Pakistan on Friday finally gave in to the International Monetary Fund’s pressure and released the audit report of expenditures incurred on Covid-19, revealing more than Rs40 billion irregularities in operations.
The Auditor General of Pakistan (AGP) found misprocurements, payments to ineligible beneficiaries, cash withdrawal via fake biometrics, and procurements of poor quality goods by Utility Stores Corporation (USC) for consumption.
Releasing the report by the ministry of finance is one of the five prior actions that the IMF has put forth for Pakistan to implement if it wants to get the $1 billion loan tranche by January next year.
According to the report, the auditors attempted to trace the Rs354.3 billion expenses but were unable to get all the records. The auditors have found Rs40 billion irregularities from the record of expenses and procurements available.
The maximum irregularities of more than Rs25 billion were unearthed against Rs133 billion spent under the banner of the Benazir Income Support Programme, which equated to 19% of its spending. The USC spent Rs10 billion however the auditors raised questions on Rs5.2 billion or 52% of its spending.
The National Disaster Management Authority spent Rs22.8 billion while the auditors raised a red flag on Rs4.8 billion or nearly 21% of the spending.
Furthermore, the report showed that the defense ministry had suspicious and irregular spending to the tune of Rs3.2 billion while other government departments had doubtful expenses to the tune of Rs1.5 billion.
This report is based on the audit of the accounts of government agencies and departments involved in relief activities at the federal level for the year ending June 30, 2020, to the extent of expenditure related to Covid-19.
The audit comprises all government allocations, loans and grants received or repurposed from the foreign donor partners pertaining to tackling the pandemic. The IMF had also provided a $1.4 billion loan under the corona relief package.
The main issues brought to light by the AGP were “instances of misprocurements, delays in the delivery of procured items, procurement without proper need assessment, instances of weak financial controls, lack of proper record-keeping and non-production of records to audit authorities”.
Furthermore, issues were seen regarding the lack of warehouse management, issues in the distribution of equipment, advance payments to supplier firms without properly securing guarantees, data problems resulting in the release of cash grants to both spouses in the same family and beneficiaries excluded by NADRA during profiling checks, the release of cash grants to the insured persons and pensioners of EOBI and beneficiaries from both BISP and Zakat.
The auditors also found serious issues such as payment to ineligible beneficiaries like government servants, pensioners, and their spouses, taxpayers, and to those having poverty scores above the cut-off scores approved by the federal cabinet and the BISP board.
Other issues noted were, “Weak monitoring and implementation resulting in withdrawals through fake biometric and withdrawals out of the district of registration, irregular and unjustified prequalification of flour mills by the USC”.
Issues pertaining to service delivery under the Ehsaas Emergency Cash Programme that resulted in non-disbursement of cash transfers to 1.32 million enrolled beneficiaries were also mentioned in the report.
The prime minister had approved the Rs1.24 trillion Economic Stimulus Package on March 24, 2020, for the purpose of battling COVID-19. The primary objectives of the relief package were to curtail the pandemic, provision of medical and subsistence relief to citizens, and support to business and the economy.
The amount released out of the announced package was Rs354.2 billion till June 30, 2020.
The report stated, “The finance ministry issued Rs314 billion less supplementary grants from the PM’s stimulus package due to which citizens of Pakistan could not avail the complete benefit of the announced package resulting in suffering, economic hardship and many private factories laying off their workers during Covid-19 process”.
Although Rs200 billion were promised to daily wagers, only Rs16 billion were disbursed among them. The vulnerable families were to be provided with Rs150 billion but given Rs145 billion. The Utility Stores package was Rs50 billion however, Rs10 billion was given. They promised to pay Rs100 billion electricity and gas bills but the actual payments were Rs15 billion.
Key irregularities
The main coordinating agency for relief activities across the country was the NDMA. The NDMA received Rs33.3 billion funds and spent Rs22.8 billion out of it. However, the auditors found glaring discrepancies.
It stated, “During the course of the audit, a number of instances of misprocurements, weak contract management, delays in delivery of procured items, improper storage management etc were observed.”
The BISP utilized Rs133.3 billion in the fiscal year 2019-20 and 13.1 million beneficiaries were paid.
The audit noted Rs6.6 billion payments to relatively better-off 484,402 beneficiaries owing to the absence of any clear policy which needs to be figured out before making any related future payments.
There were irregular payments of cash transfers to government servants such as pensioners and their spouses to the tune of Rs1.84 billion. Incorrect profiling of beneficiaries led to the release of cash transfers to both spouses worth Rs1.6 billion.
Furthermore, the report shows a major discrepancy as auditors found unauthentic withdrawals of Covid-19 cash transfers out of districts/provinces to the tune of Rs12.8 billion.
The auditors observed that in categories I to IV, withdrawals of emergency cash transfers were shown from out of province/districts by 2,048 agents who operated in Quetta, Lasbela, Thatta, Jamshoro, Hyderabad, and Khanewal. The AGP suggested, “This needs proper investigation”.
Rs1.7 million were withdrawn via fake biometrics.
The auditors revealed Rs200 million Covid-19 funds were diverted towards the clearance of liabilities and procurement of normal cardiac medicines. During an audit of Combined Military Hospital Rawalpindi, it was discovered that from the record that PPE items of the same specifications were purchased at higher rates by ignoring the lowest rates available in the comparative statement of tenders.
The Rs235 million irregular payment was made to Pakistan International Airlines without fulfilling the required formalities against shipment of exactly the same commodity required to be transported through the armed forces’ service aircraft.
