Embezzlement, irregularities and mismanagement of Rs 33.1 billion was detected in the accounts of Earthquake Reconstruction and Rehabilitation Authority (ERRA), according to Auditor General of Pakistan's Report-2010-11.
According to the report, the ERRA Council had decided in its 9th meeting to make immediate payment of the remaining 3rd and 4th instalments of urban housing subsidy in AJK and in Khyber Pakhtunkhwa (KP) after obtaining certificate from the concerned development Authority.
ERRA paid Rs 4.955 billion to 28,319 households at Rs 175,000 to each household during the period from 2006 to December 2009 without obtaining any drawing duly approved from the development authorities or any technical inspection carried out by the concerned authorities.
The report says that when requested, ERRA could not produce any certificate of the concerned authorities for payment made to 28,319 households. The housing grant paid in violation of criteria was irregular and without any proof of compliance by the recipients. The total payment of Rs 4.955 billion was, therefore, held irregular and unjustified. When pointed out in November 2011, it was stated that the matter would be taken up with the development authorities in AJK through SERRA to issue the requisite certificates. No certificates were produced to be audited thereafter. It was therefore proposed that irregular payment be regularised.
Similarly, in another audit para, the ERRA paid Rs 3.344 million, in two tranches, during 2008-09 and 2009-10, as compensation under the 'Rural Housing Reconstruction Programme' to 26,757 households at Rs 125,000 to each household. These households never started reconstruction or failed to comply with the required design specifications. As such, Rs 3.344 billion was irregularly paid, causing loss to the public exchequer.
The report further said that removal of debris in the urban area of Muzaffarabad city was approved for Rs 409.26 million. No record was produced for audit scrutiny. The initial audit observation was issued on October 14, 2010, but no response was received till finalisation of the audit report. The report says that audit also detected Rs 370 million unjustified payments were made to the consultant during 2007-08 by the Authority.
The report says that during the scrutiny of records it was observed that out of 15, eight prime core activities were not conducted by Nespak as no record/documents in support of these activities were produced /available with the Authority. The Audit held that due to poor internal controls, irregular expenditure was incurred. The DAC meeting was held on December 24, 2009 and it was decided that the Authority would provide relevant documents in support of the services provided by the consultant in accordance with the contract agreement, which has not been done so far. Billions of rupees of embezzlement, mismanagement and irregularities in ERRA in the Audit Report-2010-11 have been detected.