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AUDIT REPORT
ON
THE ACCOUNTS OF
DEFENCE SERVICES
AUDIT YEAR 2016-17
AUDITOR-GENERAL OF PAKISTAN
i
TABLE OF CONTENTS
Page
ABBREVIATIONS AND ACRONYMS iii
PREFACE vi
EXECUTIVE SUMMARY vii
AUDIT STATISTICS
I. Audit Work Statistics
II. Audit Observations Classified by Categories
III. Outcome Statistics
IV. Irregularities Pointed Out
V. Cost-Benefit Analysis
xi
xi
xii
xiii
xiii
CHAPTER-1 Ministry of Defence
1.1 Introduction 01
1.2 Status of Compliance of PAC Directives
01
AUDIT PARAS
Pakistan Army
1.3 Recoverables / Overpayments 03
1.4 Irregular / Un-authorized Expenditure 18
1.5 Mis-procurement of stores 31
1.6 Non-production of Record 38
Military Lands and Cantonments
1.7 Recoverables / Overpayments 41
1.8 Loss to State
1.9 Mis-procurement of stores
72
75
ii
Pakistan Air Force
1.10 Recoverables / Overpayments 76
1.11 Loss to State 83
1.12 Irregular / Unauthorized Expenditure 83
1.13 Mis-procurement of stores 86
Pakistan Navy
1.14 Recoverables / Overpayments
1.15 Loss to State
1.16 Irregular / Unauthorized Expenditure
1.17 Mis-procurement of stores
91
94
95
98
Military Accountant General
1.18 Recoverables / Overpayments 108
1.19 Irregular / Unauthorized Expenditure 109
1.20 Mis-procurement of stores 110
CHAPTER-2
Ministry of Defence Production
2.1 Introduction 112
2.2 Status of Compliance of PAC Directives 112
AUDIT PARAS
2.3 Recoverables / Overpayments 114
2.4 Loss to State 116
2.5 Irregular / Unauthorized Expenditure 118
2.6 Mis-procurement of stores
121
Annexure-I MFDAC Paras (DGADS North) 122
Annexure-II MFDAC Paras (DGADS South) 134
iii
ABBREVIATIONS AND ACRONYMS
ACAS Assistant Chief Air Staff
AGP Auditor-General of Pakistan
AHQ Air Headquarters
AMF Aircraft Manufacturing Factory
ASRF Advance System Rebuild Factory
BA (Fee) Building Application Fee
BMP Dte Budget Marketing and Procurement Directorate
BTS Base Trans receiver Station
AWACS Air Borne Warning and Control System
AOC Air Officer Commanding
CBR Cantonment Board Resolution
CLAR Cantonment Lands Administration Rules
CMA Controller of Military Accounts
CEO Cantonment Executive Officer
CIMLA Cantonment Institute of Municipal and Land
Administration
CMH Combined Military Hospital
CNE Civilian Non-Entitled
CNA Controller of Naval Accounts
COMSAT College of Management Science and Technology
CRV Certified Receipt Voucher
DAC Departmental Accounts Committee
DBA Director Budget Accounts
DG DP Directorate General Defence Purchase
DGP (Army) Directorate General Procurement (Army)
DG RV&F Director General Remount Veterinary and Farms
DHA Defence Housing Authority
DMA Daily Messing Allowance
DP (Air / Navy) Directorate Procurement (Air / Navy)
DP Draft Para
DSR Defence Services Regulations
EME Electrical and Mechanical Engineering
E-in-C Engineer in Chief
iv
ESD Engineering Stores Depot
FA Financial Advisor
FAM Financial Audit Manual
FBR Federal Board of Revenue
FOB Free on Board
FOR Free on Rail
FR Financial Regulations
GE Garrison Engineer
GHQ General Headquarters
GST General Sales Tax
HIT Heavy Industries Taxila
HRA House Rent Allowance
HRF Heavy Rebuilt Factory
HSR Hospital Stoppage Receipts
INTOSAI International Organization of Supreme Audit Institutions
JCOs Junior Commissioned Officers
JSHQ Joint Staff Headquarters
JSI Joint Services Instruction
KARF Kamra Avionics and Radar Factory
LC Letter of Credit / Local Currency
LD Liquidated Damages
LUMS Lahore University of Management and Sciences
MEO Military Estate Office
MES Military Engineering Services
MFDAC Memorandum for Departmental Accounts Committee
MH Military Hospital
MIS Management Information System
ML&C Military Lands and Cantonments
MoD Ministry of Defence
MoDP Ministry of Defence Production
MOQs Married Officer Quarters
MRF Mirage Rebuild Factory
NDU National Defence University
NHQ Naval Headquarters
NOC No Objection Certificate
NIV Not in Vocabulary
v
NLC National Logistics Cell
NUST National University of Science and Technology
OC Officer Commanding
PAC Pakistan Aeronautical Complex
PAF Pakistan Air Force
PAO Principal Accounting Officer
PESCO Peshawar Electric Supply Company
PNS Pakistan Navy Ship
PPRA Public Procurement Regulatory Authority
QMG Quarter Master General
RHQ Regional Headquarter
R&E Risk and Expense
RV&F Remount Veterinary and Farms
SMA Special Messing Allowance
SNGPL Sui Northern Gas Pipeline Limited
SOP Standing Operating Procedure
SRO Statutory Regularity Order
STA Special Transfer Account
TESCO Tribal Electric Supply Company
TIP Transfer of Immovable Property
TO&E Table of Organization and Equipment
UA Unit Accountant
UNRA United Nations Reimbursement Account
WAPDA Water and Power Development Authority
WTI Walton Training Institute
vi
Preface
Articles 169 and 170 of the Constitution of Islamic
Republic of Pakistan, 1973 read with Sections 8 and 12 of the Auditor-
General (Functions, Powers and Terms and conditions of Service)
Ordinance, 2001 require the Auditor-General of Pakistan to conduct audit
of accounts of the Federation and the accounts of any authority or body
established by the Federation.
The Report is based on Audit of receipts and expenditure of the
Defence Services (Ministry of Defence and Ministry of Defence
Production) for the Financial Year 2015-16. The Directorates General
Audit Defence Services conducted Audit of the accounts of Defence
Services during 2016-17 on test check basis with a view to reporting
significant findings to the relevant stake holders. The main body of the
Audit Report includes only the systemic issues and audit findings carrying
value of Rs. 1 million or more. Relatively less significant issues are listed
in the Annexure-I & II of the Audit Report. The audit observations listed
in Annexure-I & II shall be pursued with the Principal Accounting Officer
at the DAC level and in all cases where the PAO does not initiate
appropriate action, the Audit observation will be brought to the notice of
the Public Accounts Committee through the next year’s Audit Report.
The Audit findings indicate the need for adherence to the regularity
framework besides instituting and strengthening internal controls to avoid
recurrence of similar violations and irregularities.
Most of the observations included in this Report have been
finalized in the light of discussions in the DAC meetings.
The Audit Report is submitted to the President in pursuance of
Article 171 of the Constitution of Islamic Republic of Pakistan, 1973 for
causing it to be laid before the Parliament.
(Rana Assad Amin)
Auditor General of Pakistan
Islamabad
Dated:26-02-2017
vii
Executive Summary
The Directorates General of Audit Defence Services (North and
South) are Field Audit Offices (FAOs) of the Department of Auditor-
General of Pakistan responsible for conducting the audit of budgetary
grants of Defence Services (except Pakistan Ordnance Factories Wah) and
Federal Government Educational Institutions in Cantonments & Garrisons,
managed by Ministry of Defence (MoD) and Ministry of Defence
Production (MoDP). Audit of other allocations made to Defence Services
like Special Transfer Account, United Nations Reimbursement Account
and Defence Pension is also conducted by these FAOs. Moreover, audit of
the entities which are under these Ministries but do not get allocation from
the Government e.g. Cantonment Boards, Frontier Works Organization are
also under the audit purview of these offices.
The jurisdiction of Directorates General Audit Defence Services
(North & South) has been made on geographical basis. The two
Directorates conducted audit of 492 formations of MoD and 40 formations
of MoDP during the audit year 2015-16.
This report highlights systemic issues like huge outstanding dues
in various Cantonment Boards, rampant violations of Public Procurement
Rules across the formations, disregard to delegated financial powers and
contractual obligations.
a. Scope and objectives of Audit
Out of total expenditure of the Federal Government for the
financial year 2015-16, auditable expenditure under the jurisdiction of
Directorates General Audit Defence Services (North and South) was
Rs. 791.569 billion covering 02 PAO’s and 3620 formations. Of this,
Directorates General Audit Defence Services (North and South) audited an
expenditure of Rs. 306.794 billion which, in term of percentage, is 39% of
the auditable expenditure. In addition, Directorates General Audit Defence
Services (North and South) conducted performance audit of 02 projects
and 09 special audit studies. Reports of these audits are being published
separately.
viii
Overall audit objective was to assess compliance with financial
rules, assessment and accountal of receipts, examine the issues of
propriety, economy of expenditure and adequacy of internal controls.
b. Recoveries at the instance of audit
Recovery of Rs. 54.010 billion was pointed out during audit, out of
which recovery of Rs. 1.153 billion and US $ 0.110 million was effected
during year 2016-17 at the time of compilation of report.
c. Audit Methodology
The activities, policies, procedures and internal controls of audited
organizations were reviewed for identifying risk areas, where occurrence
of irregularities and misappropriation could be possible, and for devising
strategy for audit scrutiny. Audit was conducted on the test-check basis
with special emphasis on high monetary value and risk areas which could
be prone to irregularities. Budgeted allocations made by Services
Headquarters were compared and verified with the actual expenditure.
d. Audit Impact
(i) The issue of unauthorized use of A-I Land by Defence Services for
commercial purposes has regularly been raised by Audit since
1986. However, a policy was finalized in April, 2008 but instances
were noticed where Policy was being violated. Audit pointed out
the issue during DACs and PACs and as a result of the persistent
audit objections, a revised policy is being processed in the Ministry
of Defence. The said policy is being framed in the light of issues
raised by the audit from time to time.
e. In view of the proactive approach of the Public Accounts
Committee (PAC) and professional role of Audit, the MoD
constituted various audit committees at Services Headquarters and
also at lower level to comply with the observations.
f. Comments on Financial and Accounting Management
i. The final grant No. 26 pertaining to Ministry of Defence for
financial year 2015-16 was Rs. 799,480.147 million against which
ix
expenditure of Rs. 791,569.416 million was incurred. Thus,
showing an overall saving of Rs. 7,910.731 million.
ii. The accounts of CMA (RC), Rawalpindi revealed that Rs. 214.153
million was paid for purchase of medical store in excess of the
actual budget allocation for the financial year 2015-16. The case
was required to be regularized from Ministry of Defence which
was not done till finalization of this report.
g. Comments on Internal Control and Internal Audit
Department
i. An elaborate structure comprising rules, regulations and
procedures specifying internal checks regarding procurements,
personnel payments and receipts is available in MoD, MoDP and
MAG. An Internal Audit Department (Controller Local Audit,
Defence Services) also exists to check irregularities and violation
of rules and regulations in Defence Services. Despite existing
arrangement, recurrence of irregularities was observed.
ii. There is no internal audit structure available in Military Lands and
Cantonments.
h. The key audit findings of the report
i. Recoverables of Rs. 5,021.910 million and US $ 0.214 million in
61 cases1
ii. Loss to State valuing of Rs. 3,633.644 million and US $ 0.377
Million in 08 cases 2
iii. Unauthorized Expenditure of Rs. 4,215.200 million and US $
2.680 million in 23 cases 3
iv. Mis-procurement of Stores of Rs. 5,175.449 million in 22 cases 4
v. Non-production of Auditable Record of Rs. 36.077 million in 02
cases5
1 1.3, 1.7, 1.10, 1.14, 1.15, 1.18, 2.3 2 1.8, 1.11, 1.15, 2.4 3 1.4, 1.9, 1.12, 1.16, 1.19, 2.5 4 1.5, 1.13, 1.17, 1.20, 2.6 5 1.6
x
Audit Paras for the Audit Year 2015-16 involving procedural
violations including Internal Control weaknesses and irregularities not
considered worth reporting to the PAC are included in Annexure – I & II
MFDAC.
i. Recommendations
(i) Policy regarding payment of HRA to Armed Forces officers
availing facilities of non-standard Government accommodation be
formulated expeditiously and implemented after vetting from Ministry of
Housing and Works and Finance Division.
(ii) Serious irregularities in procurement contracts have been noticed.
Public Procurement Rules, 2004 are needed to be observed. Existing
departmental rules which are inconsistence with the PP Rules should be
amended accordingly.
(iii) Policy issued by the Government for expenditure out of allocation
for Al-Mizan was not being followed and funds were being incurred on
works not covered under the policy. PAO should take necessary steps to
follow Government policy while incurring expenditure from Al-Mizan
funds.
(iv) The unauthorized/unlawful use of A-I land should be checked
limiting its use for the specified purposes only. The income earned from
the use of A-I land should be made transparent, disclosed in the public
accounts and provided to Audit for scrutiny.
(v) The management needs to take steps to recover large amounts of
Government dues pointed out in this report and fix responsibility thereof.
(vi) An internal audit wing comprising qualified officers and staff
should be institutionalized in Military Lands and Cantonments Department
to mitigate the risk of errors / irregularities.
(vii) The scope of Corps Audit Committees at services HQrs should be
made more effective to fix responsibilities for violation of rules and to
take remedial measures to avoid recurrence of irregularities.
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Summary Tables & Charts
Table-1: Audit Work Statistics
(Rs. in Million)
Sr # Description No Budget/Actual
Expenditure
1 Total Entities (Ministries/PAOs) in Audit
Jurisdiction 2
799,480.147
2 Total formations in audit jurisdiction 3620
3 Total Entities (Ministries/PAOs) audited 2
306,794.888 4 Total Formations audited 532
5 Audit and Inspection Reports (LTAR) 532
6 Special Audit Reports 9 -
7 Performance Audit Reports 2 -
8 Other Reports - -
Table-2: Audit Observations by Categories (Rs in Million)
S # Description Amount placed under
Audit Observation
1 Unsound asset management 30,641.350
2 Weak financial management 67,212.940
3 Weak internal controls 62,296.933
4 Others 6,160.937
Total 166,311.710
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Table-3: Outcome Statistics
(Rs. in Million)
Sr
#
Description Expenditure
on
acquiring
Physical
Assets
Civil
Works
Others Receipts Total
current year
Total last
year
1 Outlays
Audited 126,024.621 93,837.022 51,703.089 35,230.156 306,794.88 166,225.697
2
Amount
under Audit
observation
79,422.993 51,996.341 6,160.937 28,731.439 166,311.710 109,727.342
3
Recoverables
pointed out
by Audit
3,394.134 23,598.517 1,262.969 25,754.880 54,010.500 34,393.970
4 Recoverables
accepted 498.749 329.265 296.356 786.966 1,911.336 1,989.801
5 Recoverables
realized 78.708 40.664
999.750 +
$ 0.110 34.493
1,153.615
+ $ 0.110
1,290.716
+ US $ 0.509
xiii
Table-4: Irregularities Pointed Out (Rs. in Million)
S # Description
Amount
under Audit
Observation
1 Violation of rules and regulations as well as principle of
propriety and probity 108,800.543
2 Cases of fraud, embezzlement, thefts and misuse of public
resources -
3 Misclassification of expenditure and receipts. 1,442.959
4 Weaknesses of internal control system 47,715.700
5 Established recoverable and overpayments, or misappropriation
of public money 1,911.336
6 Non-production of record 280.235
7 Others, including cases of accidental loss, negligence etc. 6,160.937
Total 166,311.710
Table-5: Cost-Benefit Analysis
(Rs. in Million)
S # Description Amount
1 Outlays audited (Item 1 of Table 3) 306,794.888
2 Expenditure on audit 275.723
3 Recoverable realized at the instance of audit 1,153.615
+ US $ 0.110
4 Cost - Benefit Ratio 1 : 4
1
CHAPTER-1
Ministry of Defence
1.1 Introduction
Ministry of Defence (MoD) deals with all policy and
administrative matters pertaining to the three armed forces, defence
treaties, defence agreements and military assistance to foreign countries.
MoD also administers Inter Services Organizations, Pakistan Military
Accounts Department, Military Lands and Cantonments and Federal
Government Educational Institutions in Cantonments and Garrisons.
1.2 Brief comments on the status of compliance with PAC's
directives
The status of compliance of Public Accounts Committee (PAC)
directives for the Audit Reports from 1985-86 to 2015-16 discussed during
its various meetings held from July, 1992 to December, 2016 is given
below:-
Year
Total
Paras
No. of Paras
Discussed
Compliance
Made
Compliance
awaited / Non
Complied
Percentage
of
Compliance
1 2 3 4 5 6
1985-86 76 05 02 03 40%
1986-87 36 06 03 03 50%
1987-88 49 08 01 07 12.5%
1988-89 48 15 03 12 20%
1989-90 69 03 0 03 0%
1990-91 63 04 01 03 25%
1991-92 65 05 0 05 0%
1992-93 91 12 06 06 50%
1993-94 198 83 28 55 34%
1994-95 91 03 0 0 0%
1995-96 102 09 01 08 11%
1996-97 106 104 78 26 75%
1997-98 651 05 01 04 20%
2
1998-99 762 762 705 57 92.52%
1999-00 443 222 85 137 38.29%
2000-01 699 85 34 51 40%
2001-02 570 12 0 12 0%
2002-03 166 166 151 15 90.96%
2003-04 112 112 90 22 80.36%
2004-05 55 55 34 21 61%
2005-06 138 121 73 48 60%
2006-07 95 35 13 22 37%
2007-08 56 56 40 16 71.43%
2008-09 39 18 0 18 0%
2009-10 Report yet not discussed
2010-11 Report yet not discussed
2011-12 Report yet not discussed
2012-13 Report yet not discussed
2013-14 69 35 11 24 31.43%
2013-14 Not yet discussed by Sub-PAC
2014-15 Report yet not discussed
2015-16 Report yet not discussed
Total 4849 1941 1360 578 70.07%
Ministry of Defence fully complied with 1360 PAC‟s directives
out of 1941. The Principal Accounting Officer should take necessary steps
to expedite further compliance of PAC‟s directives.
3
Pakistan Army
Audit Paras
1.3 Recoverables / Overpayments
1.3.1 Non-recovery of House Rent Allowance from Army
officers living in Married Accommodation –
Rs. 440.453 Million
According to Rule-66 of Pay and Allowances Vol-II 1999,
“Married officers not provided with Government/hired/requisitioned
married accommodation shall be entitled to House Rent Allowance”.
During audit, it was observed that officers of following 10
Army units were living in Government accommodations and were
regularly drawing HRA in their pay and allowances, which resulted into
an overpayment of Rs. 440.453 million.
(Rs. in Million)
S # DP No. Unit / Formation Amount
1 DP-N-243/2015-16 Pakistan Military Academy, Kakul 1.324
2 DP-N-299/2015-16 Military College, Murree 421.405
3 DP-N-282/2015-16 66 Medical Battalion, Lhr Cantt 1.324
4 DP-N-283/2015-16 HQ 30 Indep Int Brgde Lhr 2.200
5 DP-N-289/2015-16 CMH, Sargodha 2.923
6 DP-N-314/2015-16 CMH, Peshawar 4.328
7 DP-N-424/2015-16 CMH, Multan 3.939
8 DP-N-429/2015-16 502 Central Workshop, EME Rwp 1.577
9 DP-N-469/2015-16 HQ 333 Brgd, Rawalpindi 0.328
10 DP-N-19/2016-17 20-MBRL Regt Arty Bahawalpur Cantt 1.105
Total 440.453
4
When pointed out by Audit in January 2015, it was replied
that MAG authorized HRA to all married officers living in any
accommodation other than proper service accommodation vide letter dated
6th
December, 2003. However, 5% of the recovery of rank pay was being
made from the officers. The reply was not acceptable as the HRA was not
admissible under the rule cited above.
The paras were discussed by the DAC in its meetings held
on 28th
and 30th
September, 2016 and 4th
January, 2017. The DAC pended
the paras till formulation of Policy on House Rent Allowance in the light
of PAC‟s directives.
No further progress was reported till finalization of this
report. Audit stresses for recovery of HRA from Army officers.
DPs-N-243, 299, 282, 283, 289, 314, 424, 429 and 469/2015-16 and DP-N-19/2016-17
1.3.2 Non-recovery of lease rent from the lessee of
agriculture land – Rs. 260.042 Million
According to Rule-88 of Financial Regulations Volume-I
1986, “officers entering into contracts are charged with the responsibility
of making all arrangements necessary to effect a contract”.
During audit, it was noticed in 02 Military Farms that
agricultural land was being used by farmers on lease but its rent
amounting to Rs. 260,041,820 was not recovered as transpired from the
rent recovery register and trading profit and loss accounts, which needed
recovery.
(Rs. in Million)
S # DP No. Unit / Formation Period Amount
1 DP-N-201/2015-16 Military Farm, Sargodha 2013-14 10.398
2 DP-N-27/2016-17 Military Farm, Renala 2014-15 249.644
Total 260.042
5
When pointed out by Audit in May and August, 2016, no
reply was furnished by the executive.
The paras were discussed by the DAC in its meetings held
on 30th
September, 2016 and 4th
January, 2017. The DAC pended the para
till full recovery against serial No. 01. Against serial No. 02, the DAC
pended the para being subjudice.
No further progress was reported till finalization of this
report. Audit stresses for full recovery.
DP-N-201/2015-16, DP-N-27/2016-17
1.3.3 Non-realization of proportionate share from
allottees of Stud Land – Rs. 196.950 Million
According to General Head Quarters QMG‟s Branch (RVF
Dte) Rwp letter No. 5804/269/Rem/C, dated 1st August, 2001 those stud
grantees who are in litigation against resumption order of stud land 65% of
the total produce of land may be forfeited through concerned District
collector from the dates of their illegal possession under the provision of
clause-49(5) to lease deed 1983.
While examining the accounts of District Remount Office
Sahiwal, it was noticed that stud land was allotted to following allottees
for a period of 10 years on animal breeding conditions. After completion
of allotment period, Ministry of Defence issued orders for resumption of
stud land in favour of State. The ex-grantee entered into litigation against
resumption orders. The cases were decided in the favour of State for
illegal occupation, 65% share of total produce amounting to Rs. 196.950
million as detailed below required recovery.
6
(Rs. in Million)
S # DP No.
Name of
Unit /
Formation
Property
No.
Land
occupied Grantee Name
Amount
of Govt.
share
(65%)
1 23/16-17
District
Remount
Office
Sahiwal
Chak No.
2/14-L
Kassowal 32 square
Sardar Khizar
Hayat & others 171.600
2 24/16-17 -do- Chak 30/
2-9 Okara
198 kanal
12 marlas
Naib Sub
Maqbool Ahmed 4.875
3 25/16-17 -do-
Chak
No.30/2-R
Okara
399 kanal
16 marlas
Maj (Rtd)
Khalid Iftikhar
Asghar & others
14.625
4 26/16-17 -do-
Chak
No.28/2-R
Okara
397 kanal
15
marlas
Muhammad
Iqbal 5.850
Total 196.950
When pointed out by Audit in May, 2016 it was replied that
the case regarding recovery would be initiated with DCO office/Provincial
Government.
The matter was discussed by the DAC in its meeting held
on 4th
January, 2017. The DAC directed that case may be discussed with
the DGADS (North) and position be explained to find the way out.
No further progress was reported till finalization of this
report. Audit stresses for early recovery from occupants of land.
DP-N-23, 24, 25 and 26/2016-17
1.3.4 Non-recovery of training charges from foreign
trainees – Rs. 91.784 Million + USD 0.179 Million
According to Joint Services Instructions 4/2006, “Training
charges will be recovered from foreign trainees/cadets when they are
provided such facilities in various institutions of the Pakistan Armed
Forces training institutions”.
7
During audit of below mentioned formations, it was noticed
that training charges valuing Rs. 91,784,500 and USD 0.179 million
against foreign trainees were lying outstanding for the period April, 2014
to August, 2015, which needed to be recovered.
(Rs. in Million)
S # DP No. Unit / Formation Amount
1 DP-N-199/2015-16 Pakistan Military Academy, Kakul 91.784
2 DP-N-450/2015-16 Junior Leader Academy, Shinkari US $ 0.179
Total 91.784
US $ 0.179
When pointed out by Audit in July and December, 2015 it
was replied that training charges of objected period in respect of foreign
trainees had already been forwarded to GHQ for realization of the same
from respective countries.
The para was discussed by the DAC in its meeting held on
28th
September, 2016. The DAC directed to recover outstanding training
charges.
During verification, no documentary evidence relating to
recovered amount was provided to audit by both units. No further progress
was reported till finalization of this report. Audit stresses that overall
amount of Rs. 91.784 million and US $ 0.179 million needed recovery.
DP-N-199 and 450/2015-16
1.3.5 Non-recovery of electricity and sui gas consumed
beyond authorization – Rs. 52.847 Million
Under Rule-81(a) of Quarter and Rents 1985, “free supply
of sui gas shall be made at places where fire wood and K-II is so
authorized for cooking/heating purpose as per scale given in the rule.
Excess consumption shall be paid by the consumer at the supplying
agency rates”.
8
While examining the accounts of following formations, it
was noticed that a sum of Rs. 52.847 million on account of excess
consumption of electricity and sui gas was lying outstanding against
different consumers.
(Rs. in Million)
S # DP No. Unit / Formation Amount
1 DP-N-114/2016-17 GE (Army), Jhelum 1.647
2 DP-N-206/2016-17 GE (Army), Murree 51.200
Total 52.847
When pointed out by Audit in September, 2016, it was
replied that objected amount would be recovered from all concerned
shortly.
The para was discussed by the DAC in its meeting held on
4th
January, 2017. The DAC directed to convene Board of Officers,
recovery be reconciled and action be finalized.
No further progress was reported till finalization of this
report. Audit stresses for early recovery action.
DPs-N-114 and 206/2016-17
1.3.6 Non-recovery of rent and allied charges from
various consumers – Rs. 19.572 Million
According to Para-442 of Defence Services Regulations
1998, “the GE is responsible for making demands for payment of all
revenue and for taking steps for its prompt realization”.
It was observed from the accounts of following G.E offices
that rent and allied charges amounting to Rs. 19.572 million were not
recovered.
9
(Rs. in Million)
S # DP No. Unit / Formation Amount
1 DP-N-250/2015-16 GE (Army) Svcs, Okara 6.317
2 DP-N-261/2015-16 GE (Svcs), Sialkot 1.035
3 DP-N-263/2015-16 GE (Svcs), Sialkot 1.611
4 DP-N-264/2015-16 GE (Svcs), Sialkot 2.097
5 DP-N-453/2015-16 GE (Army), Abbottabad 1.385
6 DP-N-483/2015-16 AGE (Army), D.I Khan 2.314
7 DP-N-128/2016-17 AGE (Army), Attock 2.332
8 DP-N-253/2016-17 GE (Svcs), Gujranwala 1.249
9 DP-N-255/2016-17 GE (Svcs), Multan 1.232
Total 19.572
When pointed out by Audit during the year 2015-16, it was
replied that partial recoveries were effected and balance would be
recovered shortly but no documentary evidence was presented for audit
verification regarding partial recoveries.
The DAC in its meeting held on 28th
September, 2016 and
4th
January, 2017 directed the executives to provide documentary evidence
of the recovered amount to audit and expedite the recovery of remaining
amount.
No further progress was reported till finalization of this
report. Audit stresses for early recovery action.
DPs-N-250, 261, 263, 264, 453 and 483/2015-16, DPs-N-128, 253 and 255/2016-17
1.3.7 Non-recovery of rent and allied charges –
Rs. 88.752 million
According to Para-442 of Defence Services Regulations for
MES 1998, the GE is responsible for making demands for payment of all
revenues, whether credited to Main Head VIII/X-H/XI-C or D, or
compiled as deduction from expenditure, and for taking steps for its
prompt realization.
10
It was observed from the record held with Army
formations/units that a sum of Rs. 88.752 million on account of rent and
allied charges was outstanding for the years 2014-15 and 2015-16. The
details are as under:-
(Rs. in million)
S.No. Unit/Formation DP No. Amount
1 GE (Army) Services Quetta S-290 41.011
2 GE (Army) Karachi S-233 16.873
3 GE (m Army) Services Quetta S-294 10.971
4 GE (Army) Services PanoAqil S-19 5.363
5 GE (Army) Services Quetta S-287 5.209
6 GE (Army) Hyderabad S-27 3.531
7 AGE (Army) Rahim Yar Khan S-79 1.669
8 GE (Army) Services PanoAqil S-330 1.287
9 GE (Army) Services Quetta S-288 1.168
10 AGE (Army)-Khuzdar S-156 0.930
11 GE (Army)-I Quetta S-221 0.740
T o t a l 88.752
When pointed out by Audit from July 2015 to December
2016, it was replied that efforts were being made to recover the
outstanding amount.
The paras were discussed during DAC meetings held on
28th
December, 2016, 10th
and 31st January 2017. The DAC in respect of
paras at serial No. 1 to 7, was apprised that partial recoveries had been
affected while efforts were being made to recover the outstanding amount.
The DAC directed that full recovery be effected and
recovered amount got verified from Audit. In respect of paras at serial No.
5, 9 and 10, the DAC directed that fresh reply be submitted within three
weeks for examination by Audit.
. During verification carried out by Audit, recovery of
Rs. 5.082 million in respect of para at serial No. 02 was verified. No
11
progress was reported in case of the remaining paras till finalization of this
report.
Audit suggests expeditious recovery of the pointed out
amount.
DP-S-290, 233, 294, 19, 287, 27, 79, 330, 288, 156 and 221/2016-17
1.3.8 Non-recovery of Sales Tax from contractors –
Rs. 32.302 million
Section 3 of Sales Tax Act, 1990 stipulates that subject to
the provisions of this Act, there shall be charged, levied and paid a tax
known as Sales Tax @ 17% of the value of taxable supplies made by a
registered person in the course of furtherance of any taxable activity
carried on by the person.
In various Army units, amount was expended on purchase
of store from suppliers/ market, but the Sales Tax amounting to Rs. 32.302
million was either not deducted or less deducted. Besides, no Sales Tax
invoices were available on record. The details are as under;
(Rs. in million)
S.No. Unit/Formation DP No. Amount
1 GE (Army)-II Malir S-401 19.27
2 GE (Army)-I Malir S-398 7.55
3 GE (Army) PanoAqil S-302 2.101
4 AGE (Army )Chorr S-144 1.215
5 GE (Army) PanoAqil S-303 0.855
6 AGE (Army) Khuzdar S-157 0.821
7 GE (Army) Hyderabad S-09 0.490
T o t a l 32.302
When pointed out in March 2015 to October 2016, the
executive stated that contract agreements in question were for execution /
completion of works. No particular supply was made by contractor,
therefore, no Sales Tax was deducted.
12
The DAC in its meeting held on 28th
December, 2016, 10th
and 31st January, 2017 directed the executive to provide relevant record to
Audit for verification.
No record / documents were produced to Audit for
verification till the finalization of this report.
Audit suggests expeditious recovery of pointed out amount.
DP-S-401, 398, 302, 144, 303, 157 and 09/2016-17
1.3.9 Non-recovery of Income Tax from contractors –
Rs. 23.936 million
As per Section-153 of Income Tax Ordinance 2001 as
amended from time to time, every prescribed person making a payment for
rendering or providing of services is liable to deduct tax from the gross
amount of the bills at prescribed rates.
In various Army units, a sum of Rs. 23.936 million on
account of income tax was not deducted from the final bills of contractors.
The details are as under:
(Rs. in million)
S.No. Unit/Formation DP No. Amount
1 GE (Army) Services, Quetta S-286 6.932
2 GE (Army) Karachi S-235 6.667
3 Station HQ, Quetta S-206 6.375
4 GE (Army)-I, Quetta S-220 3.962
T o t a l 23.936
When pointed out by Audit in March 2015, the executive
replied that the efforts were being made for recovery.
The paras were discussed during DAC meeting held on 10th
January, 2017. The DAC in respect of paras at serial 1 and 2 directed that
documents be provided to Audit for examination/verification. For paras at
13
serial no 3 and 4, the DAC directed the executive to submit fresh replies
within three weeks for examination by Audit.
No record / documents were produced to Audit for
verification till the finalization of this report. Besides, replies from the
executive were also awaited.
Audit suggests expeditious recovery of pointed out amount.
DP-S-286, 235, 206 and 220/2016-17
1.3.10 Non-deposit of Government’s share of rental
income – Rs. 15.628 Million
According to policy on use of A-1 Land circulated vide
MoD letter dated 2nd
April, 2008, in order to launch essential commercial
activities required to serve the residents of the respective garrison, survey
will be conducted by a board of officers to determine the actual area under
usage. The rent shall be charged @ 6% per annum of existing revenue rate
of the said land. Government‟s share @ 25% of the rent so charged will
be deposited into Government treasury. Besides, the entire amount of rent
charged for use of A-I land for agricultural purposes will be deposited into
Government treasury.
In Central Ordnance Depot, Karachi commercial/
agricultural activities were being carried out on “A-1” land. However,
Government‟s share in the rent amounting to Rs. 15.628 million was not
deposited into Government Treasury. The details are as under;
(Rs. in million)
S.No. Detail of activities DP No. Amount
1 Banquet Halls/ Marriage Lawns S-346 12.749
2 Agricultural activities S-344 2.879
T o t a l 15.628
When pointed out by Audit in December 2016, the
executive replied that the cases for assessment of rent had been initiated
for approval from competent authority.
14
The paras were discussed in DAC meeting held on 31st
January, 2017. The executive apprised the DAC that agricultural activities
were being carried out on Ordinance Estate Land and not A-1 Land.
Furthermore, Government‟s share in the rent from banquet halls/marriage
lawns was being deposited as per A-1 Land Policy.
The DAC directed that clarification regarding existence of
land category „Estate Land‟ may be obtained from MoD and documents /
records be produced to Audit for examination / verification.
No record / documents were produced to Audit for
verification / examination till the finalization of this report.
Audit suggests early deposit of government share in
treasury.
DP-S-346 and 344 /2016-17
1.3.11 Non-recovery of stamp duty from contractors –
Rs. 7.903 Million
As per Section 35 of Stamp Act 1899, no instrument
chargeable with duty shall be admitted in evidence for any purpose by any
person having by law or consent of parties authority to receive evidence,
or shall be acted upon, registered or authenticated by any such person or
by any public officer, unless such instrument is duly stamped.
As per Government of Sindh Finance Act 2009, “Stamp
duty of Thirty paisa for every hundred rupees or part thereof of the amount
of the contract will be charged”.
Contrary to above rule, the record held with the
units/formations revealed that a sum of Rs. 7.903 million on account of
stamp duty was not recovered against certain contracts during the years
2012-13, 2013-14 and 2014-15. The details are as under;
15
(Rs. in Million)
S.No. Unit/Formation DP No. Amount
1 ACE 5 Corps, Karachi S-25 1.798
2 GE (Army)-II, Malir S-404 1.569
3 C.M.H, Malir S-386 0.924
4 GE (Army)-I, Malir S-400 0.921
5 SSD, ASC, Hyderabad S-97 0.880
6 SSD, ASC, Karachi S-99 0.653
7 GE (Army) Karchi S-236 0.570
8 602, EME, Workshop, Karachi S-160 0.357
9 Station Headquarter, Quetta S-205 0.231
T o t a l 7.903
When pointed out by Audit in December 2015 to
November 2016, it was replied that Finance Act of Government of Sindh
was not applicable on departments working under Federal Government.
The paras were discussed during DAC meetings held on
28th
December, 2016 and 10th
and 31st January, 2017. The DAC directed
the executive to refer the case to Ministry of Defence for clarification.
No progress was reported to Audit till finalization of this
report. Audit suggests recovery of the pointed out amount.
DP-S-25, 404, 386, 400, 97, 99, 236, 160 and 205/2016-17
1.3.12 Non-recovery of gas charges on account of excess
consumption beyond free authorization limit –
Rs. 6.338 Million
According to Rule-81 of Quarters and Rents Rules, 1985 as
amended vide letter No. F.5620/109/Qtg-4/F-2/D-3(AIII)/2002 dated
October 14, 2009, scale for free consumption of Sui Gas to a cook house is
prescribed by the government @ 400 cft per month. Consumption in
excess of this scale is to be paid by the consumer concerned. Further,
according to Para-442 of Defence Services Regulations for MES 1998, the
16
GE is responsible for making demands for payment of all revenue, and
taking steps for its prompt realization.
In four Army units, gas was consumed in excess of
authorized quantity amounting to Rs. 6.338 million during the year
2014-15 and 2015-16. However, the amount was not recovered from the
concerned units/formations. The details are as under:-
(Rs. in million)
S.No. Unit/Formation DP No. Amount
1 GE (Army) Services Quetta S-291 3.086
2 GE (Army) Services Malir S-295 1.130
3 Station Headquarters Quetta S-208 1.063
4 AGE (Army) SI&T Quetta S-01 1.059
T o t a l 6.338
When pointed out by Audit from March 2016 to November
2016, the executive replied that efforts were being made to recover the
outstanding amount.
The Paras were discussed in the DAC meeting held on 10th
January, 2017. The DAC in respect of Para at serial No. 1 and 2 was
apprised that partial recoveries had been made. In respect of para at serial
No 4, the executive informed that a case had been sent for regularization
to HQ, Southern Command.
In respect of paras at serial No. 1 and 2, the DAC directed
the executive to recover the amount in question and get the recovery
verified from Audit. In respect of para at serial No. 3, the DAC directed
the executive to submit fresh reply within three weeks for examination by
Audit. In respect of the para at serial No. 4, the DAC directed that status of
gas meter be got verified from Sui Southern Gas Company Limited.
No progress of the cases was reported till the finalization of
this report. Audit suggests for expeditious recovery of pointed out amount.
DP-S-291, 295, 208 and 01/2016-17
17
1.3.13 Non-recovery of electricity charges on account of
excess consumption beyond free authorization
limit – Rs. 3.845 Million
According to Para-772 of Defence Services Regulations for
MES 1998 “Energy for any unauthorized appliances will be charged for.
Any allowance for hot weather establishment which would be admissible
may be drawn where fans are installed at unit expense and the energy is
paid for by the unit.
Further, according to Rule-85, Quarters and Rents Rules,
1985 “ Except when occupied by non-entitled consumers, military
buildings for which power points are authorized in Barrack Synopsis, shall
be supplied free electric energy for authorized consuming apparatus.”
In Garrison Engineer (Army) Services, payment of electric
bills was made to QESCO on account of unit/formation lines in excess of
authorization, amounting to Rs. 3.845 million which needed to be
recovered from concerned units.
When pointed out by Audit in November 2016, the
executive replied that the electric supply was being provided to units /
formation through bulk electric meters and recovery was under process.
The para was discussed in the DAC meeting held on 10th
January, 2017. Since no reply was submitted, the DAC directed the
executive to submit fresh reply within three weeks for examination by
Audit.
No progress of the case was reported to Audit till the
finalization of this report.
Audit recommends expeditious recovery of pointed out
amount.
DP-S-289/2016-17
18
1.4 Irregular / Un-authorized expenditure
1.4.1 Unauthorized expenditure on works out of Al-
Mizan funds – Rs. 658.867 Million
As per Para-1(v) of Ministry of Defence letter No.
7/6/2004-05/D-21 (Budget) dated 30th
November, 2004, the releases from
Special Transfer Account shall be used for procurement of stores and for
replenishment of stock. According to Standing Operating Procedure of Al-
Mizan Package-2008 Para-1(a) issued by GHQ Chief of Logistic Staff
Secretariat Monitoring and Budget Cell, “This fund is utilized only for the
procurement of store/equipment required for the troops deployed in
operation Al-Mizan”.
During audit of following formations, it was noticed that
contracts valuing Rs. 658.867 million were concluded for different types
of works out of Al-Mizan funds, which were not covered as per above
cited letter. Therefore, the expenditure incurred on this account stood
unauthorized and needed regularization by the Government of Pakistan.
(Rs. in million)
S # DP No. Name of Unit / Formation Amount
1 DP-N-353/2015-16 GE (Army)-I, Kharian 19.935
2 DP-N-377/2015-16 GE (Army)-I, Sialkot 109.679
3 DP-N-413/2015-16 EME College, Rawalpindi 13.312
4 DP-N-446/2015-16 GE (Army)-II, Gujranwala 43.677
5 DP-N-479/2015-16 AGE (Army) Chunnian 36.691
6 DP-N-488/2015-16 GE (Army) Constn, Lahore 85.505
7 DP-N-511/2015-16 GE (Army), Mangla 20.983
8 DP-N-16/2016-17 GE (Army), Multan 42.969
9 DP-N-83/2016-17 GE (Army) Svcs, Rawalpindi 33.173
10 DP-N-95/2016-17 GE (Army), Multan 46.226
11 DP-N-113/2016-17 GE (Army), Jhelum 32.759
12 DP-N-122/2016-17 GE (Army), Mangla 71.261
13 DP-N-204/2016-17 GE (Army), Murree 22.808
14 DP-N-207/2016-17 GE (Army), Mangla 27.756
15 DP-N-216/2016-17 GE (Army) Constn, Lahore 13.323
19
16 DP-N-239/2016-17 AGE (Army) Khanewal 38.810
Total 658.867
When pointed out by Audit in August, 2015 and March,
2016, it was replied that works were carried out on the basis of funds
released by the QMG Branch GHQ Rawalpindi. The reply was not correct
as incurring of expenditure other than procurement of stores and
replenishment of stock was not admissible under Ministry of Defence
letter dated 30th
November, 2004.
The paras were discussed by the DAC in its meetings held
on 29th
, 30th
September, 2016 and 5th
January, 2017. The DAC directed for
verification of relevant record/documents from Audit.
During verification, no relevant record was provided for
verification. Audit suggests early regularization of the expenditure.
DPs-N-353, 377, 413, 446, 479, 488 and 511/2015-16,
DPs-N-16, 83, 95, 113, 122, 204, 207, 216 and 239/2016-17
1.4.2 Un-authorized advance payment on account of
electricity and water charges bills – Rs. 609.626
Million
Under rule-47(e) of Financial Regulations Volume-I 1986,
“the most careful supervision over expenditure will be exercised and on no
account shall money be spent simply because it is available”.
While examining the accounts of GE (A) Services
Rawalpindi and Peshawar, it was noticed that advance payments
amounting to Rs. 609.626 million were released on account of
electricity/water bills to WAPDA, PESCO and TESCO in the month of
June to avoid lapse of funds, which was violation of above rule.
When pointed out by Audit in August 2015 it was replied
that funds for payment to WAPDA/PESCO/TESCO were not received
during July, August and September. Usually funds for these months were
20
received in advance during June and payments were made accordingly to
avoid late payment surcharge.
The para was discussed by the DAC in its meeting held on
5th
January, 2017. The DAC directed to hold departmental inquiry and fix
responsibility.
No further progress was reported till finalization of this
report. Audit suggests early implementation of DAC‟s directives.
DP-N-84 and 245/2016-17
1.4.3 Un-authorized utilization of fund out of United
Nation Reimbursement Account – Rs. 308.987
Million
According to provision of Government of Pakistan,
Ministry of Defence letter No. 7/7/2004/05/D-21(Budget) dated 27th
November, 2004 expenditure out of UNRA could be utilized for:-
(a) Purchase and replenishment of equipment and stores for
Army contingents deployed on UN peace keeping missions.
(b) Pay and allowances and transportation of troops.
(c) Incidental and misc expenditure of Army contingents
directly related to UN peace keeping mission.
Further, as per amendment made by the Ministry of
Defence letter dated 7th
March, 2009, expenditure can be incurred on
projects approved by the Chief of Army Staff and financially concurred by
the Finance Secretary on case to case basis.
During audit, it was noticed in 08 Army units that an
amount of Rs. 308.987 million was expended on different works out of
UNRA in violation of above authority.
21
(Rs. in million)
S # DP No. Name of Unit / Formation Amount
1 DP-N-253/2015-16 GE (Army) GHQ, Rawalpindi 58.449
2 DP-N-374/2015-16 GE (Army) Constn-I, Rawalpindi 20.028
3 DP-N-388/2015-16 Ordnance Depot, Nowshera 10.688
4 DP-N-494/2015-16 GE (Army), Jhelum 14.021
5 DP-N-01/2016-17 GE (Army), Jhelum 8.013
6 DP-N-115/2016-17 GE (Army), Jhelum 126.289
7 DP-N-131/2016-17 GE (Army), Mangla 69.844
8 DP-N-248/2016-17 ESD, Jhelum 1.655
Total 308.987
When pointed out by Audit in February 2015, no reply was
furnished by the executive authorities.
The paras were discussed by the DAC in its meetings held
on 29th
, 30th
September, 2016 and 4th
, 5th
January, 2017. The DAC
directed for verification of relevant documents / record from audit.
No documentary evidence regarding funds approval by the
Ministry of Finance was produced till finalization of this report. Audit
stresses for early regularization.
DPs-N-253, 374, 388 and 494/2015-16, DPs-N-01, 115, 131 and 248/2016-17
1.4.4 Un-authorized encroachment on Army land by
civilians – Rs. 267.300 Million
As per Rule-26 (ix) (a) of Cantonment Land Administration
Rules (CLAR) 1937, an encroachment is an un-authorized occupation of
government land and should not be permitted to remain in existence under
any circumstances unless it is properly regularized.
While examining of the accounts of 399 EME Battalion,
Dhamial Road, Rawalpindi, it was noticed that 48 Kanal 12 Marlas A-I
Army land valuing Rs. 267,300,000 (972 Marlas x Rs. 275,000 (DC Rate
2014) situated at Qasim Aviation Base was encroached, as evident from
22
the Garrison HQ C/O HQ 10 Corps Chaklala letter dated 7th
April, 2008.
Therefore, the same needed to be vacated.
When pointed out by Audit in May 2015, it was replied that
encroachment on the land was initially highlighted in 1996 by HQ 10
Corps. Responsibility for demarcation was assigned to HQ 101 Aviation
Group and 399 EME Bn. Efforts were being made by this Battalion to
remove the encroachment on the land. However, any forced demarcation
at present will damage the civil-military relations.
The para was discussed by the DAC in its meeting held on
30th
September, 2016. The DAC constituted a committee consisting of
MEO Rwp, Representative of Land and Qtg Dte GHQ under the
chairmanship of JS-I.
The committee will determine the demarcation of
encroached land and submit report to DAC in its next meeting.
Progress of the constituted committee was not reported till
finalization of this report. Audit suggests immediate implementation of
DAC‟s directives.
DP-N-477/2015-16
1.4.5 Un-authorized conclusion of contracts beyond
financial power – Rs. 63.393 Million
According to Annexure-H of Rule-89 of Financial
Regulations Volume-I 1998 (Army & Air Force) as amended vide
Ministry of Defence letter No. F.3/1/98/D-15, dated 23rd
February, 2008,
the contractual power of DGRV&F for conclusion of contracts is
Rs. 4,500,000.00.
During audit, it was noticed in 02 Army formations that the
contracts for procurement of Cattle Feed/LW Bhossa/MO Cake and works
projects valuing Rs. 63.393 million was accorded by the DGRV&F
beyond his financial powers.
23
(Rs. in Million)
S # DP No. Name of Unit / Formation Amount
1 DP-N-200/2015-16 Remount Depot, Mona 35.700
2 DP-N-202/2015-16 Military Farm, Sargodha 27.693
Total 63.393
When pointed out by Audit in August 2015, it was replied
that the procurements were made after approval of the competent
authority.
The para was discussed by the DAC in its meeting held on
30th
September, 2016. The DAC directed for verification of relevant
documents/record from Audit.
No further progress was reported till finalization of this
report. Audit stresses for early regularization of the expenditure.
DPs-N-200 and 202/2015-16
1.4.6 Unauthorized payment of project allowance in
violation of Government orders – Rs. 3.065 Million
According to Govt. of Pakistan, Ministry of Finance
(Regulation Wing) letter No.F-16 (1)R-14/2003 dated 18th
April, 2012,
project allowance will be discontinued in all types of projects with
immediate effect to remove distortion in the system.
While examining the accounts of National University of
Science and Technology (NUST) Islamabad, it was noticed that project
allowance amounting to Rs. 3,065,000 was paid to officers of NUST
though all type of project allowances had been discontinued by the
Ministry of Finance (Regulation Wing) vide its letter dated 18th
April,
2012.
When pointed out by Audit in January, 2016 it was replied
that comprehensive reply would be furnished to audit shortly.
24
No DAC was convened by the Ministry of Science and
Technology on paras relating to NUST. Audit stresses for recovery of
unauthorized project allowance.
DP-N-201/2016-17
1.4.7 Unauthorized payments to contractors before
physical completion of work – Rs. 534.618 Million
According to Rule-408 to 417 of Defence Services
Regulations for MES 1998, “there is no provision of advance payment to
contractor except secured advance”.
In various Army units, final payments against different
contracts were released during June 2015 and June 2016, showing
completion of 100% work. However, Audit observed that the works were
still in progress and the final payments were released to contractors to
avoid the lapse of funds at the end of June 2015 and June 2016, instead of
surrendering the funds.
Final / Running payments were made to contractors without
physical completion of works resulted in undue financial aid to contractor
amounting to Rs. 534.618 million. The details are as under:-
(Rs. in Million)
S.No. Unit/Formation DP No. Amount
1 GE (Army) Chorr S-332 217.508
2 GE (Army) Hyderabad S-179 83.059
3 AGE (Army) Chorr S-200 70.105
4 GE (Army) Hyderabad S-180 66.206
5 AGE (Army) Chorr S-141 30.830
6 AGE (Army) Rahim Yar Khan S-232 19.675
7 GE (Army) Pano Aqil S-301 14.140
8 GE (Army)-II, Quetta S-66 8.612
9 GE (Army)-II, Quetta S-50 7.391
10 AGE (Army) Construction, Karachi S-189 7.289
11 GE (Army)-II, Quetta S-68 4.834
12 GE (Army) Construction, Karachi S-184 3.516
25
13 GE (Army) Construction, Karachi S-185 1.453
T o t a l 534.618
When pointed out by Audit from February 2016 to
November 2016, it was replied that payments were released to contractors
after completion of 100% work done / work actually executed. In this
regard completion certificates were issued by SDO/Engineer in–charge.
Hence, no undue favor was given to contractors.
The DAC in its meeting held on 28th
December, 2016, 10th
and 31st January, 2017, directed to hold fact finding inquiry besides fixing
responsibility and taking disciplinary action against those found
responsible and report be submitted to MoD/Audit. Furthermore,
regularization action may be initiated. The paras at serial No. 2 and 3 were
pended by the DAC due to non-receipt of reply.
No progress was reported to Audit till the finalization of
this report.
Audit recommends regularization of the unauthorized
payments.
DP-S-332, 179, 200, 180, 141, 232, 301, 66, 50, 189, 68, 184 and 185/2016-17
1.4.8 Unauthorized advance payment to QESCO –
Rs. 241.235 Million
According to Para-408 to 417 of Defence Services
Regulations for MES 1998, “there is no provision of advance payment to
contractor except secured advance”.
Contrary to above rule, in Garrison Engineer (Army)
Services, Quetta, an amount of Rs. 241.235 million was paid as advance to
QESCO on account of electric bills for the month of June 2016. The
payment was made just to avoid lapse of funds.
When pointed out by Audit in November 2016, the
executive replied that the consumption of electricity for the month of June
26
2016, was not included in the bill. To avoid arrears and late payment
surcharge, payment was made which had already been adjusted.
The para was discussed in DAC meeting held on 31st
January, 2017. The executive reiterated their earlier stance. The DAC
directed that relevant record/documents be produced to Audit for
examination / verification. The DAC also directed to discontinue such
advance payments in future.
Audit recommends regularization of the unauthorized
advance payment.
DP-S-293/2016-17
1.4.9 Unauthorized utilization of Al-Mizan Grant –
Rs. 75.504 Million
As per Para 1(v) of MoD letter No.7/6/2004-05/D-
21(Budget) dated 30th
November 2004, the releases from “Special
Transfer Account” (Al-Mizan) shall be used for replenishment of stores
and for procurement . Further, according to Standing Operating Procedure
of AL-Mizan Package-2008 Para 1(a) issued by GHQ Chief of Logistics
Staff Secretariat, Monitoring and Budget Cell, “This fund is utilized only
for the procurement of store/equipment required for the troops deployed in
operation AL-Mizan”.
In three Army units, Rs. 75.504 million were utilized from
Al-Mizan funds for procurement of machinery/equipment and
construction work in areas which were not declared as operational area for
the Al-Mizan Package. The details are as under;
(Rs. in million)
S No. Unit / Formation DP No. Amount
1 C.M.H, Malir S-360 62.371
2 GE (Army)-II Quetta S-56 11.029
3 AGE (Army) Rahim Yar Khan S-230 2.104
Total 75.504
27
As the said funds could be only used for procurement of
Defence Stores for the troops deployed in operation AL-Mizan, the
expenditure stood as unauthorized,
When pointed out by Audit in October, 2016, the executive
stated the funds were allocated by the competent Authority i.e. QMG.
The DAC in its meetings held on 28th
December, 2016, 10th
and 31st January, 2017 directed for regularization of the expenditure in
respect of para at serial No. 2. With respect to paras at serial No. 1 and 3,
the DAC directed the executive to provide relevant record / documents to
Audit for examination / verification.
No further progress was reported / record produced to
Audit till finalization of this report.
Audit suggests regularization of unauthorized expenditure.
DP S-360, 56 and 230/2016-17
1.4.10 Unjustified expenditure on repair of pumps –
Rs. 51.870 Million
According to Rule-11 of Equipment Regulations Volume-II
(Instructions) 1987, for stores condemned as unserviceable/repairable due
to wear and tear, a copy of the condemnation board proceedings will be
linked with the office copy of the demand to meet the audit requirements.
In SCARP-VI, Rahim Yar Khan, an amount of Rs. 51.870
million was incurred on repair/replacement of 99 submersible pumps of
1.5 cusecs due to less discharge of water. Examination of contract
agreement revealed that each pump had same fault and required same type
of repair which was not understood and not justified. Furthermore, no
documentary evidence regarding holding of condemnation board or board
proceedings was produced to Audit. Therefore, the expenditure was held
irregular and doubtful in audit.
28
When pointed out in March 2016, the executive replied that
all repair/replacement works were done on the report received from
concerned SDOs. Further, repair and maintenance works were segregated
category wise for similar type of fault/repair and contracts concluded for
each category separately.
The DAC in its meeting held on 28th
December, 2016
directed the executive to provide relevant documents to Audit for
verification within one month.
No record / documents were produced for verification till
the finalization of this report.
Audit suggests regularization of the expenditure.
DP S-85/2016-17
1.4.11 Irregular expenditure on replacement of heating
system – Rs. 37.658 Million
According to Rule 25 of Defence Services Regulations for
MES 1998, the power of administrative sanction of QMG for all ordinary
repairs renewal and replacement work is up to Rs. 6,000,000.
In Garrison Engineer (Army) Command and Staff College
(C&SC) Quetta, a sum of Rs. 37,658,189 (Rs. 29,960,699 + Rs.
7,697,490) was incurred during 2014-15, against two administrative
approvals of Rs. 28.000 and Rs. 7.000 million, issued by QMG for
replacement of unserviceable Boiler Heating System installed in main
building. However, the QMG was empowered to issue sanction up to
Rs. 6.000 million only. Thus the said expenditure stood as irregular.
When pointed out by Audit in March, 2016, the executive
replied that the expenditure sanctioned by QMG pertained to budget “Cost
of War” Main Head 26. “Cost of War” was a special code head under
which QMG was empowered to sanction work of any value.
29
The DAC in its meeting held on 28th
December, 2016
directed for regularization of the expenditure within two months.
No progress was reported to Audit till finalization of this
report.
Audit suggests regularization of the expenditure.
DP S-20/2016-17
1.4.12 Irregular revision of sanction for change in
structural design after construction of building –
Rs. 2.573 Million
Under Rule-6(a) F.R. Vol –I 1986“ Every officer should
exercise the same vigilance in respect of expenditure incurred from
Government revenue as a person of ordinary prudence would exercise in
respect of the expenditure of his own money.”
In Garrison Engineer (Army)-I Quetta, admin approval for
construction of 16 x BOQs (D/S) at Quetta Cantonment, dated 26th
March
2013, was issued by QMG for Rs. 17,652,000. Later, revised admin
approval, dated 11th
May 2015, for the said work for
Rs. 20,213,000 was issued by the same authority and final payment of
Rs. 19,762,187 was paid to the contractor.
It was observed from 1st Running Accounts Receipt (RAR)
that Rs. 15,939,613 were paid to a contractor against percentage of work
done shown in RAR as 99.99% vide CBI No. 149 dated 19th
June, 2013.
As per record, the work was completed on 09th
April, 2014 and the only
formality left was payment of final bill. Instead, however, a revised admin
approval was issued by QMG on 11th
May 2015. Further, an amendment
in contract, bearing No. 1 for Rs. 2,573,158 was approved by DGW&CE
on 01st June, 2015 through which the reason for revision was recorded as
“due to change of structural drawing for Seismic Zone-IV.”
Audit was of the view that reason for amendment was not
valid as 100% structural work had already been completed. The revised
30
admin approval and amendment were issued just to favour the contractor,
which needed recovery/regularization.
When pointed out by Audit in October 2016, the executive
replied that as per amendment attached in final bill, drawing as per
Seismic Zone - IV was prepared on 23rd
April, 2016 and was incorporated
accordingly during execution on site. There was only a delay in sanction
from competent authority and financial effect of amendment was paid in
final bill.
Reply was not tenable as the work was completed 99.99%
as per 1st RAR and reason for amendment was not valid.
The DAC in its meeting held on 10th
January, 2017 directed
the executive to submit fresh reply to Audit within three weeks for
examination.
Response of the executive was awaited till finalization of
this report.
Audit recommends recovery / regularization of the
expenditure.
DP-S-215/2016-17
1.4.13 Irregular expenditure on repair of footpath -
Rs. 2.384 Million
According to Para 12.22, Schedule of Rates, 2014 the sub
base for the areas to be used for pedestrians only, well compacted earth is
sufficient.
In Garrison Engineer (Army) Services, Quetta, payment for
repair/replacement of footpath was made to a contractor, but quantity and
rates of cement concrete and crush stone were incorporated in the
composite rate. As these items were not required, it resulted in
unjustified/irregular payment of Rs. 2,384,795 to the contractor.
31
When pointed out by Audit in November 2016, the
executive replied that the work was executed as per drawings approved by
competent technical authority according to the site requirement. The
specification could be verified from the drawings and specifications. The
generalized specification could be altered by the competent technical
authority according to the site requirement.
The reply was not tenable as method of laying footpath was
clearly defined under Para-12.22 Schedule of Rates 2014, duly approved
by E-in-C. The drawings mentioned in the reply were not part of the said
contract.
The DAC in its meeting held on 10th
January, 2017 directed
the executive to submit fresh reply to Audit for examination within three
weeks.
Response of the executive was awaited till finalization of
this report.
Audit suggests regularization of the expenditure.
DP S-283/2016-17
1.5 Mis-procurement of stores
1.5.1 Mis-procurement of stores in violation of Public
Procurement Rules – Rs. 726.801 Million
According to Rule-12(1-2) of Public Procurement Rules-
2004, “all procurement over one hundred thousand rupees and up to the
limit of Rs. 2.000 million shall be advertised on the authority‟s website.
Further procurement over Rs. 2.000 million should be advertised on the
authority‟s website as well as in two national dailies, one in English and
the other in Urdu”.
During audit, it was noticed in 30 formations that contracts
valuing Rs. 726.801 million were awarded to different contractors without
32
calling for open competition through newspapers and PPRA‟s website,
which was violation of above PP rules.
(Rs. in million)
S # DP No. Name of Unit / Formation Amount
1 DP-N-239/2015-16 Military Farm, Sargodha 34.245
2 DP-N-240/2015-16 CMH (AK), Rawalakot 20.050
3 DP-N-286/2015-16 HQ 23 Div, Jhelum 85.818
4 DP-N-287/2015-16 Remount Depot, Sargodha 23.127
5 DP-N-300/2015-16 Military College, Jhelum 4.079
6 DP-N-320/2015-16 CMH, Gujranwala 34.000
7 DP-N-322/2015-16 CMH, Gujranwala 75.268
8 DP-N-323/2015-16 CMH, Gujranwala 61.062
9 DP-N-327/2015-16 Remount Depot, Sargodha 29.201
10 DP-N-328/2015-16 Remount Depot, Sargodha 5.794
11 DP-N-367/2015-16 Military Farm, Jhelum 34.200
12 DP-N-368/2015-16 CMH, Rawalakot 2.500
13 DP-N-493/2015-16 CMH, Bannu 9.638
14 DP-N-02/2016-17 GE (Army), Jhelum 4.611
15 DP-N-94/2016-17 GE (Army), Multan 2.499
16 DP-N-112/2016-17 4 Engr Btn, Bahawalpur 7.000
17 DP-N-116/2016-17 GE (Army), Jhelum 8.053
18 DP-N-130/2016-17 GE (Army), Mangla 8.342
19 DP-N-150/2016-17 Remount Depot, Sargodha 164.794
20 DP-N-159/2016-17 AGE (Army), Risalpur 22.223
21 DP-N-166/2016-17 GE (Army), Terbella 12.760
22 DP-N-168/2016-17 HQ Engr Centre, Risalpur 2.500
23 DP-N-175/2016-17 HQ Engr Centre, Risalpur 4.500
24 DP-N-200/2016-17 SSD, D.I. Khan 1.950
25 DP-N-202/2016-17 Arty Centre, Attock 4.819
26 DP-N-209/2016-17 GE (A) Services Mangla 5.783
27 DP-N-213/2016-17 Signal Training Centre Kohat 9.000
28 DP-N-242/2016-17 GE (Army), Abbottabad 2.904
29 DP-N-244/2016-17 GE (Army) Svcs, Rawalpindi 41.505
30 DP-N-256/2016-17 GE (Army), Kohat 4.576
Total 726.801
When pointed out by Audit in 2015 and 2016, it was
replied that contracts of stores and works were awarded to firms after
33
meeting all codal formalities. The replies of executives were not
acceptable as documentary evidences regarding advertisement in
newspapers or PPRA‟s invoices were not produced.
The paras were discussed by the DAC in its meetings held
on 28th
, 30th
September, 2016 and 4th
, 5th
January, 2017. The DAC
directed to hold inquiry and fix responsibility.
No progress was reported to Audit till finalization of this
report. Audit stresses for implementation of DAC‟s directive.
DPs-N-239, 240, 286, 287, 300, 320, 322, 323, 327, 328, 367, 368 and 493/2015-16,
DPs-N-02, 94, 112, 116, 130, 150, 159, 166, 168, 175, 200, 202, 209, 213, 242, 244 and
256/2016-17
1.5.2 Award of contracts without open tendering in
violation of PPRA Rules – Rs. 564.321 Million
According to Rule-12 (1, 2) of PPRA Rules-2004, all
procurements over one hundred thousand rupees and upto the limit of
Rs. 2.000 million shall be advertised on the authority‟s website. Further,
procurement over Rs. 2.000 million should be advertised on the
authority‟s website as well as in two national dailies, one in English and
the other in Urdu.
During audit of different units/formations, it was observed
that contracts were concluded without advertisement on PPRA website/
newspapers in violation of PPRA Rules, 2004. The details are listed
below:-
(Rs. in million)
S # Name of Unit / Formation DP No. Amount
1 SSD ASC, Hyderabad S-61 249.674
2 305 Spare Depot, Karachi S-248 134.532
3 C.M.H Malir S-353 49.421
4 SSD ASC, Karachi S-98 42.495
5 GE (Army)-II, Quetta S-48 31.408
6 C.M.H Malir S-381 21.176
34
7 C.M.H, Badin S-171 12.238
8 AGE (Army) Chorr S-142 8.197
9 C.M.H Malir S-358 5.930
10 C.M.H, Malir S-384 4.400
11 AGE (Army Rahim Yar Khan S-81 2.745
12 GE (Army)-I, Quetta S-223 1.525
13 Station Headquarter Badin S-183 0.580
Total 564.321
When pointed out by Audit from December 2015 to
November 2016, the executive submitted evasive replies without
substantive documentary evidence.
The DAC in its meetings held on 28th
December, 2016, and
10th
and 31st January, 2017 directed the executive to hold inquiry, fix
responsibility, take disciplinary action against those found responsible and
submit report to MoD/Audit. Furthermore, in respect of paras at serial no
2, 3, 4, 7, 9 and 11, the DAC directed that documents be provided to Audit
for examination/verification.
No progress was reported / record produced to Audit till
finalization of this report.
Audit suggests regularization of the PPRA Rules violation.
DP-S-61, 248, 353, 98, 48, 381, 171, 142, 358, 384, 81, 223 and 183/2016-17
1.5.3 Conclusion of contracts giving less than prescribed
response time in bidding process – Rs. 33.135
Million
According to Rule-13(1) of PPRA Rules, 2004 under no
circumstances the response time shall be less than 15 days for national
competitive bidding.
In two Army units/formations, contracts were concluded
with less than fifteen days response time given in the bidding process. The
details are listed below:-
35
(Rs. in million)
S # Name of Unit / Formation DP No. Amount
1 GE (Army) Services, Quetta. S-292 30.00
2 AGE (Army) Khuzdar S-158 3.135
Total 33.135
When pointed out by Audit in October and December 2016,
the executive either did not furnish reply or submitted evasive replies
without substantive documentary evidence.
The DAC in its meeting held on 10th
January, 2017 directed
the executive to conduct fact finding inquiry, fix responsibility and take
disciplinary action against the person(s) found at fault. The DAC also
directed that the violation of rules may be got regularized.
No progress was reported to Audit till finalization of this
report.
Audit suggests regularization of the PPRA Rules violation.
DP-S-292 and 158/2016-17
1.5.4 Award of contracts before publication of tenders –
Rs. 14.839 Million
According to Rule-38 of PPRA Rules, 2004 the bidder with
the lowest evaluated bid, if not in conflict with any other law, rules,
regulations or policy of the Federal Government, shall be awarded the
procurement contract, within the original or extended period of bid
validity.
In three Army units/formations tenders were advertised on
the PPRA website but the related contracts had already been awarded to
contractors. The irregular advertisement /tendering process was carried out
merely to fulfill a formality. The details are as under;
36
(Rs. in million)
S # Name of Unit / Formation DP No. Amount
1 GE (Army)-I, Malir. S-397 5.660
2 GE (Army)-II Quetta. S-53 3.951
3 GE (Army)-II Quetta. S-59 3.044
4 AGE (Army) Khuzdar S-155 2.184
Total 14.839
When pointed out by Audit from June 2015 to August
2016, the executive either did not furnish reply or submitted evasive
replies without substantive documentary evidence.
The DAC in its meetings held on 28th
December, 2016 and
10th
and 31st January, 2017 directed the executive in respect of paras at
serial No 2 to 4 to hold fact finding inquiry, fix responsibility and take
disciplinary action against the person(s) found at fault. Furthermore, the
violation of rules may be got regularized. In respect of the para at serial
No 1, the DAC directed that relevant record / documents be produced to
Audit for examination / verification.
No progress was reported / record produced to Audit till
finalization of this report.
Audit suggests regularization of the PPRA Rules violation.
DP-S-397, 53, 59 and 155/2016-17
1.5.5 Purchase of medicines from other than lowest
bidders without prior formulation of evaluation
criteria- Rs 4.744 Million
According to Rule 29 of PPRA Rules, 2004 states that
procuring agencies shall formulate an appropriate evaluation of criteria,
listing all relevant information against which a bid is to be evaluated. Such
evaluation criteria shall form an integral part of the bidding documents.
Failure to provide for unambiguous evaluation criteria in the bidding
documents shall amount to mis-procurement. Furthermore, Rule 38 states
37
that “the bidder with the lowest evaluated bid, if not in conflict with any
other law, rules, regulations or policy of the Federal Government, shall be
awarded the procurement contract, within the original or extended period
of bid validity.”
In CMH Malir, orders for purchase of medicines were
issued to bidders who did not offer lowest rates. As a result, the
Government sustained a loss of Rs 4,743,504 on account of difference
between the rates at which medicines were procured and the lowest rates
offered.
When pointed out by Audit in October 2016, the executive
stated that medicines were being purchased on recommendations of
consultants. None of the items had been purchased at higher rates.
The reply was not tenable since no evaluation criteria was
formulated and made an integral part of bidding documents as required
under PPRA Rules.
The para was discussed in DAC meeting held on 31st
January, 2017. The DAC directed the executive to hold fact finding
inquiry, fix responsibility, take disciplinary action against the responsible
persons and initiate regularization action.
No progress was reported to Audit till the finalization of
this report.
Audit suggests regularization of the PPRA Rules violation.
DP-S-382/2016-17
1.5.6 Rejection of a bid after technical acceptance in
violation of PPRA Rules – Rs. 1.760 Million
According to Rule 33(1) of PPRA Rules 2004, The
procuring agency may reject all bills or proposals at any time prior to the
acceptance of a bid or proposal.
38
In CMH Malir, Karachi, tender was called for purchase of
medical equipment amounting to Rs. 1.760 million. M/S Endo Kare
submitted technical bid conforming to specifications of equipment as per
tender requirement. The bid was first accepted but later on rejected and
contract was awarded to M/S Allmed Solutions. M/S Allmed Solutions
had submitted bid for a medical equipment which did not meet the
requisite specification. The award of contract was, therefore, in violation
of PPRA rules.
When pointed out by Audit in October, 2016, the executive
stated that equipment was purchased on recommendation of a consultant.
The para was discussed in DAC meeting held on 31st
January, 2017. The DAC directed the executive to provide relevant record
/ documents to Audit for examination / verification.
No record / documents were produced to Audit for
examination / verification.
Audit suggests regularization of the PPRA Rules violation.
DP-S-357/2016-17
1.6 Non-production of auditable record
1.6.1 Non-provision of auditable documents – Rs. 36.077
Million
As per Article 170(2) of the Constitution of Islamic
Republic of Pakistan 1973, “the audit of the accounts of the Federal and of
the Provincial Governments and the accounts of any authority or body
established by, or under the control of, the Federal or a Provincial
Government shall be conducted by the Auditor-General, who shall
determine the extent and nature of such audit”.
According to Para-5(d) of Government of Pakistan
Ministry of Defense Rawalpindi letter No F.2/5/D-12/ML&C/99 dated
20th
November, 2009 issued in continuation of Ministry‟s letter No.
39
F.2/5/D-12/ML&C/99 dated 2nd
April, 2008, accounts for use of A-1 land
for commercial and welfare purpose (for category A & C activities) shall
be auditable.
While examining the accounts of Station Head Quarter
Lahore, it was noticed that four accounts i.e. Pakistan Park Account,
Vehicle Sticker Account, E-Lane Account, Cable Account were being
maintained by the Station Headquarters Lahore. An amount of Rs.
36,076,984 was received by Station HQ against above mentioned accounts
during the year 2013-14 since the activities were being carried out on A-I
land therefore relevant record was requisitioned for audit but not provided.
According to Para-2(b)(2) of Government of Pakistan Ministry of Defense
Rawalpindi letter dated 2nd
April, 2008, an amount of Rs. 9,019,246 (25%
of Rs. 36,076,984) was required to be deposited by the Station HQ into
Government treasury.
When pointed out by Audit in June, 2014 it was replied that
available documents of these accounts were already provided to audit. The
reply was not acceptable as complete record of these accounts was not
produced.
The para was discussed by the DAC in its meeting held on
28th
September, 2016. The DAC constituted a Board of Officers under the
chairmanship of DS (PAC) and representative from HQ 4 Corps and Audit
to resolve the issue.
The Director Audit Lahore being member of the
aforementioned committee informed the Ministry of Defence vide letter
dated 2nd
November, 2016 regarding non-production of the record by the
formation concerned. Audit stresses for implementation of DAC‟s
directive.
DP-N-268/2015-16
1.6.2 Non-provision of record of NUST Funds Account
As per Article 170(2) of the Constitution of Islamic
Republic of Pakistan 1973, “the audit of the accounts of the Federal and of
40
the Provincial Governments and the accounts of any authority or body
established by, or under the control of, the Federal or a Provincial
Government shall be conducted by the Auditor-General, who shall
determine the extent and nature of such audit”.
During audit of National University of Science and
Technology Islamabad, it was noticed that NUST Funds Account was
maintained by the NUST authorities but record regarding receipts during
July, 2013 to June, 2015 was not produced to audit, which was against the
above cited Constitutional provisions.
When pointed out by Audit in January, 2016 the
management stated that as per NUST Act Part II, Chapter 15, Clause 124,
only Government budgetary allocations/grants shall be carried out by
auditors appointed by the Auditor General of Pakistan. The reply was not
satisfactory because statutory audit of both allocations and receipts is
mandatory under the Constitution.
No DAC was convened by the Ministry of Science and
Technology on the paras relating to NUST. Audit stresses for provision of
auditable documents of NUST Funds Account.
DP-N-61/2016-17
41
Military Lands and Cantonments
1.7 Recoverables / Overpayments
1.7.1 Non-recovery of property tax from Lahore
University of Management and Sciences –
Rs. 1,036.246 Million
According to Para-92(1) of the Cantonment Act 1924 “ if a
person liable of the payment of any tax does not pay within 30 days from
the receipt of notice of demand pay the amount or show sufficient cause
of non-payment of the same to the satisfaction of the Cantt Executive
Officer such sum with all costs of recovery may be recovered under
warrant”.
While examining the accounts of Cantonment Board
Lahore, it was noticed that Lahore University of Management and
Sciences was running business on commercial basis but property tax
amounting to Rs. 1,036,246,916 was not paid by the LUMS Management,
which resulted into loss to the Cantt Fund.
When pointed out by Audit in August, 2015, it was replied
that matter had already taken up with LUMS management. The reply was
not acceptable, as property tax of LUMS was lying outstanding since
2005.
The para was discussed by the DAC in its meeting held on
16th
December, 2016. The DAC was apprised that the appeal filed by the
LUMS for exemptions of property tax is under consideration with DG
ML&C Rawalpindi. The DAC directed that the case be finalized at the
earliest.
No further progress was reported till finalization of this
report. Audit stresses for immediate recovery of property tax from LUMS
management.
DP-N-124/2016-17
42
1.7.2 Non-recovery of property tax from various
property owners – Rs. 337.048 Million
Under section-259 of Cantonment Act 1924, Cantt Board is
liable to recover any tax and any other money together with the cost
recovery either by suit or an application to Magistrate.
During audit, it was noticed in 14 Cantonment Boards that
an amount of Rs. 337.048 million was outstanding on account of property
tax, which needed recovery.
(Rs. in Million)
S No. DP No. Unit / Formation Amount
1 DP-N-506/2015-16 Cantt Board, Abbottabad 6.375
2 DP-N-12/2016-17 Cantt Board, Nowshera 2.507
3 DP-N-105/2016-17 Cantt Board, Sargodha 2.463
4 DP-N-123/2016-17 Cantt Board, Abbottabad 4.727
5 DP-N-126/2016-17 Cantt Board, Lahore 12.879
6 DP-N-176/2016-17 Cantt Board, Walton Lahore 21.490
7 DP-N-181/2016-17 Cantt Board, Chaklala 171.801
8 DP-N-193/2016-17 Cantt Board, Lahore Cantt 2.258
9 DP-N-221/2016-17 Cantt Board, Chaklala 4.490
10 DP-N-228/2016-17 Cantt Board, Rawalpindi 44.394
11 DP-N-233/2016-17 Cantt Board, Chaklala 4.123
12 DP-N-234/2016-17 Cantt Board, Chaklala 27.649
13 DP-N-236/2016-17 Cantt Board, Chaklala 7.001
14 DP-N-237/2016-17 Cantt Board, Chaklala 24.891
Total 337.048
When pointed out by Audit in August, September,
November, 2016 and January, 2017, it was replied that assessment was
made under section 60 and 64 of the Cantt Act, 1924 and notices for
recovery had already been issued.
The paras were discussed by the DAC in its meetings held
on 16th
and 22nd
December, 2016. The DAC directed all Cantt Boards for
taking immediate measures for recoveries. Against serial No. 14, the DAC
43
was apprised that the case is subjudice. The DAC directed to pursue the
case in court.
No further progress was reported till finalization of this
report. Audit stresses for implementation of DAC‟s directives for early
recovery.
DP-N-506/2015-16,
DPs-N-12, 105, 123, 126, 176, 181, 193, 221, 228, 233, 234, 236 and 237/2016-17
1.7.3 Non-recovery of premium and development
charges due to unauthorized use of residential
property as commercial – Rs. 325.355 Million
As per Para-3 (h) (General Conditions) of Government of
Pakistan Ministry of Defence letter No. 3/6/D-12/(ML&C)/97-2007 dated
31st December, 2007 “usage of residential property for commercial
purpose will require NOC from respective Station HQrs. Paid premium of
revenue rate applicable for the said purposes, imposition of composition
fee by the respective Cantt Board and those who fail to pay the above their
property will be resumed”.
During audit it was noticed that in 05 Cantonment Boards,
under mentioned properties were held on lease for residential purpose but
the same were un-authorizedly being used for commercial purpose, which
resulted into loss to Cantt Funds amounting to Rs. 325.355 million on
account of premium and development charges.
(Rs. in Million)
S
No. DP No. Unit / Formation Property No. Amount
1 DP-N-10/2016-17 Cantt Board,
Nowshera 958, Moti Bazzar NSR 1.753
2 DP-N-11/2016-17 -do- Bungalow No. 108,
Sher Shah Road, NSR 41.485
3 DP-N-42/2016-17 -do-
1231 & 1231/1-6
Khushal Coly, NSR
Cantt
60.813
44
4 DP-N-44/2016-17 -do-
1062/1-2 and House
No. 1056-57, Manki
Road NSR
29.771
5 DP-N-229/2016-17 Cantt Board, Rwp Bungalow No. 30,
Haidar Road, Rwp 162.943
6 DP-N-232/2016-17 Cantt Board,
Jhelum
Bangalow No. 12
Lalazar Coly, Jhelum 28.590
Total 325.355
When pointed out by Audit in September, 2015 and
January, 2016 it was replied that action for determination of lease or
regularization of unauthorized commercial use was under process.
The para was discussed by the DAC in its meeting held on
16th
and 22nd
December, 2016. The DAC directed that the case for
determination of lease or regularization be finalized. Whereas the DAC
against serial No. 2 and 4 directed to pursue the court case.
No further progress was reported till finalization of this
report. Audit stresses for early determination of lease or regularization of
the case.
DP-N-10, 11, 42, 44, 229 and 232/2016-17
1.7.4 Non-recovery of development charges and House
Tax from COMSATS Institute – Rs. 272.910
Million
According to Section-92 (1) of Cantonment Act-1924, if a
person liable of the payment of any tax does not, within 30 days from the
service of notice of demand, pay the amount due or show sufficient cause
of non-payment of the same to the satisfaction of the executive officer,
such sum with all costs of recovery, may be recovered under a warrant.
During audit of Cantonment Board Abbottabad, it was
noticed that COMSATS Institute of Information Technology was
established on 38 kanal on B-3 land vide Ministry of Defence letter dated
15th
January, 2008 and GHQ letter dated 25th
May, 2001 but house tax
45
amounting to Rs. 86,570,000 and development charges amounting to
Rs. 186,340,000 as evident from Ministry of Defence letter dated 30th
April, 2004 and CBR No. 9 dated 24th
November, 2006 were still lying
outstanding.
When pointed out by Audit in October 2014, it was replied
that objected amount would be recovered shortly.
The para was discussed by the DAC in its meeting held on
4th
October, 2016. The DAC was apprised that the matter is subjudice. The
DAC directed to pursue the case in the Court of Law.
No further progress was made till finalization of this
report. Audit stresses for vigorous pursuance of court case.
DP-N-515/2015-16
1.7.5 Non-recovery of property tax from WAPDA –
Rs. 200.000 Million
According to Para-92 (1) of the cantonment Act 1924 “if a
person liable of the payment of any tax does not pay within 30 days from
the receipt of notice of demand pay the amount due or show sufficient
cause of nonpayment of the same to the satisfaction of the Cantonment
Executive Officer such sum with all costs of recovery may be recovered
under warrant.”
While examining the accounts of Cantt Board Walton
Lahore, it was noticed that an amount of Rs. 199.861 million on account
of property tax was outstanding against WAPDA since 1984, but after
passage of three decades no efforts were made to recover outstanding
Cantt fund dues.
When pointed out by Audit in August, 2015 it was replied
that matter was already taken up with WAPDA authorities. The reply was
not convincing, as amount is outstanding since 1984.
46
The para was discussed by the DAC in its meeting held on
16th
December, 2016. The DAC directed Cantt Board authorities to file
civil suit against WAPDA.
No further progress was reported till finalization of this
report. Audit stresses for early recovery.
DP-N-238/2016-17
1.7.6 Non-recovery of conversion / development charges
from property developers/owners – Rs. 118.601
Million
According to Para-16(a)(1) of Government of Pakistan
Ministry of Defence (ML&C Deptt) Rawalpindi letter No.
55/45/Lands/ML&C/99, dated 17th
February, 2011, “Depending on usage
of land on which the housing scheme as purposed, following conversion
charges will apply according to area carved for Agricultural to Residential
or commercial”.
(i) Agriculture to residential 5% of the valuating table
(ii) Agriculture to commercial 25% of valuating table
(iii) Residential to commercial 20% of valuating table
During audit of Cantonment Board Sargodha, it was
noticed that agricultural land was converted into residential and
commercial plots, but conversion / development charges of Rs. 118.601
million were not recovered from the owners.
When pointed out by Audit in August, 2016, it was replied
that objected amount would be recovered from the concerned owners
shortly.
The para was discussed by the DAC in its meeting held on
16th
December, 2016. The DAC was apprised that a sum of Rs. 20.000
million out of Rs. 118.601 million had already been recovered. The DAC
47
directed that recovery made so far be got verified and balance amount be
recovered.
No evidence in support of recovery was produced till
finalization of this report. Audit stresses for immediate recovery of
conversion/development charges from the owners.
DP-N-106/2016-17
1.7.7 Non-recovery of hoarding charges – Rs. 107.830
Million
Under Section-259 of Cantt Board Act, 1924, any tax or
any other money recoverable by a board may be recovered together with
the cost of recovery either by suit or, on application to Magistrate having
jurisdiction in the Cantt.
As per record of following Cantonment Boards, hoardings
were installed within the cantonments limit but hoarding charges
amounting to Rs. 107.830 million was not recovered.
(Rs. in Million)
S No. DP No. Unit / Formation Amount
1 DP-N-326/2015-16 Cantt Board, Walton, Lahore 18.600
2 DP-N-349/2015-16 Cantt Board, Rawalpindi 21.015
3 DP-N-125/2016-17 Cantt Board, Rawalpindi 40.459
4 DP-N-169/2016-17 Cantt Board, Rawalpindi 27.756
Total 107.830
When pointed out by Audit in September 2015, it was
replied that partial recoveries had been effected and rest of the cases are
subjudice.
The paras were discussed by the DAC in its meeting held
on 4th
October, 2016 and 22nd
December, 2016. The DAC directed against
serial No. 1 and 2 that recovery be expedited. However, serial No. 3 and 4
were subjudice.
48
No further progress was reported till finalization of this
report. Audit suggests expeditious recovery of the amount.
DPs-N-326 and 349/2015-16, DPs-N-125 and 169/2016-17
1.7.8 Non-recovery of premium due to unauthorized use
of residential property as commercial – Rs. 77.177
Million
According to Para-3 of “General condition” contained in
sub Para-h to Ministry of Defence letter No 3/6/D-12 (ML&C)/97-2007
dated 31st December, 2007, residential property being used for commercial
purpose will be charged premium @ 100% revenue rates applicable for the
said purpose and after approval, composition fee also be charged as per
existing rules.
While examining the accounts of MEO Rawalpindi, it was
noticed that residential properties were being used by the lessees for
commercial purpose without obtaining approval of the Competent
Authority. Thus, premium at full market price as well as development
charges amounting to Rs. 77.177 million needed to be recovered from the
lessees.
When pointed out by Audit in August 2015, it was replied
that notices were issued to concerned lessees and case for determination of
lease was being processed against the said properties.
The para was discussed by the DAC in its meeting held on
4th
October, 2016. The DAC pended the draft para till finalization of
process of commercialization and determination of lease of properties
involved.
No further progress was reported till finalization of this
report. Audit stresses that the case for determination of lease be finalized
expeditiously.
DP-N-211/2015-16
49
1.7.9 Non-recovery of rent from CIMLA/WTI building –
Rs. 70.924 Million
Under Section 259 of Cantonment Act, 1924, any tax or
any other money recoverable by a board may be recovered together with
the cost of recovery either by suit or, on application to Magistrate having
jurisdiction in the Cantt.
While examining the accounts of Cantt Board Walton
Lahore, it was noticed that rent of CIMLA/WTI building @ Rs. 1,000,000
per year and 10% annually increase w.e.f. 1st January, 2011 was fixed by
Cantt Board authorities, but no rent was recovered from CIMLA/WTI,
which resulted into loss to Cantt funds amounting to Rs. 70.924 million.
When pointed out by Audit in August, 2015 it was replied
that the matter had already been taken up with CIMLA authorities.
The para was discussed by the DAC in its meeting held on
16th
December, 2016. The DAC directed the Cantt Board authorities to
finalize the recoveries within 01 month.
No further progress was reported till finalization of this
report. Audit stresses for recovery action.
DP-N-196/2016-17
1.7.10 Non-recovery of rent of A-1 Land used for
commercial purpose – Rs. 64.529 Million
As per policy on use of A-1 land for welfare and other
projects of the armed forces by Ministry of Defence, Rawalpindi letter No.
F-2/5/D-12/ML&C/99 dated 2nd
April, 2008 that rent was required to be
charged @ 6% per annum of existing revenues rates of the land used in
commercial projects. Out of total amount so calculated, 25% was to be
deposited into the Govt. treasury and 75% balance was to be utilized by
the respective formation. Moreover, Rule-14(3) of cantonment land
administration (CLA) 1973 provides land in class-A would not be used
or occupied for any purpose other than those stated in sub rule (i) of Rule-
50
5 without prior sanction of the Central Government or such authority as
they may appoint in this behalf.
During Audit of MEO Rawalpindi, it was noticed that
below mentioned properties were being run on commercial basis but
neither 25% Government share on rent as per above Government policy
was recovered from the occupants nor Government approval was obtained
for commercial use of A-I Land, which needed recovery amounting to
Rs. 64.529 million.
(Rs. in Million)
S
No. Property No. Area of
Plot Period
Amount
(25% Govt.
share)
1 Shell Pump, Bangalow No. 142
Murree Road Rwp
33 Marlas 2008 to
2015
4.208
2 Total Pump, Khasra No. 16 and 715
Chaklala Cantt
143
Marlas
-do- 12.441
3 Blue Lagoon AWT 320
Marlas
-do- 45.840
4 Safe Way, CNG Murree Road, Rwp 16 Marlas -do- 2.040
Total 64.529
When pointed out by Audit in August 2015, it was replied
that the requisite properties are being run directly by Army authorities and
governed under A-I land policy.
The para was discussed by the DAC in its meeting held on
22nd
December, 2016. The DAC pended the para as the same would be
discussed in presence of Army representative.
No further progress was reported till finalization of this
report. Audit stresses for early recovery of rent.
DP-N-197/2015-16
51
1.7.11 Non-recovery of Transfer of Immovable property
tax – Rs. 53.542 Million
According to Federal Board of Revenue S.R.O No. 382
(1)/94 dated 3rd
May, 1994, the Federal Government imposed a tax on the
transfer of immovable property (lands and buildings) payable by the
transferee at the rate of three percent of the consideration money of such
property as recorded in the sale deed or as assessed by the Cantonment
Executive officer for the purpose of assessment of tax as market value of
the property whichever is higher.
While examining the accounts of following Cantonment
Boards, it was noticed that Transfer of Immovable Property (TIP) Tax
amounting to Rs. 53.542 million was not recovered.
(Rs. in Million)
S
No.
DP No. Unit / Formation Property owner Amount
1 DP-N-144/2016-17 Cantt Board, Rawalpindi Shell, Pakistan 4.144
2 DP-N-147/2016-17 Cantt Board, Rawalpindi Daewoo, Pakistan 17.528
3 DP-N-194/2016-17 Cantt Board, Lahore PTCL 9.310
4 DP-N-198/2016-17 Cantt Board, Walton,
Lahore
UBL Officer Co-
operating Housing
Society
22.560
Total 53.542
When pointed out by Audit in August, 2015 it was replied
that the cases were under process for recovery.
The paras were discussed by the DAC in its meetings held
on 16th
and 22nd
December, 2016. The DAC directed to recover/resolve
the cases.
No further progress was reported till finalization of this
report. Audit stresses for immediate recovery action.
DP-N-144, 147, 194 and 198/2016-17
52
1.7.12 Non-recovery of premium from owners of the shops
– Rs. 17.796 Million
According to Para-92 (1) of the Cantonment Act-1924 “if a
person liable of the payment of any tax does not pay within 30 days from
the receipt of notice of demand pay the amount due or show sufficient
cause of non-payment of the same to the satisfaction of the Cantt
Executive Officer such sum with all costs of recovery may be recovered
under warrant”.
While examining the accounts of Cantonment Board
Nowshera, it was observed that an amount of Rs. 17,796,500 was lying
outstanding against the owners of the shops situated at commercial
complex Nowshera Cantt, which needed to be recovered.
When pointed out by Audit in January 2016, it was replied
that an amount of Rs. 575,000 out of Rs. 17,796,500 had already
been recovered and notices for balance amount were also issued to
defaulters.
The para was discussed by the DAC in its meeting held on
22nd
December, 2016. The DAC directed that reported recovery be got
verified from audit and balance amount be recovered.
No further progress was reported till finalization of this
report. Audit stresses for early recovery of premium from the owners.
DP-N-41/2016-17
1.7.13 Non-recovery of Cantt Board dues from M/s
Daewoo Pakistan Express Bus Services Ltd –
Rs. 13.044 Million
According to Cantt Board Resolution No. 36 dated 25th
September, 2013, Cantt Board dues was recoverable from Daweoo
Pakistan Bus Services.
53
While examining the accounts of Cantt Board Rawalpindi,
it was noticed that an amount of Rs. 13,043,575 was outstanding against
M/S Daewoo Pakistan Express Bus Service Ltd on account of checking
fee, BA Fee, Development charges and security, which was required to be
deposited into Cantt funds.
When pointed out by Audit in January, 2015 the executive
authorities agreed to recover the amount.
The para was discussed by the DAC in its meeting held on
22nd
December, 2016. The DAC was apprised that the matter is subjudice.
The DAC directed to pursue the case in the Court.
Audit suggests vigorous pursuance of court case.
DP-N-146/2016-17
1.7.14 Non-recovery of composition and parking fee –
Rs. 9.647 Million
According to Ministry of Defence letter No. 75/853/Lands/
92/4970/D-2/ML&C/94 dated 6th
November, 1994, “unauthorized
construction within the limits of cantonment board is an offence and the
Board is empowered to demolish the unauthorized construction or
regularize it on payment of composition fee”.
During audit, it was noticed in 03 Cantonment Boards that
an amount Rs. 9.647 million on account of composition/parking fee was
lying outstanding, which needed recovery action.
(Rs. in Million)
S # DP No. Unit / Formation Property No. Amount
1 DP-N-142/2016-17 Cantt Board,
Rawalpindi 784/75 Moza, Nothia 2.693
2 DP-N-148/2016-17 Cantt Board,
Rawalpindi
Khasra No.1704 and
1705, Mouza Chur Harpal 3.912
3 DP-N-182/2016-17 Cantt Board,
Chaklala Various properties 3.042
Total 9.647
54
When pointed out by Audit in November, 2014 and
January, 2015 the executives agreed to recover the amount.
The paras were discussed by the DAC in its meeting held
on 22nd
December, 2016. The DAC directed that the objected amount be
reconciled and reported recovery be got verified from audit.
No further progress was reported till finalization of this
report. Audit stresses for early recovery action.
DPs-N-142, 148 and 182/2016-17
1.7.15 Non-recovery of composition fee – Rs. 8.466 Million
According to Ministry of Defence letter No. 75/853/Lands/
92/4970/D-2/ML&C/94 dated 6th
November, 1994, “unauthorized
construction within the limits of cantonment board is an offence and the
Board is empowered to demolish the unauthorized construction or
regularize it on payment of composition fee”.
While examining the accounts of Cantonment Board
Abbottabad, it was noticed that M/s Usman Bashir & Others constructed
Triple Story Hospital i.e. Rehmat Hospital without prior approval of
revised building plan and deposit of composition fee of Rs. 8,466,000 as
detailed below:-
1. Area of Plot 8295 Sft or 30 Marlas
Cost of land @ Rs. 1,495,000 per marla
8295 Sft or 30 marlas (30 marla x 1,495,000) = Rs. 44,850,000
2. Cost of Const
(i) Ground Floor 8295 sft
(ii) First Floor 8295 sft
(iii) Second Floor 8295 sft
Total covered area 24885 sft @ Rs. 1600 Per Sft = Rs.39,816,000
Total (1+2) = Rs. 84,666,000
10% Composition fee = Rs. 8,466,600
55
When pointed out by Audit in August, 2016 it was replied
that the owner was asked for submitting revised building plan for approval
of the Board and composition fee would be recovered.
The para was discussed by the DAC in its meeting held on
22nd
December, 2016. The DAC directed the executive for recovery of
composition fee.
No further progress was reported till finalization of this
report. Audit stresses for early recovery action. DP-N-225/2016-17
1.7.16 Non-recovery of rent of Cantonment fund building
– Rs. 6.484 Million
According to Rule-2 (A) 5 of Cantonment Account Code
1955, “ it is duty of the Executive Officer and the staff employed by the
Cantonment Board to see that dues of the Board are correctly and
promptly assessed collected and paid into the treasury”.
While examining accounts of Cantt Board Chaklala, it was
noticed that Bungalow No. 84 Khadim Hussain Road was hired to MEO
Rawalpindi for official residence purpose of the ML&C officers, but rent
amounting to Rs. 6.484 million was lying outstanding against MEO
Rawalpindi.
When pointed out by Audit in August 2016, it was replied
that case was pended with MEO Rawalpindi for seeking final approval of
the DG ML&C.
The para was discussed by the DAC in its meeting held on
22nd
December, 2016. The DAC directed that the case for hiring of MEO
Building be finalized and recovery be made accordingly.
No further progress was reported till finalization of this
report. Audit suggests early recovery action.
DP-N-219/2016-17
56
1.7.17 Non-recovery of antenna fee from Cellular
companies – Rs. 4.007 Million
According to Para – 7 (B) of the Government of Pakistan
Ministry of Defence (ML&C Deptt) Rawalpindi letter No. 51/1411/
Lands/ML&C/2005 dated 24th
June, 2015, “the cellular companies will be
required to pay an antenna fee @ Rs. 20,000 per month with an annual
enhancement @ 10 %”.
While examining the accounts of Cantonment Board
Sargodha, it was noticed that 03 cellular companies installed towers within
the Cantonment limits, but antenna fee / sky charges amounting to
Rs. 4.007 million were not deposited for the year 2015-16 which needed to
be recovered from cellular companies.
When pointed out by Audit in August, 2016, it was replied
that objected amount would be recovered.
The para was discussed by the DAC in its meeting held on
16th
December, 2016. The DAC directed that objected amount be
reconciled with audit and recovery be made accordingly.
No further progress was reported till finalization of this
report. Audit suggests for early recovery action.
DP-N-104/2016-17
1.7.18 Non-recovery of composition fee – Rs. 1.087 Million
Under Section-92 (1) of Cantonment Act, 1924, “If person
liable of the payment of any tax dues not, within 30 days from the service
of notice of demand, pay the amount due or show sufficient cause of
nonpayment of the same to the satisfaction of the executive officer, such
sum with all costs of recovery, may be recovered under warrant”.
During audit of Cantonment Board Shorkot, it was noticed
that composition fee and conversion charges amounting to Rs. 1,087,034
was outstanding against property No. CB-20 and 832 situated at Shorkot
57
Cantt as confirmed from C.B.R No. 38 & 39 of 31st January, 2014, which
needed recovery action.
When pointed out by Audit in August 2015, it was replied
that objected amount would be recovered.
The para was discussed by the DAC in its meeting held on
4th
October, 2016. The DAC directed to recover the full objected amount.
No further progress was reported till finalization of this
report. Audit stresses for early recovery of amount involved.
DP-N-288/2015-16
1.7.19 Loss to state due to non-recovery of premium
and ground rent from WAPDA – Rs. 267.769
Million
As per Policy issued by the Government of Pakistan,
Ministry of Defence Rawalpindi vide letter dated 31st December, 2007,
fresh lease of land was to be granted on payment of premium @ of 50% of
DC rate of land. Moreover, ground rent was required to be charged @ Rs
4 per sq yds per annum.
In MEO Hyderabad, 11.33 acres of land were allocated to
WAPDA in the year 1973 . However, premium of Rs. 258.557 million
[11.33 acres x 4840 = 54837.2 sq yds x Rs. 9430 (DC rate) x 50%] and
ground rent of Rs. 9.212 million [54837.2 sq yds x Rs. 4 x 42 years] were
not recovered till to date.
When pointed out by Audit in October 2016, the executive
stated that M.E.O office had forwarded a case to the ML&C Department
in June, 2008, for obtaining Government‟s sanction for transfer of land to
the WAPDA authorities. The sanction was still awaited.
The para was discussed in the DAC meeting held on 30th
January, 2017. The DAC directed that Government‟s sanction be obtained
58
immediately and recovery on account of premium and ground rent be
made within three months.
No progress was reported to Audit till the finalization of
this report.
Audit suggests that recovery may be expedited.
DP-S-368/2016-17
1.7.20 Non-recovery of cantonment taxes – Rs. 178.174
million
Section-92 of Cantonments Act, 1924, states that if a
person liable for payment of any tax does not, within thirty days from the
service of the notice of demand, pay the amount due, or show sufficient
cause for non-payment of the same to the satisfaction of the Executive
Officer, such sum, with all costs of the recovery, may be recovered under
a warrant, issued in the form set forth in Schedule II, by distress and sale
of the movable property of the defaulter.
It was observed from the record for the year 2015-16 held
with six Cantonment Boards that a sum of Rs. 178.174 million was
outstanding on account of cantonment boards‟ taxes. The details are given
below:
(Rs. in million)
S.No. Name of Unit DP No. Amount
1 CB Clifton (Rs. 245.568 M – Rs. 213.196 M) S-249 32.372
2 CB Hyderabad S-277 53.834
3 CB Faisal S-52 30.644
4 CB Clifton S-372 22.122
5 CB Clifton S-375 16.902
6 CB Malir (Rs. 10.544 M – Rs. 2.569 M) S-209 7.975
7 CB Korangi Creek S-391 6.810
8 CB Manora S-95 3.595
9 CB Clifton S-335 2.031
10 CB Clifton S-336 1.889
T o t a l 178.174
59
When pointed out by Audit from January 2016 to
November 2016, it was replied that efforts were being made to recover the
outstanding amount.
The paras were discussed in DAC meetings held on 27th
December, 2016, 11th
and 30th
January, 2017. The DAC was apprised that
partial recoveries had been made in some cases. Efforts were being made
to recover the balance amount. The DAC directed the executive to recover
the balance amount in full and get the recoveries verified form Audit.
During verification carried out by Audit, recovery of
Rs. 213.196 million in respect of para at serial No. 01 and Rs. 2.569
million in respect of para at serial No. 06 was verified. No progress was
reported in case of remaining paras to Audit till finalization of this report.
Audit suggests expeditious recovery of outstanding dues.
DP-S-249, 277, 52, 372, 375, 209, 391, 95, 335 and 336/2016-17
1.7.21 Loss of scrutiny fee due to non-approval of building
plans of Army Housing Schemes – Rs. 145.855
Million
According to Rule-2(1) of Building By-Laws SRO
No.(1)/99 dated 30th
April, 1999 and SRO No.(1)/2006 dated 17th
April,
2006, every person intending to erect, re-erect or alter a building shall
apply for sanction under Section 179 of Cantonment Act, 1924 in Form 1
along with the necessary documents specified therein.
According to CBR No. 16 dated 4th
November, 2011
scrutiny fee @ Rs. 15 per sq ft will be charged.
In Cantonment Board Malir, 1870 houses were constructed
by Army without submission of building plans to the Cantonment Board
and without obtaining approval of the Board during the year 2015-16.
Due to non-submission of building plans for approval, the Cantonment
60
Board sustained a loss of Rs. 145.855 million, in the shape of Scrutiny
Fee.
When pointed out by Audit in August 2016, the executive
replied that the case would be taken up with the concerned quarters.
Further outcome would be intimated accordingly.
The DAC in its meeting held on 11th
January, 2017, was
apprised that the case had been taken up with HQ ML&C Department/
concerned quarters in November, 2016. The DAC directed that the amount
may be recovered within two months and documentary evidence produced
to Audit for verification.
Further progress was not reported till finalization of this
report.
Audit suggests that building plans be got approved from the
Board and scrutiny fee recovered expeditiously.
DP-S-210/2016-17
1.7.22 Loss to state due to non-recovery of premium
and ground rent from M/s PTCL/Etisalat –
Rs. 51.575 Million
As per Policy issued by the Government of Pakistan,
Ministry of Defence Rawalpindi vide letter dated 31st December, 2007,
fresh lease of land was to be granted on payment of premium @ of 50% of
DC rate of land. Moreover, ground rent was required to be charged @
Rs. 4 per sq yds per annum.
In MEO Hyderabad, it was observed from Military Land
Register/Mutation entry that land measuring 2.88 acres in Freek Hill
Colony, Sukkur was leased out to PTCL on the basis of guarantee given
by Government of Pakistan, Ministry of Finance vide DO letter dated 28th
February, 2011. However, premium of Rs. 51,296,256 and ground rent of
Rs. 278,784 were still outstanding against the PTCL.
61
When pointed out in October 2016, the executive replied
that the ML&C Department had approached the Ministry of Finance. The
Ministry vide office memorandum dated 25th
August, 2016 stated that the
settlement would take place according to the said DO letter on receipt of
dues from M/s Etisalat.
The DAC in its meeting held on 11th
January, 2017 was
apprised that partial recovery of ground rent amounting to Rs. 55,757 had
been made. DAC directed to pursue the matter vigorously to recover the
amount. The case may also be taken up with Finance Division, Islamabad
for early recovery.
Further progress was not reported till finalization of this
report.
Audit suggests expeditious recovery of outstanding dues.
DP-S-279/2016-17
1.7.23 Non-recovery of conservancy charges from Pak
Army – Rs. 25.405 Million
Under Rule 2(A)(1) of the Pakistan Cantonments Account
Code, 1955, it is laid down that the Executive Officer is the principal
Executive Officer of the Board and all other officers and servants of the
Board are subordinate to him. He is the officer, who has been entrusted by
Government with the responsibility of assessing and collecting
cantonment revenues.
Cantonment Boards were providing conservancy services
regularly to Pakistan Army by concluding agreements with Station
Headquarters, but an amount of Rs. 25.405 million, as detailed below, was
outstanding upto June 30, 2016. The details are as under;
62
(Rs. in million)
S.No. Name of Units DP No. Amount
1 CB Hyderabad S-275 23.151
2 CB Malir
(Rs 30.096 M – Rs 27.842 M) S-211 2.254
Total 25.405
When pointed out by Audit in August, 2016, the executive
stated that the case for recovery of arrears had been initiated with Station
HQs.
The DAC in its meeting held on 11th
January, 2017 was
apprised that in case of para at serial No 1, Rs. 27.842 million had been
recovered. In respect of para at serial No. 2 it was stated that efforts were
being made to recover the amount. DAC directed that recovered amount
be got verified from Audit and balance amount i.e. Rs. 2.25 million be
recovered within two months. In case of para at serial No. 02, DAC
directed that Army authorities be approached for recovery of amount
within six months.
During verification carried out by Audit, recovery of
Rs. 27.842 million in respect of para at serial No. 01 was verified. No
progress was reported in case of the other para till finalization of this
report.
Audit suggests expeditious recovery of conservancy
charges.
DP-S-211 and 275/2016-17
1.7.24 Non- Recovery of Cantonment Fund Loans
and Advances – Rs. 23.107 Million
According to rule-42 (1) & (2) of Pakistan Cantonment
Accounts Code, 1955, All advances, other than permanent advances and
advances from the provident fund, shall be entered in a Register. The
Executive Officer shall be responsible for the recovery or adjustment of all
63
such advances and shall bring to the notice of the Board twice a year all
cases in which the recovery of adjustment has not been made in due time.
Rule-76 of Pakistan Cantonment Account Code, 1955,
further provided that all loans received by the Cantonment Board shall be
recorded in a register of loans. Each entry in the register shall be attested
by the Executive Officer.
In Cantonment Board Clifton, Karachi, a sum of
Rs. 22,852,744 was outstanding since long on account of loans given to
other cantonment boards. Similarly, a sum of Rs. 255,260 was recoverable
from staff on account of advances given to them up to June 2015.
When pointed out by Audit in January 2016, the executive
replied that letters for refund of loans and advances amounting to
Rs. 23.107 million had been issued to all concerned.
The para was discussed in the DAC meeting held on 30th
January, 2017. The DAC was apprised that a sum of Rs. 1.784 million had
been recovered so far. The DAC directed that recovery made so far be got
verified from Audit and balance amount be recovered within three months.
No record / documents were produced to Audit for
verification till the finalization of this report.
Audit suggests early recovery of the outstanding amount.
DP-S-348/2016-17
1.7.25 Non-receipt of project dues from Housing
Directorate, QMG – Rs. 15.000 Million
According to Rule-2(A)(3) of The Pakistan Cantonments
Account Code, 1955, it is not sufficient that Cantt officer‟s accounts
should be correct to his own satisfaction. A disbursing officer has to
satisfy not only himself, but also the audit, that a claim, which has been
accepted, is valid, that a voucher is complete proof of the payment which
it supports, and that an account is correct in all respects.
64
In Cantonment Board Malir, an amount of Rs. 25.000
million was outstanding on account of sewerage network project against
Housing Directorate, QMG Branch, Rawalpindi. It was observed from the
accounts that only Rs. 10.000 million were received up to March 2008 and
Rs. 15.000 were still recoverable.
When pointed out by Audit in August 2016, the executive
replied that the case would be initiated with Housing Directorate, QMG
Branch.
The DAC in its meeting held on 11th
January, 2017 directed
that amount be recovered within three months.
Further progress was not reported till finalization of this
report.
Audit suggests expeditious recovery of outstanding
amount.
DP-S-228/2016-17
1.7.26 Non-recovery of composition charges – Rs. 14.852
Million
According to Section 185 of Cantonments Act, 1924, a
Board may direct the owner, lessee or occupier of any land in the
cantonment to stop the erection or re-erection of a building in any case in
which the Board considers that such erection or re-erection is an offence
under Section 184. The Board may direct the alteration or demolition of
the building or accept, by way of composition, such sum as it thinks
reasonable.
In Cantonment Board Malir, composition charges
amounting to Rs. 14.852 million were outstanding despite lapse of
considerable time. The details are as under;
65
(Rs. in million)
S.No. Name of Defaulter D.P No Amount
1 M/s Al-Farooq Builders S-213 13.452
2 M/s Orient Housing Services S-214 1.400
Total 14.852
When pointed out by Audit in August 2016, the executive
replied that completion plan of buildings were under process. Action
would be completed after finalization of completion plan.
The DAC in its meeting held on 11th
January, 2017 directed
that full amount may be recovered and record produced to Audit for
verification.
No record / document was produced to Audit for
verification till finalization of this report.
Audit suggests immediate recovery of the outstanding
amount.
DP-S-213 and 214/2016-17
1.7.27 Overpayment to contractors due to non-deduction
of running payments while making final payments
– Rs. 4.800 Million
According to Rule 65(6)(ii) of the Pakistan Cantonments
Account code, 1955, an undertaking shall be obtained from the contractor
before the payment is actually made that should the amount of advance
paid to him be subsequently found to be more than the cost of the work
done in respect of which the advance was paid, he shall refund forthwith
the amount overpaid. The Executive Officer shall be responsible for the
adjustment of the advance before final payment of the bill.
In Cantonment Board Quetta, two running payments
amounting to Rs. 4.000 million and Rs. 0.800 million were made to two
66
contractors namely, M/s Ghulam Hussain & Co. and M/s Aga Salahud-
din Bazai & Co. on 18th
November, 2013 and 29th
June, 2015
respectively. However, the same were not adjusted while making final
payments to them, resulting in loss of Rs. 4.800 million to Cantonment
Fund.
When pointed out in March 2016, the executive agreed to
affect recovery as pointed out by Audit.
The DAC in its meeting held on 27th
December, 2016, was
apprised that recovery of Rs.1.071 million had been made. However, the
executive objected to the recoverable amount pointed out by Audit. The
DAC directed that relevant record/ documents be provided to Audit for
examination / verification and reconciliation of objected amount.
No record was produced to Audit for verification/
reconciliation till finalization of this report.
Audit suggests expeditious recovery of over payment made
to the contractors.
DP-S-15/2016-17
1.7.28 Overpayment to contractors due to calculation
errors /application of incorrect Rates – Rs. 5.795
Million
According to Rule-2(A)(3) of The Pakistan Cantonment
Account Code, 1955, it is not sufficient that an officer‟s accounts should
be correct to his own satisfaction. A disbursing officer has to satisfy not
only himself, but also the audit, that a claim, which has been accepted, is
valid, that a voucher is a complete proof of the payment which it
supports, and that an account is correct in all respects.
In Cantonment Board Quetta several cases of
overpayments were detected during the financial year 2015-16. The
details are as under;
67
(Rs. in million)
S. No DP No. Name of Unit Description Amount
1 S-10 CB Quetta Application of incorrect rates 2.949
2 S-12 CB Quetta Calculation errors 1.925
3 S-13 CB Quetta Calculation errors 0.265
4 S-16 CB Quetta Application of incorrect rates 0.656
Total 5.795
When pointed out in February, 2016 and March 2016, the
executive agreed to affect recovery as pointed out by Audit.
The DAC in its meeting held on 27th
December, 2016, was
apprised that partial recoveries had been made. The DAC directed that
recoveries may be got verified from Audit and balance amount be
recovered within 01 month.
Neither record / documents were produced to Audit for
verification nor any progress reported till finalization of this report.
Audit suggests expeditious recovery of pointed out amount.
DP-S-10, 12, 13 and 16/2016-17
1.7.29 Non recovery of road cutting charges – Rs. 4.994
Million
According to Rule 2 (5&6) of Cantonment Accounts Code
1955, it is the duty of the executive officer and the staff employed by the
Cantonment Board to see that dues of the Board are correctly and
promptly assessed, collected and paid in to the treasury.
In Cantonment Board Manora, an amount of Rs. 4.994
million was outstanding on account of Road Cutting charges against AGE
(Navy) Maintenance, Manora, since January 2009.
When pointed out by Audit in January, 2016 the executive
did not furnish reply.
68
The DAC in its meeting held on 27th
December, 2016,
directed that the recovery be pursued with AGE (Navy) vigorously and
amount be recovered within 03 months
Further progress was not reported to Audit till finalization
of this report.
Audit suggests expeditious recovery of cantonment dues.
DP-S-107/2016-17
1.7.30 Non Recovery of Sales Tax on auction of vehicles /
stores – Rs. 4.235 Million
As per Sales Tax Act 1990, amended from time to time,
Sales Tax @ 17% is to be recovered on auction amount from Sales Tax
registered persons / company and 18% from unregistered persons /
companies.
In Cantonment Board Clifton Karachi it was observed that:
(i) Unserviceable vehicles were auctioned for Rs. 10,485,000
during 2014-15 but Sales Tax amounting to Rs. 1,887,300
was not deducted.
(ii) Unserviceable stores were auctioned for Rs. 13,100,000
from May, 2011 to March, 2015 but Sales Tax @ 18%
Rs. 2,358,000 was not collected.
When pointed out by Audit in January 2016, the executive
replied that SRO for levy of Sales Tax against auctions had never been
served upon this office nor ever collected.
The para was discussed in the DAC meeting held on 30th
January, 2017. The DAC directed that the amount of Sales Tax be
recovered within two months.
No progress was reported to Audit till finalization of this
report.
69
Audit suggests expeditious recovery of the outstanding
amount.
DP-S-334 and S-339/2016-17
1.7.31 Non-recovery of shop board fee from contractor –
Rs. 2.775 Million
Under Rule-2(A)(1) of the Pakistan Cantonments Account
Code, 1955, it is laid down that the Executive Officer is the principal
Executive Officer of the Board and all other officers and servants of the
Board are subordinate to him. He is the officer, who has been entrusted by
Government with the responsibility of assessing and collecting
cantonment revenues.
In Cantonment Board, Hyderabad contract for collection
rights of shop board fee for the financial year 2014-15, was awarded to
M/s. H.S. Enterprises for Rs. 11,100,000. Scrutiny of record revealed that
Rs. 2,775,000 were still recoverable from the contractor.
When pointed out by Audit in August, 2016, the executive
stated that F.I.R. had been lodged against the said contractor.
The DAC in its meeting held on 11th
January, 2017
directed that civil suit be filed against the contractor for recovery of
Government dues. Case may be processed to black list the contractor.
Further progress was not reported till finalization of this
report.
Audit suggests expeditious recovery of pointed out amount.
DP-S-276/2016-17
1.7.32 Irregular retention of income tax amount of –
Rs. 2.143 Million
Section 160 of Income Tax Ordinance 2001 provides that
any tax that has been deducted shall be paid to the Commissioner by the
person making the deduction within the time and in the manner as may be
70
prescribed. Section 161 of Income Tax Ordinance 2001 provides that
where a person fails to pay the tax to the Commissioner as required under
section 160, the person shall be personally liable to pay the amount of tax
to the Commissioner who may pass an order to that effect and proceed to
recover the same.
In Cantonment Board, Korangi Creek, Rs. 2,143,477
were deducted on account of Income Tax from suppliers/contractors
during the year 2015-16, but the same was not deposited into Government
treasury.
When pointed out by Audit in October, 2016 the
executive stated that Rs 2,268,594 were payable to the FBR. The Board
had approved to clear the financial liability.
The para was discussed in the DAC meeting held on 30th
January, 2017. The DAC directed that the objected amount be deposited
into Government treasury and got verified from Audit.
No record / documents were produced to Audit for
verification till finalization of this report.
Audit suggests early deposit of income tax deducted at
source in government treasury.
DP-S-388/2016-17
1.7.33 Non-recovery of income tax on account of auction –
Rs. 1.110 Million
As per section 236(A) of Income Tax Ordinance 2001, the
rate of collection of tax shall be 10% of the gross sale price of any
property or goods sold by auction.
In Cantonment Board Manora, income tax amounting to
Rs. 1,110,600 was not recovered during the financial year 2014-2015,
from eight contractors on account of auction of different services.
71
When pointed out by Audit in January, 2016 the executive
did not furnish reply.
The DAC in its meeting held on 27th
December, 2016, was
apprised that notices to the contractors had been issued and necessary
proceedings for initiation of disciplinary action against responsible staff
had been recommended. The DAC directed that the recovery of Income
tax be made within 01 month and disciplinary proceedings against the
responsible be finalized within 02 months.
Further progress was not reported till finalization of this
report.
Audit suggests expeditious recovery of the pointed out
amount.
DP-S-108/2016-17
1.7.34 Non-recovery of auction dues from contractors –
Rs. 1.345 Million
Rule-2(A)(1) of the Pakistan Cantonments Account Code,
1955, states that the Executive Officer is the principal Executive Officer of
the Board and all other officers and servants of the Board are subordinate
to him. He is the officer, who has been entrusted by Government with the
responsibility of assessing and collecting cantonment revenues.
In Cantonment Board Manora, Rs. 1.345 million were
outstanding against five contractors on account of auction of toll collection
etc. The executive did not recover full contract amount till to date
although the contracts were awarded in 2014-15.
When pointed out by Audit in January, 2016 the executive
did not furnish reply.
The DAC in its meeting held on 27th
December, 2016, was
apprised that efforts were being made for recovery of the amount. The
DAC directed that outstanding amount be recovered within 02 months.
72
No progress of the case was reported to Audit till
finalization of this report.
Audit suggests early recovery of the outstanding amount.
DP-S-110/2016-17
1.8 Loss to State
1.8.1 Loss due to encroachment of Government land –
Rs. 75.094 Million
According to Rule-26(ix) (a) of Cantonment Land
Administration Rules-1937, an encroachment is an un-authorized
occupation of government land and should not be permitted to remain in
existence under any circumstances unless it is properly regularized.
During audit of Military Estate Office Peshawar, it was
noticed that A-I land within Cantonment area was encroached un-
authorizedly, which resulted into loss of Government revenue amounting
to Rs. 75,093,600 on account of rent.
When pointed out by Audit in February 2016, it was replied
that efforts had been made for removal of encroachment as most of A-I
land was in occupation of Provincial Government Departments.
The para was discussed by the DAC in its meeting held on
4th
October, 2016. DAC directed that the land encroached by the
Provincial Government be got vacated.
No further progress was reported till finalization of this
report. Audit stresses for implementation of DAC‟s directive.
DP-N-486/2015-16
73
1.8.2 Loss to Cantonment fund due to non-finalization of
cantonment code lease into regular lease –
Rs. 19.754 Million
In terms of Para-3 to Government of Pakistan Ministry of
Defence Rawalpindi policy-2007, “premium @ 20% of Revenue Rate for
conversion of residential accommodation into Regular lease will be
charged”.
While examining the accounts of Cantonment Board
Nowshera, it was noticed that the lessees of HATA No 1054, Survey No.
269/940 held on schedule-VI for “Residential Purpose” applied for
conversion of above lease in schedule-IX-C of CLA Rules-1937 for
“Residential Purpose” on 13th
December, 2012 as evident from “Schedule-
V Form” but premium, development charges and ground rent amounting
to Rs. 19,754,072 was not recovered against the property, which needed to
be deposited into cantonment fund.
When pointed out by Audit in January, 2016, it was replied
that the case for conversion of Schedule IX-C of the CLA rules 1937 for
residential purpose into regular lease in Schedule IX-C was forwarded to
RHQ Peshawar.
The para was discussed by the DAC in its meeting held on
22nd
December, 2016. The DAC directed that the case for obtaining
sanction of the competent authority for finalization of cantonment code
lease into regular lease be finalized.
No further progress was reported till finalization of this
report. Audit recommends early regularization action.
DP-N-65/2016-17
74
1.8.3 Loss to cantonment fund due to irregular
conclusion of parking fee contract by Station HQ –
Rs. 4.000 Million
As per Para-259 of Cantonment Board Act-1924, “Any tax
or any other money recoverable by a Board under this Act may be
recovered together with the cost of recovery either by suit or on
application to a Magistrate having jurisdiction in the Cantonment”.
During audit of Cantonment Board Murree, it was noticed
that contract of parking fee was awarded for financial year 2009-10 @ Rs.
910,000 per annum. The subject contract was cancelled by the
Cantonment Board authorities vide Station Headquarters letter dated 13th
October, 2009 but recovery of parking fees @ Rs. 1,000,000 P.A for the
period 2009 to 2013 was not made from the Station Head Quarter Murree,
which needed to be recovered.
When pointed out by Audit in August 2014, it was replied
that the cases regarding recovery of parking fees and possession of
parking area had already been taken up with Station Headquarter. The
reply was not convincing, as outstanding parking fees needed to be
recovered and deposited into Cantonment fund.
The para was discussed by the DAC in its meeting held on
4th
October, 2016. DAC pended the Para and decided to discuss the same
in presence of rep of Station HQ Murree.
No further progress was reported till finalization of this
report. Audit stresses for early recovery of parking fees.
DP-N-505/2015-16
75
1.9 Mis-procurement of Stores
1.9.1 Award of contracts in violation of Public
Procurement Rules – Rs. 28.362 Million
According to Rule-12(1,2) of PPRA-2004, all procurements
over one hundred thousand rupees and upto the limit of Rs. 2.00 million
shall be advertised on the authority‟s website. Further, procurement over
Rs. 2.00 million should be advertised on the authority‟s website as well as
in two national dailies, one in English and the other in Urdu.
In Cantonment Board Clifton, different contracts were
concluded during the financial year 2014-15, without advertisement on
PPRA website/ newspapers. The details are listed below;
(Rs. in million)
S # DP No. Description Amount
1 S-378 Local purchase of medical equipment 19.318
2 S-338 Local purchase of Pre-casted barriers 5.750
3 S-380 Local purchase of firefighting equipment 3.294
Total 28.362
When pointed out by Audit in February 2016, the executive
submitted evasive replies without substantive evidence.
The paras were discussed in the DAC meeting held on 30th
January, 2017. The DAC directed that violation of PPRA Rules may be
got regularized.
No further progress was reported to Audit till the
finalization of this report.
Audit suggests regularization of PPRA Rules violation.
DP-S-378, 338 and 380 /2016-17
76
Pakistan Air Force
1.10 Recoverables / Overpayments
1.10.1 Non-recovery of Base Trans-receiver Station tower
fee – Rs. 9.723 Million
According to Military Lands and Cantonment Department
Rawalpindi letter No. 50/14/Land/MLC/2005 dated 24th
June, 2005, the
cellular companies will be required to pay an antenna/tower fee @ Rs.
20,000 per month with annual enhancement of 10%.
While examining of the accounts of following units, it was
noticed that 20 BTS tower/antenna were installed at different locations,
but tower/antenna fee amounting to Rs. 9.723 million was not recovered
from the cellular companies.
(Rs. in Million)
S # DP No. Unit / Formation Amount
1 DP-N-269/2015-16 GE (Air), Sargodha 2.811
2 DP-N-292/2015-16 PAF Base Lahore 2.112
3 DP-N-510/2015-16 GE (Air) Maintenance, Islamabad 4.800
Total 9.723
When pointed out by Audit in May, August and December
2014, it was replied that concerned authorities had been approached for
deposit of amount.
The paras were discussed by the DAC in its meeting held
on 15th
December, 2016. The DAC directed that objected amount be
recovered.
No further progress was reported till finalization of this
report. Audit stresses for early recovery action.
DP-N-269, 292 and 510/2015-16
77
1.10.2 Non-recovery of House Rent Allowance from PAF
officers living in married accommodation –
Rs. 15.830 Million
According to Rule-66 of Pay and Allowances Vol-II 1999,
Married officers not provided with Government/hired/requisitioned
married accommodation shall be entitled to House Rent Allowance.
While examining the accounts of following units, it was
noticed that certain PAF officers were living in Government
accommodations but were also drawing HRA in their monthly pay and
allowances, which resulted into loss to state amounting to Rs. 15.830
million.
(Rs. in Million)
S # DP No. Unit / Formation Amount
1 DP-N-272/2015-16 PAF Base Lahore 3.317
2 DP-N-317/2015-16 PAF Base MM Alam, Mianwali 4.263
3 DP-N-439/2015-16 PAF Base Mushaf 4.960
4 DP-N-91/2016-17 PAF Base, Shorkot 3.290
Total 15.830
When pointed out by Audit, it was replied that HRA was
admissible to all married officers living in any accommodation other than
proper service accommodation vide MAG letter dated 6th
December, 2003.
However 5% of the recovery of the pay had been affected from the
officers. The reply was not acceptable as Army officers provided with
government accommodations including BOQs and MOQs shall not
receive HRA as per rule cited above.
The paras were discussed by the DAC in its meeting held
on 15th
December, 2016. The DAC pended the paras till formulation of
policy on house rent allowance.
78
No further progress was reported till finalization of this
report. Audit suggests recovery of the objected amount till
finalization/approval of policy.
DPs-N-272, 317 and 439/2015-16, DP-N-91/2016-17
1.10.3 Non-deposit of Government share into Government
Treasury -Rs. 149.793 Million
Para-2 (b) (1) of the A-1 land Policy issued vide
Government of Pakistan, Ministry of Defence Rawalpindi letter dated
April 02, 2008 , the rent shall be charged @ 6% per annum of existing
revenue rate (earlier known as DC rates) of the said land used in
commercial projects and 25% of the calculated rent will be deposited into
Government treasury.
In PAF Base Masroor, Karachi, 1.830 acres of A-1 land
within the Base were given to a commercial entity, M/s Shaheen
Knitwear. The government share of rent amounting to Rs. 149,793,658
from July 2008 to June 2016, as per A-1 Land Policy was not deposited
into government treasury.
When pointed out by Audit in December 2016, the
executive stated that the land was acquired by M/s Shaheen Knitwear on
lease from Military Estate Office (MEO) Karachi and rent was being paid
to MEO as per lease agreement. The reply was not acceptable as A-1 Land
could not be awarded on lease.
The para was discussed in the DAC meeting held on 30th
January, 2017. The DAC was apprised that a Board of Officer had been
ordered to determine the Government‟s share in rent. The DAC directed
that the Board proceeding may be completed immediately and
Government share be deposited in treasury within two months.
No progress was reported to Audit till the finalization of
this report.
79
Audit suggests early deposit of government„s share in
treasury.
DP-S-321/2016-17
1.10.4 Non-recovery of Sales Tax on services – Rs. 17.554
Million
The Sindh Sales Tax on Services Rules, 2011 prescribes the
procedure and manner for collection and payment of sales tax on taxable
services @ 16%.
In Project Shahbaz Islamabad, a contract for consultancy
services was concluded between Pakistan Air Force and M/s Kashif Aslam
and Associates (Pvt) Ltd in March, 2009, for up gradation of PAF Base
Shahbaz, Jacobabad. An amount of Rs. 109.714 million was paid to the
contractor upto October, 2015 for services rendered. However, Sales Tax
on services amounting to Rs. 17.554 million was not recovered from the
contractor.
When pointed out by Audit in May 2016, the executive
replied that Sales Tax was neither paid nor deducted from contractor as the
contract was executed within cantonment limits where Sales Tax on
services was not applicable.
Reply of executive was not tenable. The Sales Tax on
services was applicable without any exemption.
The DAC meeting held on 10th
January, 2017, directed that
documents be provided to Audit for examination / verification.
No record was produced to Audit till finalization of this
report.
Audit suggests expeditious recovery of pointed out amount.
DP-S-247/2016-17
80
1.10.5 Loss to state due to less recovery of water charges
from consumers – Rs. 9.129 Million
As per appendix “O” (i) of Defence Services Rules for
MES, 1998 the all Pakistan flat rate for water will be notified from time to
time. The annexed note to appendix „O‟ further elaborates that any
increase of water rates by supplying agency when notified shall be
recovered in addition to the rates specified above.
In GE (Air) Masroor Karachi, it was observed that Rs. 100
per 1000 Gallons of water were paid to Karachi Water & Sewerage Board
(KW & SB) and an amount of Rs. 5,000,000 was also paid for supply of
fresh water through water tankers during the financial year 2013-14.
However, recovery @ Rs. 40 per month was made from consumers for
water supplied. This was in contravention of above rule and resulted into
less recovery of Rs. 9,129,600. The details are as under;
S.# Accommodation
Type & No
Recovery per
month as per
Rules
Recovery
per month
made from
Consumers
Difference Recovery
(Rs.)
1 749
M.O.Q
Rs. 960 (9600
GL / 1000 GL x
Rs. 100 Per
1000 GL = 960)
Rs. 40 Rs. 920 920 x 749 x
12= 8,268,960
2 B.O.Q
163
Rs. 480 (9600
GL / 1000 GL x
50% for B.O.Q)
Rs. 40 Rs. 440 440x163x12=
860,640
Total 9,129,600
Water charges were being recovered @ Rs. 960 per month
in Pakistan Navy formations.
When pointed out by Audit in November 2016, the
executive replied that PAF Base Masroor was facing shortage of water
81
since long, therefore, rate of water charges were not revised. The reply
was not tenable.
The DAC in its meeting held on 10th
January, 2017 was
apprised that recovery affected @ Rs. 40 per month was already on higher
side. The DAC directed that the matter be discussed with Audit to resolve
the issue within one week.
No record was produced or discussion held with Audit by
the executive till finalization of this report.
Audit suggests that either special circumstances under
which subsidized rate is being charges may be explained or pointed out
amount may be recovered expeditiously.
DP-S-177/2016-17
1.10.6 Non-deduction of Sales Tax on account of purchase
of furniture – Rs. 8.736 Million
Section 3 of Sales Tax Act, 1990 stipulates that subject to
the provisions of this Act, there shall be charged, levied and paid a tax
known as Sales Tax @ 17% of the value of taxable supplies made by a
registered person in the course of furtherance of any taxable activity
carried on by the person.
Project Shahbaz, Air Head Quarter, Islamabad, purchased
furniture items, costing to Rs. 39.606 million, during the year 2015-16.
However, Sales Tax of Rs. 8.736 million was not deducted on those
supplies.
When pointed out by Audit in June 2016, executive replied
that Sales Tax was not applicable on construction package.
The para was discussed in the DAC meeting held on 30th
January, 2017. The DAC was apprised that as per Clause-14(iii) of Sindh
Sales Tax on Services Act, 2011 Government‟s civil works were
82
exempted from levy of Sales Tax. The DAC directed that relevant record /
documents may be got verified from Audit.
No record / document was produced to Audit during
verification carried out on 1st February, 2016. The rule quoted by the
executive were not relevant as Audit‟s objection was not on non-deduction
of Sales Tax on services.
Audit suggests expeditious recovery of the Sales Tax
amount in question.
DP-S-313/2016-17
1.10.7 Non-recovery of training charges from foreign
trainees – Rs. 5.865 Million
JSI-4/2006 provides complete procedure for recovering of
training and allied charges from the Governments of foreign trainees
attending courses in various institutions of the Pakistan Armed Forces
through their respective embassies.
In PAF Base Masroor Karachi, Rs. 5,865,900 (US $
58,659) were outstanding against 34 foreign trainees from different
countries on account of training charges upto 31st December, 2014.
When pointed out by Audit in February 2015, the executive
replied that recovery of outstanding training charges was in process.
The DAC in its meeting held on 10th
January, 2017 directed
that efforts be made to recover the outstanding amount expeditiously.
No progress was reported to Audit till finalization of this
report.
Audit recommends expeditious recovery of the training
charges.
DP-S-174/2016-17
83
1.11 Loss to State
1.11.1 Loss to State due to excess consumption of Sui gas –
Rs. 21.369 Million
Under Rule-81(a) of Quarter and Rents 1985, “free supply
of sui gas shall be made at places where fire wood and K-II is so
authorized for cooking/heating purpose as per scale given in the rule.
Excess consumption shall be paid by the consumer at the supplying
agency rates”.
While examining the accounts of GE (Air) Rafiuqui, it was
noticed that an amount of Rs. 24,305,690 was paid to the SNGPL on
account of Sui Gas charges. The free authorization of barracks, messes,
and hospital came to Rs. 2,936,794, which resulted into loss to state due to
payment of sui gas bills in excess of free authorization.
When pointed out by Audit in September 2015, it was
replied that mess authorities would be approached for depositing the
amount.
The para was discussed by the DAC in its meeting held on
15th
December, 2016. The DAC directed for verification of Board of
Officers for authorization of Sui Gas besides reconciliation of amount with
Audit.
No further progress was reported till finalization of this
report. Audit stresses for recovery of sui gas charges.
DP-N-203/2015-16
1.12 Irregular / Un-authorized expenditure
1.12.1 Un-authorized conclusion of contract beyond
financial power – Rs. 33.000 Million
Under Rule-89 of Financial Regulations Volume-I, 1986 as
amended vide Government of Pakistan, Ministry of Defence, letter No.
84
F.3/98/D-15, dated 23rd
February, 2008, the financial powers of Base
Commander, AOC and ACAS for concluding the contract are
Rs. 13,500,000, Rs. 6,000,000 and Rs. 4,500,000 respectively.
While examining the accounts of PAF Hospital MM Alam
Mianwali, it was noticed that contract valuing Rs. 3,300,0000 for life
saving medicine of 2014-15 was concluded by the AOC/ACAS beyond
financial powers. The sanction of contract was required to be obtained
from CAS instead of AOC, which resulted into unauthorized payment of
Rs. 33,000,000 and needed regularization action.
When pointed out by Audit in November 2015, it was
replied that sanctions for local purchase of NIV lifesaving medicines were
accorded by the OC hospital/Base Commander being competent authority.
The para was discussed by the DAC in its meeting held on
15th
December, 2016. The DAC directed the executive to amend the
existing policy so as to remove ambiguity in future cases. The DAC
directed for verification of contracts from Audit.
No further progress was reported till finalization of this
report. Audit suggests for early regularization.
DP-N-443/2015-16
1.12.2 Un-authorized payment of Special Messing
Allowance/Daily Messing Allowance to Airmen and
Officers – Rs. 23.225 Million
According to Para-39 and 81 of Pay and Allowances
Regulation (PAF) 1998 & Ministry of Defence letter No. 3/331/PP&A
dated 8th
May, 1999, SMA is only admissible for trainings, camps and
exercises in operational area.
While examining the accounts of PAF Base Lahore and
Mushaf, it was noticed that SMA/DMA amounting to Rs. 23.225 million
was paid to officers, airmen and civilian employees who were deployed
85
for security duties within Base area, which was not declared operational
area and thus resulted into un-authorized payment of SMA/DMA.
When pointed out by Audit in November, 2015 it was
replied that the Bases had the status of operational area/activities keeping
in view of prevailing security situation, The reply was not acceptable, as
both bases were not declared as operational area.
The para was discussed by the DAC in its meeting held on
15th
December, 2016. The DAC directed for verification of deployment
orders duly issued by the competent authority from audit.
No further progress was reported till finalization of this
report. Audit stresses for implementation of DAC‟s directives.
DP-N-274 and 437/2015-16
1.12.3 Irregular construction of non-public buildings from
public fund – Rs. 5.660 Million
Rule-72(a) of Quarter and Rents Rules, 1985 refers to re-
appropriation of surplus military buildings, if required for use as welfare
centers, without any extra cost to Government subject to the condition that
such re-appropriation shall not entail new construction at a later date.
In Project Shahbaz, Air Head Quarters (AHQ), Islamabad,
a building for PAFWA, a non-public organization, was constructed,
costing to Rs. 5,660,722 through the budget allocation (2014-15) for
Project Shahbaz, AHQ Islamabad from Defence budget in violation of
rules. The MES Scale of Accommodation for Defence services also did
not authorize construction of such building.
When pointed out by Audit in June 2016, the executive
replied that in order to facilitate the Base personnel, the building was
constructed as per policy in vogue. The reply of executive was not
acceptable as expenditure was incurred in violation of rules.
86
The para was discussed in the DAC meeting held on 30th
January, 2017. The executive stated that PAFWA Center was constructed
as training center for welfare of troops. The same was allowed under Para
16 of the Defence Services Accommodation Scales, 2000 and Rule-72(a)
of the Quarter & Rents Rules, 1985. The DAC directed that the relevant
record / document may be provided to Audit for verification.
The rules had been misquoted in the DAC meeting. The
Para 16 of the Defence Services Accommodation Scales 2000, does not
mention training center. Moreover, the Rule-72(a) of Quarter & Rents
Rules, 1985 does not allow construction of building for use as welfare
center.
Audit suggests regularization of the expenditure.
DP-S-316/2016-17
1.13 Mis-procurement of stores
1.13.1 Award of contracts in violation of Public
Procurement Rules – Rs. 15.614 Million
According to Rule-12 (2) of Public Procurement Rules
2004, “all procurement opportunities over two million rupees should be
advertised on the Authority‟s website as well as in the other print media or
newspapers having wide circulation. The advertisement in the newspapers
shall principally appear in at least two national dailies, one in English and
the other in Urdu”.
While examining the accounts of GE (Air) Mushaf
Sargodha, it was noticed that 02 contracts amounting to Rs. 15.614
Million were concluded without calling for open tendering in newspapers
and PPRA‟s website, which was violation of above PP rule.
When pointed out by Audit in August, 2016, it was replied
that expenditure would be regularized.
87
The para was discussed by the DAC in its meeting held on
15th
December 2016. The DAC directed for verification of relevant record.
No further progress was reported till finalization of this
report. Audit suggests prompt action for regularization of mis-procured
amount besides fixing responsibility on concerned officers/officials.
DP-N-152/2016-17
1.13.2 Irregular award of contracts without open
tendering – Rs. 2,299.610 Million
As per Rule 15, PPRA Rules 2004, a procuring agency,
prior to the floating of tenders, invitation to proposals or offers in
procurements proceedings, may engage in pre-qualification of bidders in
case of services, civil works etc.
In Project Shahbaz, Air Head Quarter, Islamabad three
different contracts for construction work, costing Rs. 2,299.610 million,
were concluded in 2013-14. It was observed that contracts were awarded
after advertisement for pre-qualification of contractors was published in
newspapers. However, no tenders were floated after pre-qualification, as
required under Rule-15 of PPRA Rules, 2004.
When pointed out by Audit in June 2016, the executive
replied that PPRA rules were followed. Advertisement was published in
newspapers on 25th
July, 2013 and on PPRA website.
The para was discussed in the DAC meeting held on 30th
January, 2017. The executive stated that newspapers clippings had been
obtained from concerned quarters for verification. The DAC directed that
relevant documents / record be provided to Audit for verification.
Verification of documents / record was carried out on 1st
February, 2017. It was verified from record that only advertisement for
pre-qualification of contractors was published in newspapers.
88
Audit suggests regularization of the PPRA Rules violation.
DP-S-314/2016-17
1.13.3 Irregular award of contracts without open
tendering – Rs. 61.724 Million
As per Rule 12, PPRA Rules 2004, All Procurement
opportunities over two million rupees should be advertised on the
Authority‟s as well as in other print media or newspapers having wide
circulation. The advertisement in the newspapers shall principally appear
in at least two national dailies, one in English and the other in Urdu.
In two PAF units/formations different contracts for costing
Rs. 61.724 million were concluded without advertisement on PPRA
website/ newspapers. The details are listed below;
(Rs. in million)
S # Name of Unit / Formation DP No. Amount
1 Project Shahbaz, AHQ, Islamabad S-323 37.787
2 Project Shahbaz, AHQ, Islamabad S-333 20.167
3 PAF Base, Masroor, Karachi S-202 3.770
Total 61.724
When pointed out by Audit in March 2016 and June 2016,
the executive in respect para at serial No. 1 stated that the contract was
awarded to contractor on the basis of experience. In respect of para at
serial No 2, it was replied that tender was not published due to security
reasons. In respect of para at serial no 3, the executive stated that
contracts were offered to prequalified contractors. The replies of the
executive were not convincing as deviation from advertisement
requirement was permissible with prior approval of the authority.
The paras were discussed in the DAC meetings held on 10th
and 30th
January, 2017. The DAC directed that relevant documents /
record be provided to Audit for verification.
89
Verification of documents / record of paras at serial No. 1
and 2 was carried out on 1st February, 2017. No documentary evidence
regarding prior approval for deviation from PPRA requirement was
produced. No progress regarding para at serial No. 3 was reported till
finalization of this report.
Audit suggests regularization of the PPRA Rules violation.
DP-S-323, 333 and 202/2016-17
1.13.4 Irregular procurement of medicine – Rs. 7.437
million
According to Rule-10 of PPRA Rules 2004, “Specifications
shall allow the widest possible competition and shall not favor any single
contractor or supplier nor put others at a disadvantage. Specifications shall
be generic and shall not include references to brand names, model
numbers, catalogue numbers or similar classifications. However if the
procuring agency is convinced that the use of or a reference to a brand
name or a catalogue number is essential to complete an otherwise
incomplete specification, such use or reference shall be qualified with the
words “or equivalent”.
In PAF Base Malir, Senior Medical Officer, issued demand
for medicines using brand names instead of generic names in violation of
rule during the year 2014-15. Thus entire expenditure of Rs. 7,437,755
stood as irregular.
When pointed out by Audit in December 2015, executive
replied that purchases were made as per prescription of specialists with
brand names on basis of efficacy.
The reply is not tenable. As per Rule 10, brand names
could be used only with the words “or equivalent”.
The DAC in its meeting held on 27th
December, 2016
directed that relevant record be provided to audit for verification.
90
No record was produced to Audit for verification till
finalization of this report.
Audit suggests regularization of the PPRA Rules violation.
DP-S-136/2016-17
91
Pakistan Navy
1.14 Recoverables / Overpayments
1.14.1 Non-recovery of allied charges – Rs. 38.009 Million
According to Rule-442 of Defence Services Regulations for
MES, 1998, GE is responsible for making demands for payment of all
revenues and for taking steps for its prompt realization.
In three MES formations of Navy Rs. 38.009 million were
outstanding on account of allied charges up to June 2016. The details are
as under;
(Rs. in million)
S. No. Unit/Formation DP No. Amount
1 GE (Navy) East, Karachi S-326 32.268
2 GE (Navy) South, Karachi S-243 4.040
3 GE (Navy) Logistics Karachi S-327 1.701
T o t a l 38.009
When pointed out by Audit in August 2016 and October
2016, the executive replied that efforts were being made to recover the
outstanding amount.
The paras were discussed in the DAC meetings held on 12th
and 30th
January, 2017. The DAC was apprised in respect of para at serial
No 1 that Rs 15.375 million had been recovered. In case of remaining
paras, the executive stated that efforts were being made to recover the
amount. The DAC directed that amount recovered so far be got verified
from Audit and balance amount be recovered within three months.
No record /documents were produced to Audit for
verification till finalization of this report.
92
Audit suggests expeditious recovery of the pointed out
amount.
DP-S-326, 243 and 327/2016-17
1.14.2 Non-recovery of income tax from contractors –
Rs. 26.986 Million
As per Section-153 of Income Tax Ordinance 2001, as
amended from time to time, every prescribed person making a payment for
rendering or providing of services is liable to deduct tax from the gross
amount of the bills at prescribed rates.
In various Naval units, a sum of Rs 26.986 million on
account of income tax was not deducted/less deducted from the final bills
of contractors. The details are as under;
(Rs. in million)
S.No. Unit/Formation DP No. Amount
1 GE (Navy) Central Construction, Karchi S-259 8.531
2 GE (Navy) Construction, Turbat S-149 5.897
3 PNS Shifa, Karachi S-131 5.068
4 PNS Shifa. Karachi S-126 2.832
5 PNS Shifa, Karachi S-153 1.252
6 GE (Navy) Central Construction, Karchi S-260 0.910
7 GE (Navy) East, Karachi S-06 0.799
8 GE (Navy) Comwest, Gawadar S-40 0.518
9 GE (Navy) Fleet, Karachi S-182 0.503
10 GE (Navy) Central Construction, Karchi S-07 0.417
11 PNS Karsaz, Karachi S-37 0.259
T o t a l 26.986
When pointed out by Audit from August 2015 to August
2016, the executive replied that recovery in some cases was under process,
whereas in other cases income tax was rightly deducted.
93
The DAC in its meetings held on 11th
and 12th
January,
2017 was apprised in respect of paras at serial No 2, 6, 9 and 11 that
recovery was in process. In respect of paras at serial No 1, 3, 4, 5, 7, 10,
and 12, the executive stated that the recovery of Income Tax was rightly
deducted. The DAC directed that balance amount of tax may be recovered
and got verified from Audit. The executive was also directed to provide
record/ documents to Audit for examination/verification that Income Tax
was rightly deducted.
No record / documents were produced to Audit till
finalization of this report.
Audit suggests expeditious recovery of the pointed out
amount.
DP-S 259, 149, 131, 126, 153, 260, 06, 40,182, 07 and 37 /2016-17
1.14.3 Non-recovery of stamp duty from contractors –
Rs. 16.370 Million
As per Section 35 of Stamp Act 1899, no instrument
chargeable with duty shall be admitted in evidence for any purpose by any
person having, by law or consent of parties, authority to receive evidence,
or shall be acted upon, registered or authenticated by any such person or
by any public officer, unless such instrument is duly stamped.
As per Government of Sindh Finance Act 2009, “Stamp
duty of thirty paisa for every hundred rupees or part thereof of the amount
of the contract will be charged”.
In various units/formations of Pakistan Navy Rs. 16.370
million on account of stamp duty was not recovered against certain
contracts during the years 2014-15 and 2015-16. The details are as under;
(Rs. in Million)
S.No. Unit/Formation DP No. Amount
1 GE (Navy) Construction-I, Ormara S-365 6.195
2 GE (Navy) Central Construction, Karachi S-257 4.304
94
3 PN MSD, Karachi. S-62 1.300
4 GE (Navy) Construction Turbat S-104 1.099
5 AGE (Navy) Mehran, Karachi S-188 0.927
6 PNS Raza, Karachi S-74 0.761
7 AGE (Navy) Maint. Manora, Karachi S-181 0.511
8 GE (Navy) South, Karachi S-298 0.446
9 CMES (Navy) Comcoast, Karachi S-05 0.326
10 PNS Shifa, Karachi S-130 0.296
11 CMES (Navy) Comlog, Karachi S-04 0.205
T o t a l 16.370
When pointed out by Audit from February 2015 to October
2016, the executive stated that Finance Act of Government of Sindh was
not applicable on departments working under the Federal Government.
The DAC in its meetings held on 11th
, 12th
and 30th
January, 2017 directed that clarification from MoD may be obtained and
produced to Audit for verification.
No progress of the case was reported to Audit till
finalization of this report.
Audit suggests expeditious recovery of the pointed out
amount.
DP-S-365, 257, 62 104, 188, 74, 181, 298, 05, 130, and 04/2016-17
1.15 Loss to State
1.15.1 Blockage of public money due to non-disposal of
inventory – Rs. 3,476.918 Million
According to Rule 0214 (3) (a) (2) of Financial Regulations
(Navy) 1993, disposal of unserviceable, waste and scrap stores of any
value held on charge of various PN Store Depots, will be arranged by
commanding officers of the respective stores depots through public
auction in accordance with instructions contained herein and detailed
procedure laid down in Annex-E.
95
In PNS Raza, Karachi, the Standing Stores Disposal
Committee (SSDC) in its meeting held on 19th
June, 2013, declared
20,384 inventory items of aircrafts as surplus/redundant, having assessed
value of Rs. 3,476,917,759. The SSDC recommended disposal of the
items by finding potential buyers. However, the same could not be
disposed till the close of audit.
When pointed out by Audit in February 2016, the executive
stated that after SSDC‟s recommendations, continuous efforts had been
made to sell the spares to prospective buyers on every platform.
The DAC in its meetings held on 11th
January, 2017
directed that efforts be made for disposal of the store at the earliest.
No progress was reported to Audit till finalization of this
report.
Audit suggests early disposal of the inventory.
DP-S-100/2016-17
1.16 Irregular / Un-authorized expenditure
1.16.1 Irregular administrative sanction and conclusion of
contracts beyond sanctioning power – Rs. 1,082.473
Million
According to Table A of the Para 25 and the Para 389 of
Defense Services Regulations for MES, 1998, the power of administrative
sanction of DCNS is upto 30 million and the contractual powers of E-in-C
and DW& CE are Rs. 35 million and Rs. 30 million, respectively.
In GE (Navy) Central Construction, Karachi, seven
contracts, each valuing more than Rs. 35 million, totaling to Rs. 1,082.473
million were sanctioned by DCNS(A) and contracts accepted by DW&CE,
beyond their respective powers. Each contract required to be sanctioned
by Government of Pakistan and accepted by E-in-C with prior financial
concurrence.
96
When pointed out by Audit in August 2016, the executive
stated that contracts were concluded by DW& CE. The GE office only
executed the works.
The DAC in its meeting held on 12th
January, 2017 directed
that action be taken to get the violation regularized.
No progress was reported to Audit till finalization of this
report.
Audit suggests regularization of the expenditure.
DP-S-256/2016-17
1.16.2 Irregular construction of building – Rs. 174.151
Million
According to the items mentioned in BQ of construction
contracts, the number of days required for completion of ground floor
were as under:
As per BQ No. of Days
1. Excavation 2
2. PCC foundation 5
3. RCC footing foundation 28
4. Beams 28
5. Roof slabs 28
According to BQ minimum days required for ground floor 91
In GE (Navy) Central Construction, Karachi, 3 contracts
for construction of three separate buildings (ground plus three floors each)
amounting to Rs 174,151,053 were executed during 2015-16. It was
observed that each building was completed and paid within a period of 80
to 86 days. However, minimum 91 days were required for execution of
work for only ground floor structure.
When pointed out by Audit in August 2016, the executive
stated that the procedure was adopted as mentioned in Schedule of Rates.
97
DAC in its meeting held on 12th
January, 2017 was
apprised that works were executed under para -17 of DSR 1998. The DAC
directed to hold fact finding inquiry, fix responsibility, take disciplinary
action and get the irregular work regularized.
No progress was reported to Audit till finalization of this
report.
Audit suggests regularization of the expenditure.
DP-S-265/2016-17
1.16.3 Unauthorized payment of final bill to contractors
before completion of works – Rs. 30.571 Million
According to Para 412 of Defence Services Regulations-
1998, payment on running account may be made by the GE for work done.
The amount of such payment shall not exceed the difference between the
approximate value of work done and the cost of stores issued up-to-date.
In AGE (Navy) Mehran Karachi, various contracts were
concluded by the CMES/DW&CE and work orders issued by the AGE
(Navy) Mehran. A sum of Rs. 30, 571,143 was paid to contractors against
the final bills, but works were still in progress as per record. The final bills
were paid to contractors in advance just to avoid lapse of funds.
When pointed out by Audit in September 2016, the
executive did not furnish reply.
The para was discussed in the DAC meeting held on 31st
January, 2017. The DAC directed the executive to hold a fact finding
inquiry, fix responsibility and take disciplinary action those found
responsible. Furthermore, regularization action may also be initiated.
No progress was reported to Audit till the finalization of
this report.
Audit suggests regularization of unauthorized payment.
DP-S-331/2016-17
98
1.16.4 Irregular purchase of non-schedule furniture –
Rs. 2.321 million
Section II, Para 182 of Defence Services Regulations for
MES, 1998 states that Articles of Barrack & Hospital furniture will be
manufactured in accordance with the general descriptions and dimensions
sanctioned by the Government of Pakistan. Further, Section II, Para-181
states that authorized scale of furniture will not be exceeded without the
previous sanction of the Government of Pakistan.
In CMES (Navy), COMPAK, a sum of Rs. 2.321 million
was spent on procurement of special/non-schedule furniture items under
different contracts without obtaining sanction from the Government of
Pakistan as per rules. Therefore, the expenditure was held irregular in
audit.
When pointed out by Audit in December 2015, the
executive stated that HQ COMPAK had been approached for Ex-Post
Facto sanction.
The DAC in its meetings held on 11th
January, 2017
directed that violation may be got regularized from competent Authority.
Audit suggests regularization of the expenditure.
DP-S-111/2016-17
1.17 Mis-procurement of stores
1.17.1 Award of contracts in violation of Public
Procurement Rules – Rs. 2.600 Million
According to Rule-12 (1) of Public Procurement Rules
2004 “procurements over one hundred thousand rupees and up to the limit
of two million rupees shall be advertised on the Authority‟s website in the
manner and format specified by regulation by the Authority from time to
time. These procurement opportunities may also be advertised in print
media, if deemed necessary by the procuring agency”.
99
While examining the accounts of PNS Zafar Islamabad, it
was noticed that an expenditure amounting to Rs. 2.600 million was
incurred on procurement of stores for improvement of security without
calling for open competition through newspapers and PPRA‟s website,
which was violation of above PP Rule.
When pointed out by Audit in November 2015, it was
replied that due to high level of security threats, option of advertisement
was not opted. However, admin approval was obtained for inviting
contractors having cleared security from Naval for said work in the light
of PPRA Rule-42(c).
The para was discussed by the DAC in its meeting held on
16th
December, 2016. The DAC directed for verification of competent
authority orders invoking emergency for procurement of equipment.
No further progress was reported till finalization of this
report. Audit stresses for early regularization action.
DP-N-85/2016-17
1.17.2 Finalization of tenders in violation of PPRA Rules –
Rs. 519.869 Million
According to PPRA Rule-2 (1) (c) “competitive bidding”
means a procedure leading to the award of a contract whereby all the
interested persons, firms, companies or organizations may bid for the
contract and includes both national competitive bidding and international
competitive bidding.
In PN Medical Store Depot, Karachi tenders for
procurement of drugs/medicines, totaling to Rs. 519.869 million were
published inviting bids only from registered firms during the year
2014-15. Invitation of tenders from only registered firms was in violation
of PPRA Rules which required open / competitive bidding in procurement
process.
100
When pointed out by Audit in December 2015, the
executive stated that scrutiny method was adopted due to security reasons
and only registered persons were allowed to participate in tenders as
directed by HQ COMKAR.
Reply was not convincing as PPRA Rules provided equal
opportunities to all interested parties while registration imposed bar and
encouraged collusive/ limited competition to favor a few.
The DAC in its meetings held on 11th
January, 2017
directed the executive to get the violation of PPRA Rules regularized from
the competent Authority.
No progress of the case was reported till finalization of this
report.
Audit suggests regularization of the PPRA Rules violation.
DP-S-88/2016-17
1.17.3 Conclusion of contracts through negotiations in
violation of PPRA Rules – Rs. 194.864 Million
Rule-40 of PPRA Rules, 2004, states that “Save as
otherwise provided, there shall be no negotiations with the bidder having
submitted the lowest evaluated bid or with any other bidder; Provided that
the extent of negotiation permissible shall be subject to the regulations
issued by the Authority.” Furthermore, Rule 38 states that “The bidder
with the lowest evaluated bid, if not in conflict with any other law, rules,
regulations or policy of the Federal Government, shall be awarded the
procurement contract, within the original or extended period of bid
validity.”
In PN Medical Store Depot, Karachi various firms
submitted bids in response to tenders invited by the Unit, amounting to
Rs. 194.864 million. The executive first selected firms from among the
bidders without regard to rates offered by them. Contracts were then
101
awarded to the selected firms after holding negotiations. Thus, the entire
procurement process was completed in violation of PPRA Rules.
When pointed out by Audit in December 2015, the
executive stated that Standard Operating Procedure for local purchase
allowed price reasonableness meetings for brands selected on the basis of
quality. Final approval was accorded by DGMS.
The reply is not tenable as the procurement was done in
complete violation of the PPRA Rules quoted above.
The para was discussed in the DAC meetings held on 11th
January, 2017. The DAC directed that documents be provided to Audit for
examination/verification.
Neither documents were produced for examination /
verification nor any progress reported to Audit till finalization of this
report.
Audit suggests regularization of the PPRA Rules violation.
DP-S-90/2016-17
1.17.4 Award of works without publication of tender –
Rs. 190.469 Million
According to Rule 12 (1) of PPRA Rules 2004,
procurements over one hundred thousand rupees and up to the limit of two
million rupees shall be advertised on the Authority‟s website in the
manner and format specified by regulation of the Authority from time to
time. These procurement opportunities may also be advertised in print
media, if deemed necessary by the procuring agency.
In GE (Navy) Central Construction, Karachi, six contracts
amounting to Rs 190.469 million were awarded to contractors without
publication of tenders during 2012 to 2016. To avoid publication of
tender, the executive published corrigenda in newspapers for change in
date of opening of tender, after expiry of the original date fixed for
102
tenders‟ opening. The Construction Account of each work indicated that
payment was made only for publication of corrigenda. Further,
documentary evidence (news clippings) of publication of original tenders
were not produced for verification. The details are as under;
(Rs. in million)
S # Contract No DP No. Amount
1 ENC-N-23/2016 & ENC-N-24/2016 S-255 139.136
2 CEN-N-43/2015 S-251 16.341
3 CEN-N-16/2013 S-253 15.349
4 CEN-N-02/2014 S-250 13.235
5 CEN-39/2013 S-252 6.408
Total 190.469
When pointed out by Audit in August 2016, the executive
stated that contracts were concluded by DW&CE. The GE office only
executed the work after receiving the acceptance letter.
The DAC in its meetings held on 12th
January, 2017 was
apprised that the dates were revised for issuance and opening of tenders.
The DAC directed to hold fact finding inquiry, fix responsibility, take
disciplinary action and initiate regularization action.
No progress was reported to Audit till finalization of this
report.
Audit suggests regularization of the PPRA Rules violation.
DP-S-255, 251, 253, 250 and 252/2016-17
1.17.5 Award of contracts without open tendering –
Rs. 156.624 Million
According to Rule-12(1,2) of PPRA-2004, all procurements
over one hundred thousand rupees and upto the limit of Rs. 2.00 million
shall be advertised on the authority‟s website. Further, procurement over
Rs. 2.00 million should be advertised on the authority‟s website as well as
in two national dailies, one in English and the other in Urdu.
103
During audit of different Naval units/formations, it was
observed that contracts were concluded without advertisement on PPRA
website/ newspapers which was violation of Rule-12 of PPRA 2004. The
details are as under:-
(Rs. in million)
S # Name of Unit / Formation DP No. Amount
1 GE (Navy) Eastern, Karachi S-42 44.101
2 PNS Shifa, Karachi S-127 29.762
3 GE (Navy) Central Construction, Karachi S-261 21.968
4 PNS Bahadur, Karachi S-31 21.360
5 GE (Navy) Central Construction, Karachi S-258 18.032
6 AGE (Navy) Mehran, Karachi S-187 8.995
7 PN MSD, Karachi S-63 8.755
8 PNS Shifa, Karachi S-128 3.651
Total 156.624
When pointed out by Audit from December 2015 to
October 2016, the executive stated that all codal formalities were fulfilled.
However, the replies of the units/formations were not convincing as no
substantive evidence was provided.
The paras were discussed in DAC meetings held on 11th
and 12th
January, 2017. The DAC directed that documents/relevant record
be provided to Audit for examination/verification.
No record was provided to Audit till finalization of this
report.
Audit suggests regularization of the PPRA Rules violation.
DP-S-42, 127, 261, 31, 258, 187, 63 and 128/2016-17
1.17.6 Loss due to mis-procurement of medicines –
Rs. 124.851 Million
Rule 29 of PPRA Rules, 2004 states that procuring
agencies shall formulate an appropriate evaluation of criteria, listing all
104
relevant information against which a bid is to be evaluated. Such
evaluation criteria shall form an integral part of the bidding documents.
Failure to provide for an unambiguous evaluation criteria in the bidding
documents shall amount to mis-procurement.
According to PPRA Rule 38 “The bidder with the lowest
evaluated bid, if not in conflict with any other law, rules, regulations or
policy of the Federal Government, shall be awarded the procurement
contract, within the original or extended period of bid validity.”
In PN Medical Store Depot, Karachi, purchase orders were
issued for medicines to companies of choice without considering the
lowest rates offered during the financial year 2014-15. No evaluation
criteria were formulated to be made an integral part of bidding documents.
As a result, the Government sustained a loss of Rs. 124.851 million.
When pointed out by Audit in December 2015, the
executive stated that brands were selected by a committee appointed by
DGMS. Since patients‟ health care was of prime importance, the quality of
medicines was never compromised for economy.
The para was discussed in DAC meeting held on 11th
January, 2017. The DAC was apprised that quotations were called as per
PPRA Rules. From the quoted brands, best brands having economy and
quality were selected. The DAC directed that violation of PPRA Rules
may be got regularized.
No progress was reported to Audit till finalization of this
report.
Audit suggests regularization of the PPRA Rules violation.
DP-S-91 2016-17
105
1.17.7 Irregular contract for supply of medicine –
Rs. 112.638 Million
According to Rule 10 of PPRA Rules 2004, “Specifications
shall allow the widest possible competition and shall not favor any single
contractor or supplier nor put others at a disadvantage. Specifications shall
be generic and shall not include references to brand names, model
numbers, catalogue numbers or similar classifications. However if the
procuring agency is convinced that the use of or a reference to a brand
name or a catalogue number is essential to complete an otherwise
incomplete specification, such use or reference shall be qualified with the
words “or equivalent”.
In PNS Shifa, Karachi, an amount of Rs. 112.638 million
was expended for procurement of medicines during the financial year
2014-15, using brand names of medicine instead of generic names in
violation of above Rule. It indicated that purchases were made on
favoritism basis instead of competitive rates.
When pointed out by Audit in March 2016, the executive
replied that PNS Shifa‟s medical store purchased medicines which were
NA in PVMS / NIV and NIF. It was also stated that local purchase of
medicines could not be made on generic names basis as consultants were
prescribing medicines using brand names.
The DAC in its meetings held on 11th
January, 2017
directed to hold fact finding inquiry, fix responsibility, take disciplinary
action and get the violation regularized.
No progress was reported to Audit till finalization of this
report.
Audit suggests regularization of the PPRA Rules violation.
DP-S-140/2016-17
106
1.17.8 Conclusion of contract by giving less than
prescribed response time in bidding process –
Rs. 5.750 Million
According to Rule-13(1) of PPRA 2004, under no
circumstances the response time shall be less than 15 days for national
competitive bidding.
In GE (Navy) Central Construction, Karachi, tender for a
construction work amounting to Rs. 5.750 million was published in two
newspapers on 10th
March 2016. The date for opening of tender was given
as 18th
March 2016. Thus, response time of only 8 days was allowed,
which was violation of above Rule.
When pointed out by Audit in August 2016, the executive
stated that contract was awarded as per financial and contractual powers of
CMES. The GE office only executed and monitored the work.
The DAC in its meeting held on 12th January, 2017
directed for regularization of the expenditure.
No progress was reported to Audit till finalization of this
report.
Audit suggests regularization of the PPRA Rules violation.
DP-S-271 /2016-17
1.17.9 Award of contract before the publication of tender
– Rs. 3.637 Million
Rule-38 of Public Procurement Rules, 2004, “the bidder
with the lowest evaluated bid, if not in conflict with any other law, rules,
regulations or policy of the Federal Government, shall be awarded the
procurement contract, within the original or extended period of bid
validity”
Further, Rule-12(1) of PPRA Rule-2004 stipulated that
Procurements over one hundred thousand rupees and up to the limit of two
107
million rupees shall be advertised on the Authority‟s website in the
manner and format specified by regulation by the Authority from time to
time. These procurement opportunities may also be advertised in print
media, if deemed necessary by the procuring agency.
In GE (Navy) Eastern Karachi, tender advertisements of 06
works for uploading on PPRA web site, showing the date of opening of
tenders as 30th
September 2014, were sent to PPRA Authority on 11th
September, 2014. However the contracts for above works were accepted
by Garrison Engineer between 1st September and 09
th September, 2014.
This resulted in irregular expenditure costing Rs. 3,637,490.
When pointed out by Audit in December, 2015 executive
replied that works were uploaded on PPRA website. More over due to
urgency for commencement / completion of work from users‟ side, the
contracts were concluded before due course of time.
The DAC in its meeting held on 11th
January, 2017 was
apprised that the irregularity occurred as the concerned staff was not aware
of PPRA Rules. The DAC directed to hold fact finding inquiry, fix
responsibility, take disciplinary action and regularize the expenditure.
No progress was reported to Audit till finalization of this
report.
Audit suggests regularization of the PPRA Rules violation.
DP-S-45/2016-17
108
Military Accountant General
1.18 Recoverables / Overpayments
1.18.1 Non-recovery of House Rent Allowance from
Officers living in married accommodation –
Rs. 2.029 Million
According to Rule-66 of Pay and Allowances Vol-II 1999,
Married officers not provided with Government/hired/requisitioned
married accommodation shall be entitled to House Rent Allowance.
While examining the accounts of MAG Office Rawalpindi,
it was noticed that 08 civilian officers/officials living in MOQs were also
drawing HRA in their monthly pays, which was violation of rule cited
above.
When pointed out by Audit in April 2015, it was replied
that HRA was admissible at specified accommodation subject to recovery
of assessed or 5% rent. The reply was not acceptable as HRA to officers
living in Government accommodations was not admissible.
The para was discussed by the DAC in its meeting held on
18th
October, 2016. The DAC pended the DP till formulation of new
policy regarding HRA.
No further progress was reported till finalization of this
report. Audit stresses for early recovery of HRA from officers.
DP-N-405/2015-16
1.18.2 Non-recovery of hoarding charges – Rs. 3.437
Million
Under Section-14(1)(b) of the Auditor General‟s
(functions, powers and terms and conditions of service) Ordinance No.
XXIII of 2001, the Auditor General of Pakistan shall, in connection with
the performance of his duties under this ordinance have authority to
109
require that any accounts, book, papers and other documents which deal
with or form the basis of or otherwise relevant to the transactions to which
his duties in respect of audit extend, shall be sent to such place as he may
direct for his inspection. After 18th
Amendment in Constitution of Islamic
Republic of Pakistan 1973, there is no room for denial of disclosure and
withholding of accounts from Auditor General of Pakistan.
During audit of CMA (LC) Lahore Cantt, it was observed
that 02 hoarding boards were located near CMA Dispensary but rent
recovery record was not produced to audit.
When pointed out by Audit in July 2015, no reply was
furnished by the executive.
The para was discussed by the DAC in its meeting held on
18th
October, 2016. The DAC was apprised that relevant
documents/record had already been provided to audit. The DAC directed
to provide relevant record/documents for audit verification.
During verification of auditable documents, it was
transpired that rent on account of hoarding / sign boards valuing Rs. 3.437
million was yet to be recovered. No further progress was reported till
finalization of this report. Audit stresses for immediate expediting of
recovery pointed out.
DP-N-185/2015-16
1.19 Irregular / Un-authorized expenditure
1.19.1 Un-authorized advance payment of electricity bill
to WAPDA – Rs. 2.840 Million
According to Rule-51 of Financial Regulations (Volume-II)
1986, “It is not permissible to draw any money to prevent the lapse of
amounts provided in estimates”.
While examining the accounts of Dy. CAAF Lahore, it was
noticed that an advance amounting to Rs. 2,840,000 on account of
110
electricity bills was paid to WAPDA authorities in violation of above rule,
which need regularization action.
When pointed out by Audit in October 2015, it was replied
that the matter had already been referred to formation concerned for
resolving the issue. The reply was not agreed to as incurring of
expenditure merely to avoid lapse of funds was not permissible under
rules.
The para was discussed by the DAC in its meeting held on
18th
October, 2016. The DAC observed that making advance payments
against utility bills has become a recurring feature to exhaust available
funds at the close of financial year. The DAC directed to regularize the
expenditure and to avoid recurrence of such cases in future.
No further progress was reported till finalization of this
report. Audit stresses for early regularization action.
DP-N-427/2015-16
1.20 Mis-procurement of stores
1.20.1 Award of contracts in violation of Public
Procurement Rules
– Rs. 12.170 Million
According to Rule-12 (2) of PP Rules-2004, “all
procurement opportunities over two million rupees should be advertised
on the Authority‟s website as well as in the other print media or
newspapers having wide circulation. The advertisement in the newspapers
shall principally appear in at least two national dailies, one in English and
the other in Urdu”.
While examining the accounts of E-section CMA (LC)
Lahore, it was observed that contract agreements worth Rs. 12,170,809 as
detailed below for supply of furniture items were concluded during the
financial year 2014-15 by the Garrison HQs of different stations without
111
calling for open competition through newspaper and PPRA‟s website,
which was violation of above PP rules.
S.
No.
Contract Agreement/Job
No.
Work
Awarded by
Contract
awarded to
Total amount
of contract
(Rs.)
1 No. SC/SLK/01 of 2014-15
(Job No. 1613 of 2014-15)
Garrison HQ
Sialkot
M/S SAM
Traders Gujrat
2,482,584
2 LC/LHR/05 of 2014-15
(Job No. 1680 of 2014-15)
Garrison HQ
Lahore
M/S Khokhar
Wood Crafts
Lahore
2,382,575
3 GC/KHN/02 of 2014-15
(Job No. 1649 of 2014-15)
Garrison HQ
Kharian
M/S SAM
Traders Gujrat
2,375,250
4 No. GC/SGD/03 of 2014-15
(Job No. 1688 of 2014-15)
Garrison HQ
Sargodha
M/S SAM
Traders Gujrat
2,469,150
5 GC/KHN/03 of 2014-15
(Job No. 1689 of 2014-15)
Garrison HQ
Kharian
M/S SAM
Traders Gujrat
2,461,250
Grand Total Rs. 12,170,809
When pointed out by Audit in July, 2015 the Accounts
authorities replied that concerned formations were approached to submit
replies on audit observations. The reply was not correct, as compliance of
rules was required to be checked by Accounts authorities during pre/post
audit of vouchers.
The para was discussed by the DAC in its meeting held on
18th
October, 2016. The DAC directed the executive to get the relevant
documents and record verified from Audit.
During verification, no relevant record was provided by
executive. Audit suggests for early regularization action.
DP-N-309/2015-16
112
CHAPTER-2
Ministry of Defence Production
2.1 Introduction
Ministry of Defence Production deals with procurement,
indigenous production and manufacture of defence equipment and stores.
This Ministry negotiates agreements and Memorandums of Understanding
(MoUs) for foreign assistance or collaboration, loans for purchase of
military stores, technical knowledge and transfer of technology. It also
deals with export of defence products, marketing, and promotion of
activities relating to export of defence products and procurement and
research & development related matters of the defence sector. Under
Armed Forces Development Plan this Ministry has undertaken mega
projects like JF-17, Al-Khalid Tank, F-22P Frigate and AWACS Air
Refueling System as well as F-16 Block 52, Radar System etc.
2.2 Brief comments on the status of compliance with PAC's
directives.
The status of compliance of Public Accounts Committee (PAC)
directives for the Audit Reports from 1985-86 to 2015-16 discussed during
its various meetings held from July, 1992 to December, 2016 is given
below:-
Year Total
Paras
No. of Paras
Discussed
Compliance
Made
Compliance
awaited / Non
Complied
Percentage
of
Compliance
1 2 3 4 5 6
1985-86 15 01 0 01 0%
1986-87 12 0 0 0 0%
1987-88 17 13 01 12 7.6%
1988-89 14 05 0 05 0%
1989-90 14 02 0 02 0%
1990-91 10 02 01 01 50%
1991-92 15 04 0 04 0%
113
1992-93 15 03 0 03 0%
1993-94 26 04 0 04 0%
1994-95 22 0 0 0 0%
1995-96 28 12 03 09 25%
1996-97 91 63 15 48 24%
1997-98 55 05 0 05 0%
1998-99 0 0 0 0 0%
1999-00 86 33 03 30 9%
2000-01 140 48 34 14 17%
2001-02 44 27 10 17 37%
2002-03 0 0 0 0 0%
2003-04 01 01 01 0 100%
2004-05 08 08 04 04 50%
2005-06 27 06 05 01 83%
2006-07 07 06 02 04 33%
2007-08 08 08 08 0 100%
2008-09 16 03 03 03 100%
2009-10 Report not yet discussed
2010-11 Report not yet discussed
2011-12 Report not yet discussed
2012-13 Report not yet discussed
2013-14 Report not yet discussed
2014-15 Report not yet discussed
2015-16 Report not yet discussed
Total 671 254 90 167 35.433%
Ministry of Defence Production fully complied with only 90
PAC‟s directives out of 254 which indicates that compliance of PAC
directives was very slow and the Principal Accounting Officer should take
necessary steps to expedite compliance of PAC‟s directives.
114
Audit Paras
2.3 Recoverables / Overpayments
2.3.1 Non-imposition of L.D charges USD 34,625
According to Para-I of Chapter-XI of Purchase Procedures
& Instructions 2002, the specified delivery period is the essence of the
contract. All the deliveries must be completed by the specified date. Upon
failure by the supplier to deliver the stores within the stipulated time frame
the purchaser has to resort to the following in the best interest of state.
(a) To cancel the contract on the firm‟s risk and expense in
case of complete failure.
(b) To impose liquidated damages @ 2% per month up to a
maximum 10% against the unsupplied stores.
While examining the accounts of Aircraft Manufacturing
Factory, Kamra it was noticed that delivery period against 12 contracts
valuing USD 346,249.89 were neither extended by procuring agency nor
LD charges amounting to US $ 34,625 were imposed under relevant
clause of contract.
When pointed out by Audit in February 2016, it was replied
that all the contracts pertained to current financial year and LD charges
would be imposed on receipt of payment documents of the supplier. The
reply was not acceptable, as the contract delivery period was already
expired and needed imposition of LD.
The para was discussed by the DAC in its meeting held on
7th
November, 2016. The DAC directed the executive to take following
actions: imposition of LD charges, amendment in delivery period and
finalization of contract.
115
During verification, relevant record was not produced to
audit. Audit stresses for implementation of DAC‟s directive.
DP-N-76/2016-17
2.3.2 Non-recovery on account of liquidated damages –
Rs. 4.470 Million
According to Para-I of Chapter-XI of Purchase Procedures
& Instructions 2002, upon failure of supplier to deliver the stores within
the stipulated time frame the purchaser has to resort to the following in the
best interest of state.
(a) To cancel the contract on the firm‟s risk & expense in case
of complete failure.
(b) To impose liquidated damages @2% per month up to a
maximum 10% against the unsupplied stores.
While examining the accounts of Director General
Procurement (Army) Rawalpindi, it was noticed that an amount of
Rs.4,470,008 was lying outstanding on account of liquidated damages
against Contract No‟s 27-0979-3-0 dated 30th
June, 2007 and 27-1147-2-0
dated 30th
June, 2010, which needed recovery action.
When pointed out by the Audit in January, 2016 it was
replied that CMA (DP) Rwp was already proposed for recovery of LD
charges of Rs. 3,237,275 in the light of DGP (Army) letter dated 3rd
January, 2014.
The para was discussed by the DAC in its meeting held on
14th
December, 2016. The DAC directed that recovered amount be got
verified from audit.
During verification, relevant record was not provided by
the executive. Audit stresses for early recovery action.
DP-N-60/2016-17
116
2.4 Loss to State
2.4.1 Loss to State due to non-replacement of rejected
stores – Rs. 36.529 Million
Para-02 of standard warranty/guarantee clause of contract
provides that in case of failure to replace the defective stores free of cost
within a reasonable period specified by the purchaser, the suppliers will
refund the relevant cost.
During audit of Mirage Rebuild Factory, Kamra it was
noticed that the stores valuing Rs. 36.529 million against six contracts
were found defective and rejected during inspection. Technical authorities
raised discrepancy reports during the period from 2013 to 2015 but neither
defective stores was replaced by the firms nor 80% payment already made
to firms on shipment documents against rejected stores was recovered by
the procuring agency.
When pointed out by Audit in November 2015, it was
replied that replacement of rejected items was ongoing process and firms
were being pressed hard for its early replacement.
The para was discussed by the DAC in its meeting held on
7th
November, 2016. The DAC directed for imposition of LD charges on
all firms.
No further progress was reported till finalization of this
report. Audit stresses for early recovery action.
DP-N-504/2015-16
2.4.2 Loss to State due to un-necessary blockade of
public money USD 342,319
According to Rule-480 of Army Regulation that purchase
may only be resorted to when the required stores is not held with
authorized supply agency and when circumstance of emergent requirement
arises.
117
During audit of Advance System Rebuilt Factory (ASRF)
Taxila, it was noticed that 54 different spares valuing US $ 342,319 were
procured and taken on charge vide CRV No. 07/OPT/S-5/ASRF dated 31st
December, 2013, but entire quantity of spares were held in balance till
April 2015, which resulted into un-necessary blockade of public money.
When pointed out by Audit in April 2015, it was replied
that due to sustenance of Tank Al-Khalid, T-80UD and Tank T-59 /69, a
delay was occurred to obtain expertise of a technical team for the project
which resulted non consumption of store.
The para was discussed by the DAC in its meeting held on
November 15, 2016. The DAC directed for verification of relevant
record/documents by audit.
During verification, it was transpired that out of 54 items,
only 21 items having nominal value were issued and remaining 33 items
were still lying in stock. Audit stresses for holding of inquiry against
responsible(s).
DP-N-48/2016-17
2.4.3 Non-replacement of rejected stores USD 25,425 and
non-forfeiture of Performance Bank Guarantee
USD 9,350
According to Para-2 of Annex-E DPL-15 of contract
agreement No. 223/2006/5041/IT-Gen/CP/P-871/Proc dated 28th
April,
2006, in case of failure to replace the defective stores as stipulated in the
contract, the supplier hereby undertakes to refund the relevant cost as the
case may be in the currency/currencies in which paid plus freight charges.
During audit of HRF (M), HIT Taxila, it was noticed that
Part No. 8925578 Starter Engine Qty 53 valuing USD 25,425 were
rejected vide BMP Directorate letter dated 7th
April, 2008 and 15th
December, 2014 but firm consistently failed to replace the rejected stores.
118
Moreover, performance bank guarantee USD 93,500 was also required to
be forfeited but the same was already expired.
When pointed out by Audit, it was replied that the case had
already been taken up with BMP Dte for recovery action.
The para was discussed by the DAC in its meeting held on
15th
November, 2016. The DAC directed for verification of relevant
record/documents from audit.
During verification, executive did not provide documentary
evidence regarding recovery of amount of rejected stores and forfeiture of
Performance Bank Guarantee.
Audit recommends for holding of inquiry to fix
responsibility.
DP-N-38/2016-17
2.5 Irregular / Un-authorized expenditure
2.5.1 Unauthorized extension in delivery period of
contract US $ 2.680 Million
According to Para-6(b)-3 of Chapter-VIII of Purchase
Procedures and Instructions 2002, the extensions beyond 18 months will
be granted by Secretary MoDP / DGDP in consultation with finance,
keeping in view value of contract i.e. upto Rs. 40.00 million by DGDP and
above Rs. 40.000 million by Secretary MoDP.
While examining the accounts of Director General
Procurement (Army) Rawalpindi, it was noticed from Contract Agreement
No. 27-1277-1-0 dated 30th
June, 2012 for procurement of Linear
Accelerator System (Dual Photon and Multiple Electron Energy) of
valuing US $ 26,80,000 (Rs. 246,024,000) was concluded. The record
revealed that extensions in delivery period beyond 18 months were
granted without obtaining approval of the Secretary MODP.
119
When pointed out by the Audit in January 2016, it was
replied that subject contract consisted of two consignments having two
different LCs. Extension request in delivery date was entertained on
merits. However, imposing of LD would be determined after shipment of
complete stores.
The para was discussed by the DAC in its meeting held on
14th
December, 2016. The DAC directed to produce proprietary certificate
from Secretary MoDP and relevant documents of CRVs and imposition of
LD to audit for verification within two weeks.
During verification, relevant record was not provided by
the executive. Audit stresses early regularization action.
DP-N-70/2016-17
2.5.2 Unjustified expenditure on procurement of vehicles
– Rs. 3.879 Million
Rule-51 of Financial Regulation Vol-II 1986 stipulates that
it is not permissible to draw any money to prevent the lapse of amounts
provided in estimates. Further, Rule-46(a) of Financial Regulation Vol-II
1986 explains that all payments should be made through pre-audit/post
audit from the concerned Controller of Accounts.
While examining the accounts of Mirage Rebuild Factory
Kamra, it was noticed that FOR Contract No.
PACB/741/51415107/0557/P-1 dated 30th
June 2015 was concluded with
M/s Suzuki Taxila Motors Taxila for procurement of 06 No‟s of vehicle.
Following discrepancies were pointed out:
i. The payment of FOR contracts was required to be paid
through CMA (ISO) on pre-audit basis whereas the
payment was released by Director Budget Accounts MRF
Kamra itself instead of placing funds on the disposal of
CMA (ISO) as per procedure in vogue.
120
ii. The contract for the above vehicles was concluded with
M/s Suzuki Taxila on 30th
June, 2015 and under Contract
Clause No. 03 the stores were required to be delivered on
29th
September, 2015. However, the firm provided all
vehicles on 10th
June, 2015 as transpired from CRV even
before conclusion of contract and got all the payment on
30th
June, 2015.
As per contract clause-13, 100% payment will be made to
firm on production of Certified Receipt Voucher (CRV) and inspection
reports. Relevant log books of vehicles revealed that the vehicles were
inducted/delivered in October, 2015 and inspection of vehicles were
carried out on 16th
October, 2015. The executive had violated the rules and
made 100% advance payment on the date of conclusion of contract i.e.
30th
June, 2015.
When pointed out by Audit in November 2015, it was
replied that the payment was made to the firm through DBA MRF as per
contractual clauses and the case was duly concurred by Member Finance
and the Chairman PAC Board. The reply was not convincing as releasing
of 100% advance payment to firm before actual deliveries and inspection
reports was against CA clause-13.
The para was discussed by the DAC in its meeting held on
7th
November, 2016. The DAC directed the management to hold a court of
inquiry at PAC Board level and take disciplinary action.
No further progress was reported till finalization of this
report. Audit stressed for implementation of the DAC directives.
DP-N-68/2016-17
121
2.6 Mis-procurement of stores
2.6.1 Award of contracts in violation of Public
Procurement Rules – Rs. 93.630 Million
According to Rule-12 (2) of Public Procurement Rules
2004, all procurement opportunities over Rs. 2.000 million should be
advertised on the Authority‟s website as well as in order print media or
newspapers having wide circulation. The advertisement in newspapers
shall principally appear in at least two national dailies, one in English and
other in Urdu.
While examining the accounts of following procuring
agencies, it was noticed that stores valuing Rs. 93.630 million were
procured without calling for open tendering through newspapers as well as
PPRA‟s website, which was violation of above PP Rule.
(Rs. in Million)
S # DP No. Name of Unit / Formation Amount
1 DP-N-236/2015-16 PAC Board, Kamra 11.567
2 DP-N-71/2016-17 DGP (A), Rawalpindi 82.063
Total 93.630
When pointed out by the audit in November, 2014 and
January, 2016 it was replied that procurements were made after getting
approval from the competent authority.
The paras were discussed by the DAC in its meeting held
on 7th
November, 14th
December, 2016. The DAC directed the executive
mentioned at serial No. 01 to justify reasons of spot tendering. In the
second case the DAC pended the draft para till regularization action.
No further progress was reported till finalization of this
report. Audit stresses for early regularization action.
DP-N-236/2015-16 and DP-N-71/2016-17
122
Annexure-I
MFDAC Paras (DG North) 2015-16 and 2016-17
Pakistan Army (Rs. in million)
S
No.
DP
No. Year Subject Unit/Formation Amount
1. N-5 2016-17 Non regularization of expenditure
incurred under para-17 of DSR GE (A) Jhelum 112.882
2. N-6 2016-17 Un-authorized local purchase of
stores GE (A) Multan 2.499
3. N-7 2016-17
Payment made to contractor
without completion of
work
AGE (Army)
Attock 20.346
4. N-17 2016-17 Un-authorized expenditure on
abnormal repair GE (A) Multan 15.325
5. N-21 2016-17 Un-authorized payment through
cash instead through cheque
MT Trg Bn
Nowshera 262.320
6. N-22 2016-17
Non-adoption of proper procedure
for supply of material & execution
of works
HQ 31 Corps
Bahawalpur 3.240
7. N-28 2016-17 Running of Military Farm in loss Military Farm
Renala Khurd 5.867
8. N-45 2016-17 Unjustified secured advance
payment
GE (Army) PMA
Kakul 20.449
9. N-47 2016-17
Un-authorized conclusion of
contract after 15th
April without
proving urgent military necessity
GE (NDU)
Islamabad 43.393
10. N-82 2016-17 Unauthorized release of advance
payment to contractors GE (A) Mangla 5.930
11. N-90 2016-17 Un-authorized conclusion of
contracts
AGE (Army)
Chunian 36.691
12. N-97 2016-17 Unauthorized expenditure on
abnormal repair GE (A) Multan 12.219
13. N-99 2016-17 Purchase of stores without
advertisement
HQ 31 Corps
Bahawalpur 233.895
14. N-100 2016-17 Purchase of stores without
advertisement
HQ 31 Corps
Bahawalpur 10.000
123
15. N-101 2016-17 Purchase of stores without
advertisement
HQ 31 Corps
Bahawalpur 150.000
16. N-102 2016-17 Unauthorized payment to
contractor
HQ 31 Corps
Bahawalpur 1.713
17. N-103 2016-17 Overpayment to contractor due to
non-application
HQ 31 Corps
Bahawalpur 12.704
18. N-134 2016-17 Overpayment to contractor due to
non-application of schedule rates
HQ 31 Corps
Bahawalpur 1.009
19. N-136 2016-17 Overpayment to contractor due to
non-application of schedule rates
HQ 31 Corps
Bahawalpur 7.838
20. N-110 2016-17 Non-recovery of assessed rent
from occupants
GE (Services)
Multan 4.349
21. N-111 2016-17
Irregular expenditure made out of
Defence Fund Grant for the FY
2015-2016
4 Engr Bn
Bahawalpur 8.355
22. N-127 2016-17 Irregular expenditure on
construction of different buildings
HQ 31 Corps
Bahawalpur 225.150
23. N-129 2016-17 Unauthorized release of advance
payment to contractors GE (A) Mangla 13.700
24. N-153 2016-17 Irregular conclusion of contracts GE (A)-I Lahore 1.399
25. N-155 2016-17 Irregular conclusion of contract
by splitting of financial powers
GE (A)-II
Bahawalpur 7.901
26. N-156 2016-17 Non recording of payment /
expenditure in contractor ledger
AGE (Army)
Risalpur 8.826
27. N-157 2016-17 Irregular expenditure due to
execution of special work
AGE (Army)
Risalpur 3.917
28. N-158 2016-17 Less recovery of income tax AGE (Army)
Risalpur 2.590
29. N-160 2016-17 Un-justified payment made to
contractors
AGE (Army)
Risalpur 43.363
30. N-161 2016-17 Irregular conclusion of contracts
in piecemeal
AGE (Army)
Risalpur 20.988
31. N-162 2016-17 Irregular conclusion of
contracts in piecemeal
AGE (Army)
Risalpur 89.393
32. N-164 2016-17 Irregular conclusion of contracts
in piecemeal GE (A) Terbela 102.683
33. N-167 2016-17 Irregular conclusion of contracts
in piecemeal GE (A) Terbela 90.788
34. N-168 2015-16 Un-authorized payment to
contractor
GE A-II
Bahawalpur 40.006
124
35. N-170 2015-16 Loss to state due to non-recovery
of market rent
GE (Services)
Okara 1.757
36. N-187 2015-16 Expenditure in excess of budget
allotment CMH Peshawar 24.727
37. N-188 2016-17 Less recovery of Income tax GE (A) Murree 2.698
38. N-189 2016-17 Less recovery of Income tax AGE (Army)
Bannu 4.742
39. N-192 2015-16 Non production of sales tax
invoices
GE A-I
Bahawalpur 2.669
40. N-193 2015-16
Un-authorized sanctioning of
work in piecemeal to avoid
Government approval
GE Army GHQ
Rawalpindi 6.227
41. N-198 2015-16 Un-authorized expenditure
beyond the financial powers PMA Kakul 4.950
42. N-203 2016-17 Blockade of Government money Arty Centre Attock 2.127
43. N-205 2016-17 Overpayment to contractors due
to less deduction of income tax GE (A) Murree 3.495
44. N-206 2015-16 Over payment to contractor GE Army GHQ
Rawalpindi 1.134
45. N-207 2015-16 Unauthorized expenditure of
flooring / tiling PMA Kakul Atd 5.400
46. N-208 2016-17 Un-authorized release of advance
payment to contractors
GE (Services)
Mangla 14.079
47. N-210 2016-17 Less recovery on account of
income tax from contractors GE (A) Abbottabad 5.765
48. N-211 2016-17 Unauthorized expenditure on
account of electricity charges GE (A) Abbottabad 209.157
49. N-212 2016-17 Un-authorized payment on
account of IS allowance
HQ Sig Centre
Kohat 8.301
50. N-214 2016-17 Irregular conclusion of contracts Remount Depot
Mona 47.453
51. N-237 2015-16 Overpayment to contractor Remount Depot
Mona 1.770
52. N-238 2015-16 Overpayment to contractor Remount Depot
Mona 3.727
53. N-240 2016-17 Unauthorized approval of work GE (A) Murree 41.000
54. N-241 2015-16 Un-authorized expenditure against
lapsable grant 174 Engr Bn Okara 1.566
125
55. N-241 2016-17 Non-recovery of outstanding
amount from contractor GE (A) Murree 2.970
56. N-244 2015-16 Mis-appropriation of public
money PMA Kakul 4.050
57. N-246 2016-17 Irregular local purchases beyond
the financial power CMH, Lahore 14.611
58. N-247 2016-17 Irregular conclusion of contracts
in piecemeal
Remount Depot
Mona 159.336
59. N-249 2016-17 Unjustified procurement of store
at exorbitant rate ESD Jhelum 7.510
60. N-250 2016-17 Loss to State due to un-authorized
retention of staff
Military Farm,
Okara 1.437
61. N-252 2015-16 Irregular payment GE (Services)
Multan 5.201
62. N-252 2016-17 Un-authorized release of advance
payment to contractors GE (A) Jhelum 13.574
63. N-254 2016-17 Splitting up financial powers GE (A)-I
Gujranwala 131.534
64. N-262 2015-16 Un-authorized payment of Pay &
Allowances
GE (Services)
Sialkot 1.304
65. N-267 2015-16 Overpayment to contractor Remount Depot
Mona 1.830
66. N-280 2015-16 Non-recovery of allied charges GE (Services)
Sialkot 1.340
67. N-281 2015-16 Un authorized payment to Un
authorized staff
GE (Services)
Sialkot 4.372
68. N-291 2015-16 Over payment to contractor Remount Depot
Sargodha 1.315
69. N-295 2015-16 Splitting up financial powers GE A-II
Bahawalpur 52.646
70. N-306 2015-16 Un-authorized expenditure GE (Services)
Multan 79.646
71. N-311 2015-16 Loss to State due to purchase of
store on exorbitant rate CMH Peshawar 0.820
72. N-324 2015-16 Loss to State due to purchase of
store on exorbitant rate CMH Peshawar 12.000
73. N-325 2015-16 Un-authorized use of Government
building
GE (Services)
Multan 0.000
74. N-332 2015-16 Less recovery of income tax CMH Gujranwala 1.610
126
75. N-339 2015-16
Un-authorized acceptance of
charges of pension contribution
and cost of new construction work
by the Cantt board in the
conservancy contract for the year
2014-15
SHQ Gujranwala 1.420
76. N-341 2015-16
Un-authorized expenditure made
out of defence fund grant for the
FY 2014-2015
173 Engr Bn
Lahore 46.960
77. N-342 2015-16 Payment from Defence Estimate
for non Govt expenditure
173 Engr Bn
Lahore 4.658
78. N-347 2015-16 Un-authorized issuance of high
speed diesel (D-20) on payment
POL Depot
Sargodha 2.379
79. N-351 2015-16 Loss to State due to irregular
transfer of profit to private fund CMH Peshawar 0.921
80. N-383 2015-16 Non recovery of cost of ration BSD Rawalpindi 5.610
81. N-393 2015-16 Un-authorized local purchase of
store beyond financial powers
173 Engr Bn
Lahore 44.460
82. N-395 2015-16 Un-authorized payment to
contractor GE (A) Kakul 8.815
83. N-406 2015-16 Non finalization of CNE cases CMH Attock 7.766
84. N-412 2015-16 Non recovery of allied charges AGE (Army)
Risalpur 3.396
85. N-417 2015-16 Un-authorized payment to
contractor
GE (Services)
Lahore 4.478
86. N-425 2015-16 Un-authorized local purchase of
electro medical equipment’s CMH Multan 15.000
87. N-430 2015-16 Un-authorized retention of money
on Unit Account
502 CWS
Rawalpindi 3.395
88. N-455 2015-16
Loss to State due to charge off
12066 Ltrs of POL on packed
stock
POL Depot
Sargodha 0.976
89. N-459 2015-16
Un-authorized expenditure due to
provision of fiber class parking
sheds for BOQs
AGE (Army)
Risalpur 5.041
90. N-461 2015-16
Excess payment to firm for an
item of work neither required nor
provided at site
GE (A) Bagh 1.500
91. N-470 2015-16 Un-authorized expenditure Garrison Furniture
Yard Lahore 14.078
127
92. N-497 2015-16 Un-justified expenditure on
provision of parameter lights
AGE (Army) D.I
Khan 1.815
Total 183,496.252
ML&C Department
(Rs. in million)
S
No.
DP
No. Year Subject Unit/Formation Amount
93. N-13 2016-17 Non-recovery of income tax from
owners of the shops
Cantt Board
Nowshera 4.092
94. N-14 2016-17
Loss to cantonment fund due to
non-realization of Conservancy
charges
Cantt Board
Nowshera 3.112
95. N-15 2016-17
Non-recovery of income tax from
owners of the shops (commercial
complex)
Cantt Board
Nowshera 4.859
96. N-40 2016-17 Non-recovery of antenna fee from
cellular companies
Cantt Board
Sargodha 1.140
97. N-66 2016-17
Non conversion of old grant into
regular lease in schedule IX-C for
commercial use
Cantt Board
Nowshera 22.201
98. N-93 2016-17 Non-recovery of development
charges
Cantt Board
Sialkot 1.622
99. N-107 2016-17 Loss of revenue due to non-
recovery of house tax
Cantt Board
Sialkot 1.363
100. N-120 2016-17
Loss to Cantonment fund due to
non-recovery of conservancy
charges from Army authorities
Cantt Board
Abbottabad 11.964
101. N-137 2016-17
Non-production of auditable
documents and non-deposit of
rent on account of agriculture land
MEO Sargodha 15.370
102. N-141 2016-17 Loss to Cantt fund due to irregular
approval of extension of land
Cantt Board
Rawalpindi 6.126
103. N-143 2016-17
Less recovery of premium &
surcharge due to irregular
conversion of property into Sch-
IX-C
Cantt Board
Rawalpindi 2.865
104. N-145 2016-17 Un-authorized payment to
contractor
Cantt Board
Rawalpindi 7.200
105. N-177 2016-17 Non recovery of Cantt fund dues Cantt Board
Abbottabad 1.671
128
106. N-179 2016-17 Loss to Cantt fund due to un-
litigate expenditure,
Cantt Board
Rawalpindi 4.000
107. N-180 2016-17 Non assessment and construction
without approval of building plan
Cantt Board
Rawalpindi 17.760
108. N-182 2015-16 Unauthorized use of A-1 Land MEO Abbottabad 167.200
109. N-187 2016-17 Loss due to non-assessment of
commercial building,
Cantt Board
Chaklala 2.246
110. N-191 2016-17
Irregular approval and non-
recovery of conversion charges
from green fort housing society
Cantt Board
Walton 59.862
111. N-195 2016-17 Non recovery of advertisement
charges
Cantt Board
Lahore 10.078
112. N-197 2016-17
Irregular approval and non-
recovery of Government dues
from Premier Villas Housing
Society
Cantt Board
Walton 18.828
113. N-213 2015-16 Loss due to less recovery of
conservancy charges
Cantt Board
Gujranwala 16.212
114. N-215 2015-16 Non-recovery of rent from Cantt
fund commercial buildings
Cantt Board
Gujranwala 1.116
115. N-216 2015-16 Non-recovery of tower fee from
cellular companies
Cantt Board
Gujranwala 1.095
116. N-217 2015-16 Non-realization of pension share Cantt Board
Gujranwala 2.544
117. N-218 2015-16 Non-recovery of outstanding
property tax
Cantt Board
Gujranwala 1.550
118. N-218 2016-17
Loss to cantonment fund due to
non-realization of conservancy
charges
Cantt Board
Chaklala 66.700
119. N-222 2016-17 Non deposit of Income tax into
Govt treasury
Cantt Board
Chaklala 2.000
120. N-223 2016-17
Loss to Cantt fund due to non-
recovery of dues on account of
conservancy charges
Cantt Board
Abbottabad 48.484
121. N-224 2016-17 Loss to Cantt fund due to non-
realization of BTS tower fee
Cantt Board
Abbottabad 8.740
122. N-230 2016-17
Loss to Cantt fund due to non-
payment of hoarding charges
(open sites) Rs.1.622 million and
submission of fake CDRs
Cantt Board
Jhelum 1.622
129
123. N-235 2016-17 Loss to Cant fund due to non-
recovery of shops rent
Cantt Board
Chaklala 3.100
124. N-302 2015-16 Non recovery of conservancy
charges
Cantt Board
Sargodha 1.680
125. N-310 2015-16
Loss of revenue due to non-
recovery of rent from Cantt fund
commercial buildings
Cantt Board
Sargodha 1.107
126. N-329 2015-16 Non-recovery of composition fee Cantt Board
Multan 2.209
127. N-331 2015-16 Non-production of auditable
documents MEO Sargodha 15.720
128. N-333 2015-16 Unauthorized encroachment of
Cantt acquired land DHA
Cantt Board
Chaklala 508.284
129. N-350 2015-16 Un-authorized expenditure on
account of re-carpeting of road
Cantt Board
Rawalpindi 2.000
130. N-387 2015-16 Non deposit of Income Tax Cantt Board
Rawalpindi 30.000
131. N-391 2015-16
Non-recovery of long outstanding
dues on account of conservancy
charges
Cantt Board D.I
Khan 13.400
132. N-398 2015-16 Less recovery of premium from
SBP, D.I.Khan
Cantt Board D. I
Khan 4.280
133. N-399 2015-16 Non-recovery of arrears on
account of conservancy services
Cantt Board
Murree 7.294
134. N-404 2015-16 Non-recovery of Cantt dues Cantt Board
Risalpur 1.290
135. N-421 2015-16
Loss to Cantt fund due to less
assessment of house tax (Askari-I
& II)
Cantt Board
Multan 2.049
136. N-448 2015-16 Non-realization of pension share Cantt Board
Sargodha 14.890
137. N-473 2015-16
Loss to Cantt fund due to non-
recovery of conservancy charges
from Army authorities
Cantt Board
Abbottabad 72.923
138. N-474 2015-16 Loss to Cantt fund due to non-
recovery of dues
Cantt Board
Abbottabad 7.139
139. N-484 2015-16 Loss to Cantt fund due to less
recovery of conversion charges Cantt Board Kamra 0.509
140. N-499 2015-16
Non-recovery of composition fee
development charges and other
CB dues from the owner of
commercial building
Cantt Board Kamra 0.893
130
141. N-508 2015-16 Loss due to less recovery of
transfer fee
Cantt Board
Abbottabad 73.392
Total 1282.441
Pakistan Air Force (Rs. in million)
S
No.
DP
No. Year Subject Unit/Formation Amount
142. N-88 2016-17
Un-authorized incurred of
expenditure
GE (Air) Lahore 10.166
143. N-251 2016-17
Un-authorized provision of non-
scheduled furniture items without
obtaining sanction of Government
of Pakistan
AGE (Air) Mureed 2.143
144. N-258 2016-17
Extra / un authorized expenditure
on construction of garages with
BOQs
GE (Air) Risalpur 1.794
145. N-259 2016-17
Un-authorized construction of
MOQs against the sanction for
BOQs
GE (Air) Risalpur 23.000
146. N-261 2016-17
Un-due benefit to the contractor
by releasing payment before
completion of work
GE (Air) Risalpur 13.139
147. N-271 2015-16
Un-authorized payment of pay
and allowances to the staff
deputed in “AFOHS”
PAF Base Lahore 12.720
148. N-273 2015-16 Un-authorized consumption of pol
against Fazaia Housing Scheme PAF Base Lahore 2.070
149. N-275 2015-16 Loss to State due to excess issue
of chicken and mutton PAF Base Lahore 3.720
150. N-294 2015-16 Unauthorized expenditure on
abnormal repairs GE Air Sargodha 35.969
151. N-319 2015-16 Loss to State due to excess issue
of mutton
PAF Base
Mianwali 6.238
152. N-415 2015-16
Non-recovery of expenses
incurred on MES employees as
CNE patients
PAF Hospital
Raifqui 0.950
153. N-426 2015-16 Non-recovery of treatment
charges
PAF Hospital
Mushaf 2.766
154. N-438 2015-16
Un-authorized receipt of allied
charges from the Officers Airmen
and non-booking in account
PAF Base Mushaf 25.110
131
155. N-460 2015-16
Un-authorized payment for
provision of 03 (x) phase
electricity for AC units in officer
mess
GE (Air) Risalpur 0.899
156. N-498 2015-16 Non-depositing of electric charges
other than free authorization GE (Air) Lahore 4.400
Total 145.084
Pakistan Navy (Rs. in million)
S
No.
DP
No. Year Subject Unit/Formation Amount
157. N-86 2016-17 Un-authorized payment of daily
messing allowance
PNS Zafar
Islamabad 2.576
Inter Services Organization (Rs. in million)
S
No.
DP
No. Year Subject Unit/Formation Amount
158. N-385 2015-16 Loss due to non fulfilment of
contracts
AFIU
Rawalpindi 1.946
159. N-407 2015-16 Un authorized transfer of profit to
Pvt fund
AFIC
Rawalpindi 12.491
Total 14.437
132
DP Division (Rs. in million)
S
No.
DP
No. Year Subject Unit/Formation Amount
160. N-33 2016-17
Non recovery of overdrawn amount
US $ 15,548 against rejected store
and liquidated damages US $
24,493 from defaulted firm
HRF (M) HIT
Taxila US $ 0.040
161. N-35 2016-17 Blockade of Government money HRF (M) HIT
Taxila 12.400
162. N-36 2016-17 Non recovery of risk and expense
and liquidated damages from firm
HRF (M) HIT
Taxila US $ 0.019
163. N-37 2016-17 Non recovery from firm against
rejected and deficient store
HRF (M) HIT
Taxila US $ 0.057
164. N-43 2016-17 Doubtful payment Gun Factory
HIT Taxila 0.790
165. N-49 2016-17
Non deposit of labour and overhead
charges of commercial projects in
to Government treasury
APC Factory
HIT Taxila 92.715
166. N-54 2016-17
Un-authorized finalization of
contract and un-justified payment
thereof
DGP (A)
Rawalpindi US $ 0.159
167. N-56 2016-17 Un-authorized extensions and non-
imposition of LD charges
DGP (A)
Rawalpindi US $ 0.734
168. N-58 2016-17 Non recovery from suppliers DGP (A)
Rawalpindi 16.537
169. N-67 2016-17 Unauthorized payment to the firm MRF Kamra 2.443
170. N-69 2016-17
Loss to state due to non-
cancellation of contract on firm’s
risk & expense
DGP (A)
Rawalpindi 6.210
171. N-74 2016-17 Non conclusion of contract on risk
& expense of the contractor AMF Kamra 2.179
172. N-77 2016-17
Non-replacement of rejected store
against regular contracts & non-
receipt of outstanding store against
regular and rate running contracts
ARF Kamra US $ 0.166
173. N-79 2016-17 Un-due benefit to supplier on
account of advance payment
GE (DP) Const
Kamra 16.040
174. N-81 2016-17 In-fructuous expenditure on
purchase of UPS
GE (DP) Const
Kamra 18.451
133
175. N-217 2016-17 Loss to State due to non-receipt of
rejected stores
HRF (M) HIT
Taxila 6.303
176. N-361 2015-16 Non rec of rent and allied charges GE DP Maint
Taxila 1.149
177. N-401 2015-16
Un-justified/un-authorized
execution of work without approval
of competent authority
DGMP
Rawalpindi 12.168
Total 54.111
Ministry of Science & Technology
S No. DP No. Year Subject Unit/Formation Amount
178. N-215 2016-17
Uneconomical expenditure on
repair & maintenance of triple
play services for the residential
area out of public fund
NUST
Islamabad 4.795
134
Annexure-II
MFDAC Paras (DG South) 2016-17
Pakistan Army (Rs. in million)
S # DP No. Year Subject Unit/Formation Amount
1. S-207 2016-17
Outstanding Conservancy charges
of Cantt Boards against Station HQ
Quetta
Station HQ Quetta 144.924
2. S-396 2016-17 Split-up of contracts to avoid
sanction of Government of Pakistan GE (Army) I, Malir 114.937
3. S-204 2016-17 Irregular sanction of abnormal
work
CMES (Army)
Malir 95.622
4. S-359 2016-17 Unauthorized/ irregular expenditure
on local purchase of Electro
Medical Equipment
CMH Malir 62.867
5. S-54 2016-17 Unlawful award of contracts GE (Army) II,
Quetta 38.092
6. S-02 2016-17 Irregular expenditure due to split of
Project
AGE (Army) SI&T,
Quetta 29.999
7. S-285 2016-17
Irregular expenditure on
repair/maintenance of POL Bulk
installation through MES without
obtaining admin approval from
Govt. of Pakistan
GE (Army)
Services, Quetta 23.888
8. S-22 2016-17 Irregular award of two contracts to
same contractor
GE (Army) C & S
College, Quetta 23.176
9. S-347
2016-17
Irregular Establishment of UNMSD
and Recruitment of Civilian Staff. C.O.D Karachi 12.758
10. S-218 2016-17 Irregular expenditure on provision
of solarization for tube wells GE (Army) I, Quetta 10.022
11. S-225 2016-17 Non confirmation of saving GE (Army) I, Quetta 9.492
12. S-222 2016-17 Irregular/unjustified budget
allocation without record
GE (Army) I, Quetta
8.85
13. S-280
2016-17
Irregular expenditure without
obtaining Admin approval from
Govt. of Pakistan
GE (Army)
Services, Quetta 8.539
14. S-159
2016-17
Irregular Administrative approval
without drawing and release of
payment in advance
AGE (Army) ,
Khuzdar 8.303
15. S-356
2016-17
Non recovery of House Rent
Allowance of officer allotted
accommodation
CMH Malir 7.276
135
16. S-227 2016-17 Non-recovery of sales tax on
services Station HQ Quetta 6.375
17. S-282
2016-17
Avoidable extra expenditure on
redesigning of existing speed
breakers and Introducing a new
practice
GE (Army)
Services, Quetta 6.225
18. S-284 2016-17
Irregular expenditure on provision
of footpath without obtaining
admin approval from competent
authority
GE (Army)
Services, Quetta 5.881
19. S-385 2016-17 Non-recovery of income tax CMH Malir 5.106
20. S-363 2016-17 Award of contract on choice
without considering the
specifications
CMH Malir 5.100
21. S-219 2016-17
Irregular expenditure on
repair/maint work without
obtaining admin approval from
competent authority
GE (Army)-I Quetta 4.821
22. S-84 2016-17 Irregular retention of time bared
claims outside state revenue
SCARP VI-Rahim
Yar Khan 4.526
23. S-278 2016-17 Irregular sanctioning / execution of
work
CMES (Army)
Hyderabad 4.468
24. S-355 2016-17 Award of purchase order on
favoritism in violation of PPRA
Rules
CMH Malir 3.600
25. S-178 2016-17 Illegal collection of security
charges costing
F.G Minwalia Girls
Public School
Karachi
3.222
26. S-362 2016-17 Award of contract on choice
without considering the
specifications
CMH Malir 2.970
27. S-67 2016-17 Non-obtaining of GST invoice from
contractors
GE (Army)-II
Quetta 2.747
28. S-217
2016-17 Irregular issue of RTE store to units GE (Army)-I Quetta 2.680
29. S-234
2016-17
Unauthorized electric connection to
commercial consumers caused extra
burden on Defence Budget
GE (Army) Karachi 2.400
30. S-367
2016-17
Irregular expenditure through D.O.
against the amendment issued by
sanctioning authority
GE (Army) Services
Quetta 2.353
31. S-118 2016-17 un-authorized collection of security
charges
FG School Malir
Cantt 2.196
136
32. S-345
2016-17
Non Deposit of Revenue Generated
From Agricultural Activities into
Government Treasury.
C.O.D Karachi 2.000
33. S-304
2016-17
Irregular/ unauthorized excess
payment made to contractor beyond
permissible limit without obtaining
revised sanction
GE (Army) Services
Pano Aqil 1.998
34. S-341 2016-17 Irregular award of conservancy
contract C.O.D, Karachi 1.964
35. S-361 2016-17 Purchase of medicine without
calling tenders CMH Malir 1.668
36. S-226 2016-17 Irregular/unjustified expenditure
through requisition from works
saving Rs 1.518 million
GE (Army)-I Quetta 1.518
37. S-26 2016-17 Non-Deposit of tender fee in the
Government treasury ACE 5 Corps Khi 1.450
38. S-402 2016-17 Non-Recovery of electricity
charges GE (Army)-II Malir 1.439
39. S-349 2016-17
Irregular expenditure on account of
Repair/Maintenance & purchase of
Air Conditioners.
HQ Signal 5 Corp,
Karachi 1.300
40. S-281 2016-17 Irregular/unjustified replacement of
LED lights in excess of demolition
GE (Army) Services
Quetta 0.952
41. S-395 2016-17 Non-Recovery of electricity
charges GE (Arm) I, Malir 0.926
42. S-191 2016-17 Irregular payment made to
contractor before allotment
GE (Army) const
Karachi 0.881
43. S-224
2016-17 Less deduction of sales tax from the
suppliers GE (Army)-I Quetta 0.772
44. S-320
2016-17
Loss to state due to non-recovery of
cost of X-Ray films used for CNE
patients
CMH Hyderabad 0.701
45. S-72
2016-17
Non recovery of House Rent
Allowance of officer allotted
accommodation
Army S&RC, Khi 0.655
46. S-151 2016-17 Non-Deposit of Rent of BTS towers
into Govt. treasury
Com & Staff
College, Quetta 0.480
47. S-403 2016-17 Non-recovery of water charges GE (Army) Services
Quetta 0.475
48. S-216 2016-17 Overpayment to the contractor GE (Army)-I Quetta 0.466
49. S-113 2016-17 Irregular payment of House Rent
Allowance
Army S & R Centre,
Hyd 0.332
50. S-399 2016-17 Non-recovery of water charges GE (Army)-I Malir 0.312
137
51. S-231 2016-17 Non-Obtaining of GST Invoice
from Contractors
AGE (Army) Rahim
Yar Khan 0.273
Total 723.538
Pakistan Air Force (Rs. in million)
S # DP No. Year Subject Unit/Formation Amount
52. S-312 2016-17
Irregular local purchase of electro
medical equipments without
approval of unit To&E from
Government of Pakistan
Project Shahbaz,
AHQ, Islamabad 192.389
53. S-105 2016-17 Non-recovery of rent and allied
charges
GE (Air) Shahbaz,
Jacobabad 142.893
54. S-319
2016-17
Irregular Development of Non-
public fund buildings and
infrastructure from public fund and
payment of engineering design fees
Project Shahbaz,
AHQ, Islamabad 79.168
55. S-322 2016-17 Irregular award of wire line access
network
Project Shahbaz,
AHQ, Islamabad 78.22
56. S-139
2016-17
Irregular purchasing of misc. stores
and doubtful payment made to
contractors
PAF Base Malir,
Karachi
11.993
57. S-311 2016-17 Undue favouritism extended to
contractor
Project Shahbaz,
AHQ, Islamabad 10.925
58. S-175 2016-17 Irregular conclusion of joint filling
contracts and overpayment to
contractor R
GE (Air) Masroor,
Karachi 10.056
59. S-172
2016-17
Irregular conclusion of conservancy
contract without observing PPRA
Rules
PAF Base Masroor,
Karachi 8.400
60. S-238 2016-17 Outstanding Allied charges against
Private consumers
GE (Air) Korangi
Creek, Karachi 6.981
61. S-310
2016-17
Non Imposition of Liquidated
Damages due to late Supply of
Electro Medical equipment and less
recovery of Income Tax
Project Shahbaz,
AHQ, Islamabad 4.948
62. S-237 2016-17 Loss to state due to non-recovery of
rent
GE (Air) Korangi
Creek, Karachi 2.700
63. S-300
2016-17 Non-recovery of sales tax on supply
of fresh water
GE (Air) Masroor
Karachi 2.538
64. S-239
2016-17
Unauthorized electric connection to
private consumer causing loss to
state
GE (Air) Korangi
Creek, Karachi 2.040
138
65. S-212 2016-17 Non recovery of rent & allied
charges against SIF contractor
PAF Base Masroor,
Karachi 1.978
66. S-135
2016-17
Loss to State due to non-availing of
discount on trade price
PAF Base Malir,
Karachi 1.145
67. S-242
2016-17
Unauthorized expenditure incurred
on supply of fresh water
GE (Air) Korangi
Creek, Karachi 1.126
68. S-176
2016-17
unjustified provision of additional
furniture for newly constructed
B.O.Qs and non-recovery of GST
GE (Air) Masroor,
Karachi 1.081
69. S-299 2016-17 Non-deposit of Government share
against the A-1 land
GE (Air) Masroor,
Karachi 1.022
70. S-296
2016-17
Non recovery of Electric charges
from residents of Falcon Housing
Scheme
GE (Air) Malir,
Karachi 0.796
71. S-24
2016-17
Un-authorized purchase of non-
schedule furniture without govt.
sanction
GE (Air) Masroor,
Karachi 0.597
72. S-134 2016-17 Less recovery of Income Tax from
the supplier
PAF Base Malir,
Karachi 0.260
73. S-241 2016-17 Non-recovery of Stamp Duty GE (Air) Korangi
Creek, Karachi 0.239
Total 561.495
ML&C Department (Rs. in million)
S.No DP No Year Subject Unit/Formation Amount
74. S-392 2016-17 Loss to state due to non-utilization
of land
M.E.O
Hyderabad 19,785.324
75. S-69
2016-17
Illegal construction of houses on a-1
land by AFOHS without
reclassification of land
M.E.O Karachi 6,472.613
76. S-389
2016-17
Undue favor extended M/s NIP in
the shape of non-recovery of
Development Charges and non-
Utilization Fee
CB Korangi
Creek 428.340
77. S-337 2016-17 Non-adjustment of Octroi Share CB Clifton Khi 308.896
78. S-371 2016-17 Non recovery of cantonment dues
from hotel CB Clifton Khi 44.157
79. S-373 2016-17 Non recovery of cantonment dues
from three cinemas CB Clifton Khi 43.800
139
80. S-49 2016-17 Encroachment of land By M/S.
Shaheen Knitwear MEO Khi 30.419
81. S-379 2016-17 Irregular local purchase of medical
equipment and non-recovery of
income tax and G.S.T
CB Clifton Khi 29.310
82. S-393
2016-17
Illegal construction of marriage
Hall on land under litigation and
non-recovery of Premium and
Ground Rent
MEO Hyderabad 23.625
83. S-376 2016-17 Irregular hiring of private water
tankers CB Clifton Khi 16.320
84. S-18 2016-17 Irregular purchase of store CB Quetta 14.128
85. S-46 2016-17 Loss to Cantt. Fund due to non-
assessment of various properties for
tax purpose
CB Faisal Khi 6.575
86. S-11 2016-17 Infructuous expenditure CB Quetta 4.800
87. S-369
2016-17
Loss to state due to non-deposit of
premium and ground rent of
Majestic Cinema
M.E.O
Hyderabad 4.754
88. S-51 2016-17 Loss to cantt. fund due to non-
assessment of a building for tax
purpose
CB Faisal Khi 4.275
89. S-229
2016-17
Less recovery of additional
sewerage charges from residents CB Malir 2.674
90. S-14 2016-17 Expenditure without sanction of the
Board CB Quetta 2.301
91. S-109
2016-17
Non-Recovery of road
cutting/reinstatement charges from
karachi Port Turst
CB Manora 1.991
92. S-94 2016-17 Non-collection of Octroi/GST share
from Provincial Government CB Manora 1.225
93. S-377 2016-17 Unjustified payment of monthly
mobile phone charges CB Clifton Khi 0.861
94. S-390 2016-17 Less recovery of G.S.T CB Korangi
Creek 0.844
95. S-340 2016-17 Illegal payments to Judicial
Magistrates CB Clifton Khi 0.682
96. S-308 2016-17 Overpayment to contractor due to
Incorrect application of length CB Clifton Khi 0.661
97. S-17 2016-17 Loss to state due to less recovery of
income tax CB Quetta 0.331
98. S-370 2016-17 Illegal construction and
encroachment of Pak City Towers MEO Hyderabad 0
Total 27,228.906
140
Pakistan Navy (Rs. in million)
S.No DP No Year Subject Unit/
Formation Amount
99. S-89 2016-17 Finalization of tenders in violation
of directives of DGMS. PN MSD Khi 519.869
100. S-114
2016-17
Publication of tender before
administrative sanction of
construction work
GE (Navy)
Const.Turbat 395.293
101. S-266
2016-17 Irregular execution of work under
para 17 of DSR 1998.
GE (Navy)
Central Cons.
Karachi
182.478
102. S-254
2016-17 Irregular award of new capital work
after 15th April
GE (Navy)
Central Cons.
Karachi
99.032
103. S-154 2016-17 Un-justified expenditure made
without Budget/funds allocation
PNS Himaliya
Karachi 88.000
104. S-324
2016-17
Irregular Repair and Maintenance
carried out at Sea view
Flats/Bungalows
GE (Navy) East,
Karachi 84.000
105. S-273
2016-17 Irregular execution of contracts of
water supply in piecemeal
AGE (Navy)
Maint Manora,
Karachi
69.999
106. S-196
2016-17
Un-justified expenditure made
without allocation of budget/funds
allocation
PNS Haider,
Karachi 60.950
107. S-264
2016-17
Award of tenders after negotiation
in violation of PPRA
GE (Navy)
Central Cons.
Karachi
49.674
108. S-246 2016-17 Irregular/Unauthorized expenditure
incurred on supply of fresh water
GE (Navy)
South, Karachi 45.000
109. S-262
2016-17
Irregular award by split of two
contracts to same contractor
GE (Navy)
Central Cons.
Karachi
40.441
110. S-328
2016-17 Irregular free gas supply to NSSD
GE (Navy)
Logistics D/Yard
Karachi
26.616
111. S-263
2016-17
Unauthorized contract of
consultancy by superseding the
mandate of MES
GE (Navy)
Central Cons.
Karachi
21.968
112. S-120 2016-17 Less recovery of income tax from
whole sellers
PN MSD,
Karachi 18.195
141
113. S-270
2016-17
Loss to state by paying excess per
Sft Rate payment against the work
having less bearing capacity for
same type of contract with same
specification
GE (Navy)
Central Const,
Karachi
16.274
114. S-44
2016-17
Irregular expenditure due to
sanctioning of minor works by
incompetent authority
GE (Navy)
Eastern, Karachi
12.743
115. S-43
2016-17
Irregular payment of fresh water
through Bowzer to contractor
within one or two days after
conclusion of contract Rs. 12.500
million
GE (Navy)
Eastern, Karachi 12.500
116. S-244
2016-17
Less Recovery of G.S.T/Non-
production of documentary
evidence of deposit of G.S.T
GE (Navy)
South, Karachi 9.378
117. S-199 2016-17 Unjustified work issued to
contractors.
AGE (Navy)
Mehran Karachi 9.160
118. S-197 2016-17 Irregular execution of electrical
work by unlicensed contractor
AGE (Navy)
Mehran Karachi 6.063
119. S-190 2016-17 Undue benefit given to contractor
not enlisted with MES
AGE (Navy)
Mehran Karachi 5.593
120. S-101
2016-17
Irregular expenditure on
consumption of POL & repair
against unauthorized vehicles
V.S.D Karachi 5.223
121. S-148 2016-17 Unauthorized allocation of POL for
generator PNS Himalya 2.645
122. S-267 2016-17 Less recovery from contractor
against retained store
GE (Navy)
Central Const,
Karachi
2.541
123. S-29 2016-17 Non-recovery of sales tax PNS Bahadur,
Karachi 2.136
124. S-73 2016-17 Non recovery of House Rent
Allowance
PNS Raza,
Karachi 1.917
125. S-35 2016-17 Irregular Expenditure due to
splitting up of contract
PNS Karsaz,
Karachi 1.800
126. S-33 2016-17 Non-recovery of sales tax PNS Karsaz,
Karachi 1.038
127. S-272 2016-17 Recoverable excess payment issued
for Soil Investigation
GE (Navy)
Central Const,
Karachi
1.000
128. S-08 2016-17 Irregular repair of furniture items
GE (Navy)
Comwest,
Gawadar
0.791
142
129. S-325 2016-17 Over Payment to Contractor on
Account of wrong Implementation
of Schedule of rates
GE (Navy) East,
Karachi 0.775
130. S-329 2016-17 Irregular conclusion of contract
before sanction / approval
GE (N) logistic
Dockyard, Kci 0.718
131. S-123 2016-17 Non-Recovery of Sales Tax on
Services
PNS Shifa,
Karachi 0.693
132. S-34 2016-17 Less recovery of GST/Non
production of GST invoice Rs
0.631 million
AGE (Navy)
Maint Ormara 0.631
133. S-268 2016-17 Non recovery of sales tax on
furniture
GE (Navy)
Central Const,
Karachi
0.570
134. S-186 2016-17 Unjustified award of works without
obtaining security deposit from the
contractors
AGE (Navy)
Mehran Karachi 0.475
135. S-76 2016-17 Non-recovery of sales tax on
services
PNS Raza,
Karachi 0.382
136. S-38 2016-17 Non-production of auditable record PNS Karsaz,
Karachi 0
Total 1658.245
Military Accountant General (Rs. in million)
S.No DP No Year Subject Unit/
Formation Amount
137. S-309 2016-17
Irregular Execution of F.M.I.S.
Project for Development of Data
Centre Rs. 177.60 million, Non
Recovery of Income Tax
Rs. 17.760 million & G.S.T.
.C.N.A Karachi 225.560
138. S-201 2016-17 Non-deduction of income tax C.M.A Karachi 0.201
Total 225.761