms of clause-3 (b) of the agreement dated September 22, 2007 between M/s USC and M/s Qureshi Flour Mills Peshawar, on allocation of wheat to Utility Stores Corporation of Pakistan (Pvt) (USC) Limited from Passco and TCP, the second party will lift wheat from designated godowns, by making advance payment at regional office Peshawar, in shape of demand draft in the name of USC at the rate of Rs 18,990 per ton.
The report says that Utility Stores Corporation (Head Office), Islamabad shifted a quantity of 12,000 tons wheat to USC Peshawar Zone against the actual requirement of 600 tons. Due to shortage of storage capacity, a quantity of 2,153.369 tons was shifted and stored at M/s Qureshi Flour Mills, Peshawar without obtaining the advance amount as required under the agreement. The owner of the mill refused to release the quantity of wheat and got stay order, which was vacated. The owner again approached the high court despite the fact that the high court decided the case in favour of the USC. The wheat could not be lifted/recovered, which indicated that the mills utilised the wheat in production and sold out the same. This resulted in loss of Rs 39.703 million due to non-payment of cost for 2,153.359 tons wheat.
The matter was reported to the management on November 14, 2010 and the ministry on December 4, 2010. The management in its reply dated December 31, 2010 stated that 4,071.249 tons wheat was sent to M/s Qureshi Flour Mills, Peshawar and the mill returned 1,917.880 tons leaving a balance of 2,153.369 tons of wheat. M/s Qureshi Flour Mills refused to supply the balance quantity of wheat. The USC lodged FIR against the flour mill and now the accused was facing trial in the court, and the corporation had filed civil suit for recovery. The reply was not convincing because wheat was supplied without receipt of advance payment in the shape of demand draft.
The DAC in its meeting held on January 17, 2011 directed the management to recover the amount under Land Revenue Act at the earliest and take action against the persons for handing over wheat without getting advance payment. No progress was reported till finalisation of this report.
The report also revealed that the national kitty suffered a loss of Rs 14.467 million due to embezzlement of non-observance of store operational manual, Rs 5.054 million embezzlement of sales proceeds, Rs 2.826 million less supply of Atta by flour mils, Rs 8.802 million provision of stores on credit and Rs 254.345 million unauthorised/irregular provision of gratuity.