‘Reservations on PSM, Audited Accounts authenticity’: PSMC stakeholders express concerns

ISLAMABAD: Pakistan Steel Mills Corporation (PSMC) stakeholders group has observed and expressed serious “reservations on PSM, Audited Accounts from 2012 to 2022, Authenticity” compiled by Pakistan Steel Mills (PSM) accounts department, audited by various firms’ alleging authenticity is doubtful without reconciliation with all the creditors/debtors.

In a written letter to the Ministry of Industries and Production, the group said, “We have avoided the present situation faced by PSM and its Stakeholders, if Ministry of Industries & Production (MOI&P)/ Government have played their responsibilities in appointment of right man for the right job and timely monitored their performance cost to PSMC”.

The letter, while raising serious questions over the PSMC, audited accounts said that PSM “audited” accounts based on the Notes extracted from Annual Audited Financial statements for the year ended June 30, 2022 submitted by M/s Crowe Husain Chaudhury & Co.

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Chartered Accountants (already approved by PSM Board), the following questions should be asked from the Chairman Board and acting CFO before finalization and approval of audited accounts and financial statements for FY 2023.

The group raised following questions keeping in view audited accounts: (i) Why losses after tax were restated for the FY 2012-13, FY2013-14, FY2014-15, FY2015-16, FY2016-17, FY2017-18 and FY2020-21 in Note 1.6?

(ii) Who are responsible for the incorrect accounting figures reported each year and then afterward restated (corrected) in the subsequent years? (iii) What action MOIP has taken against the alleged persons at fault? (iv) Can this be explained how the yearly losses of PSM were lowest Rs 6.19 bn and Rs 7.05 bn in the FY 2017 & FY 2018 comparing with FY 2020-21 & 2021-22?

Whereas, PSM was employing more than 10,000 employees at that time and these losses abruptly increased to almost 3 times in FY 2019, FY 2020 and FY 2021 and more than 5,000 employees were also retrenched unjustified by the management in FY 2020-21, the letter said.

“Pursuant to the Review of losses incurred in 2008-09, the Honorable Supreme Court of Pakistan (the Supreme Court) took Suo moto notice and ordered investigation through Federal Investigation Agency (FIA). Since then, FIA has carried out certain investigations and lodged criminal cases against certain officials of the Corporation. Further, to investigate this matter, an independent professional services firm was appointed to carry out a forensic audit to determine the amount of losses caused by Corruption and mismanagement out of aggregate losses 2008-09. The firm submitted its report confirming large scale corruption and mismanagement and amounts attributable to the same. Later, the Supreme Court in its judgement dated 16 May 2012, ordered that the investigation of the case be transferred and entrusted to National Accountability Bureau (NAB). Currently, the matter is pending with NAB”.

The stakeholders have also raised question PSMC failure to pursue corruption cases in courts.

The stakeholders urged the ministry to seek details from the PSMC over the investigated corruption cases by PSM from 2009 to 2023, and forwarded as complainant to FIA/NAB with reflection in books of accounts for financial recoveries through process of accountability.

The PSMC management should also provide the details of recovered amounts received to PSM on account of FIA/NAB cases filed in Courts of Law.

The letter says, “On August 14, 2009, the government of Pakistan (GOP) launched Benazir Employees’ Stock Option Scheme (the Scheme) for employees of certain State-Owned Enterprises (SOEs) and non-State-Owned Enterprises where GOP holds significant investment (non-SOEs).

The scheme is applicable to permanent and contractual employees who were in employment of these entities on the date of launching of the Scheme, subject to completion of five years vesting period by all contractual employees and by permanent employees in certain instances“.

The scheme provides for cash payment to employees on retirement or termination based on the price of shares of respective entities. To administer the scheme, government shall transfer 12 per cent of its investment in such SOEs and non-SOEs to Trust Fund created for the purpose by each of such entities.

The eligible employees would be allotted units by respective Trust Fund in proportion to their respective length of service and on retirement or termination such employees would be entitled to receive such amounts from respective Trust Fund in exchange of surrendered units as would be determined based on market price for listed entities or break-up value for non-listed entities. The shares relating to the surrendered units would be transferred back to GOP.

The scheme also provides that 50 per cent of dividend related to shares transferred to the respective Trust Fund would be distributed amongst the units-holder employees.

The balance 50 per cent dividend would be transferred by the respective Trust Fund to “Central Revolving Fund” managed by the Privatization Commission of Pakistan for payment to employees against surrendered units. The deficit, if any in Trust Fund to meet the re-purchase commitment would be met by GOP.

Copyright Business Recorder, 2024