AG detects over Rs 350 million irregularities in defence services

The Auditor General of Pakistan has found irregularities of more than Rs 350 million in the defence services owing to weak internal controls, irregular expenditures and unnecessary procurements.
The audit report on the accounts of Defence Services for 2004-05, which was tabled in the National Assembly few days back, says that Director General Audit, Defence Services carried out audit of the accounts of Defence Services, Military Lands & Cantonments Department and Defence Production Division during 2004-05. In a number of cases contract conditions were not enforced which resulted into overpayments and irregular payments to contractors.
Expenditure was incurred for construction of various residential buildings and land for a purpose other than specified. Approval from competent authority was not obtained for use of buildings and land for a purpose other than specified.
The audit report says that rent and allied charges relating to residential and commercial buildings were either not billed or not recovered on time. Piecemeal purchases of stores were made to avoid sanction of higher authorities.
It was observed that significant overpayments were made in respect of pay and allowances, indicating weak internal control in the system of authorisation and pre-audit.
The national exchequer suffered a loss of Rs 15.443 million due to procedural irregularities in local purchases. According to details, four units/formations, subordinate authorities at different levels sanctioned expenditure in instalments just to avoid sanction of superior authorities that resulted into irregular expenditure of Rs 15.443 million.
A sum of Rs 97.358 million was paid to Pakistan Railways during August 2003 to December 2004 on account of booking of special trains for passengers and military stores against Military Railways Credit claim of Rs 78.624 million resulting in an overpayment of Rs 18.734 million.
As per record of PAF Base, Mushaf, Sargodha, an expenditure of Rs 7.495 million was incurred out of their receipts during 2003-04 that was against the accounting principles and in violation of government rules. Moreover, as per record of PAF Hospital, Rafiqui and Mianwali Bases, a sum of Rs 2.49 million on account of hospital amenity fund was transferred to Air Headquarters instead of spending it for the welfare of patients/hospital.
The audit report points out un-authorised use of government land for commercial purposes and non-recovery of rent worth Rs 7.016 million. As per record of Naval Billeting office, Islamabad, a piece of land measuring 12,993 sq yard was handed over to a private concern viz. Bahria University at a nominal rent of Rs 5 per sq yard in November 2001.
The handing over of government land to a private commercial concern at a nominal rent was against public interest. As per HQ Commander letter No CN/NB/0110/22 date October 14, 2003 the commercial rate of rent of that locality was Rs 15 per square yard.
Since the Bahria University was being run on commercial basis, as such a rent of Rs 15 per square yard was to be charged. No rent, however, had been deposited into government treasury from the date of handing over the land to the university. Resultantly, a sum of Rs 7.016 million for the period from November 2001 to October 2004 stood outstanding against the Bahria University.
The report further says that as per record of Cantonment Board Walton, Lahore, vacant plots in Defence Housing Authority (DHA) area were being transferred without payment of transfer tax to the board from January 2003 leading to an approximate loss of Rs 88.87 million up to March 2004.
As per record of Cantonment Board Wah Cantt, two private housing schemes (New City and Gulberg Housing Scheme) were planned and developed at an area of 300.86 kanals by the two private builders without obtaining approval of land management authority.
The unauthorised establishment of private housing schemes and non-recovery of cantonment fund dues caused a loss of Rs 15.942 million. According to the audit report, residential properties in the jurisdiction of cantonment boards were changed into commercial units by the lessees without approval/payment of prescribed charges.
Rejected/defective stores supplied under certain contracts were neither replaced nor the cost recovered from the contractors. Avoidable procurement of stores was made in a project without waiting for successful testing of prototypes.