July 27, 2002	Saturday	Jamadi-ul-Awwal 16,1423

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ISLAMABAD, July 26: The office of Auditor General of Pakistan (AGP) has pointed out irregularities in the privatization of nine industrial units in 1999-2000, which cost the government Rs4.085 billion.

The office presented five special audit reports on privatization to the federal ad hoc Public Accounts Committee (PAC) here on Friday. The nine units included General Refractories Limited, Wah Cement Company Limited, Textile Machinery Company Limited, Indus Steel Pipes Limited and Nowshera PVC.

Chairman H. U. Beg presided over the PAC meeting in the Parliament House, which was also attended by Ahadullah Akmal, Muzaffar Ahmad, Lt-Gen Talat Masood (retd), Hasan Bhutto, Syed Shaukat Hussain Kazmi and Mujahid Eshai besides Auditor-General of Pakistan Younas Khan, Senior Deputy Auditor General Chaudhry Mohammad Ilyas, Deputy Auditor General Javed Akhtar Sheikh. Secretaries Ahmed Waqar and Naveed Ahsan represented the ministries of privatization and finance as principal accounting officers.

The committee also reviewed some paragraphs related to the House Building Finance Corporation (HBFC). The chairman of HBFC informed the PAC that the Corporation had provided Rs18.5 billion to thousands of people of the country. However, the debtors had defaulted on as much as Rs8 billion.

The PAC chairman expressed his deep concern over the performance of HBFC, saying: “The business of this corporation and performance of its executives is shameful, because billions of rupees were plundered by loanees with the connivance of high ranking officials.”—APP

OUR REPORTER ADDS: The PAC challenged the privatization of General Refractories Limited (GRL) that caused a loss of Rs78.195 million to the national exchequer.

Mr Beg said that the committee would have liked more transparency in GRL’s privatization, adding that he was bewildered as to whether the company’s privatization was a correct decision or not.

According to a press release issued here, the director general (audit), who presented the special reports on privatization, stated that the reference price of GRL was fixed at Rs70 million in 1992, reduced to Rs38 million in April 1994 and further lowered to Rs36 million in June 1994, against the assets of Rs59 million and liabilities of Rs98 million. The government picked up liabilities of Rs87 million and allowed a discount of Rs9.750 million on account of the Golden Handshake Scheme for the employees.

Thus the assets were sold at a throw-away price. The senior deputy auditor general viewed it as a wrong decision, which had resulted in a negative net worth of the company.

Mr Beg observed that the deal had cost the government Rs137.093 million, who had made Rs27 million only. He, therefore, directed the principal accounting officer to submit all documents for audit.

In response to a question about the net sale proceeds, the principal accounting officer apprised the committee that total receipts on account of privatization came to Rs79.85 billion, out of which Rs56.996 billion were remitted to the government, Rs3.305 billion paid to share-holders and DFIs, Rs5.598 billion to employees under golden hand shake schemes, Rs4.089 billion to financial advisors and consultants. As much as Rs7.62 billion would be paid to advertising and marketing agencies while Rs1.8 billion earnest money would be returned to the bidders. A sum of Rs3 billion is yet to be recovered from successful bidders.

Earlier, the director-general of National Saving Schemes informed the PAC that the schemes were worth Rs850 billion as on June 30. After the lowering of interest rates on various schemes, there had been a very small decrease in investments. However, the investment in defence saving certificates had shown a tremendous increase, he added.