ISLAMABAD, Nov 23: The Public Accounts Committee (PAC) was informed here on Thursday that the Privatisation Commission kept privatisation proceeds in a separate account, other than the federal consolidated fund or a public fund, and was utilising the money for current expenditures, instead of debt retirement and poverty alleviation.

Terming the move imprudent and unconstitutional, the audit department officials said that the ‘unique arrangement’ not only violated the 1973 Constitution but also negated the 1991 privatisation policy and a related ordinance promulgated in 2000.

The PAC directed the Privatisation Commission officials to appear before the committee within 10 days and clear the commission’s position regarding the allegations.

The committee, chaired by Malik Allah Yar, also summoned all officials who had held the post of chairmen of the Privatisation Commission since 2000 – Altaf Saleem, Dr Hafeez Shaikh, Awais Ahmed Khan Laghari and Zahid Hamid – to inform it about the PC’s state of affairs over the past seven years.

The committee was informed that at least two articles of the Constitution envisaged that public money could only be managed through the federal consolidated fund or a public fund. Article 78 specified that amounts received by the government could either be credited to the federal consolidated fund or public fund.

For spending public money, Article 80 stated that any amount should be budgeted only through the federal consolidated fund.

Similarly, a national policy adopted in 1991 to regulate the privatisation of public assets outlined that 10 per cent of proceeds would go to the poverty alleviation programme and the remaining 90 per cent for debt retirement.

However, the audit department held that the commission had been violating both the Constitution and the national privatisation policy by keeping the proceeds in a separate account and utilising them for current expenditure.

Finance Secretary Tanveer Ali Agha said that the finance ministry had constantly been urging the commission to “stop keeping the funds separately” but without any success.

“When the commission was doing this (unconstitutional) practice, we kept pressing for a change …but our directives were not heard,” Mr Agha told the committee.

After facing finance ministry’s pressure, Mr Agha said, the commission got the practice approved from the Cabinet’s Committee on Privatisation (CCoP) in a bid to validate the unconstitutional step. However, he contested the audit department’s objection that privatisation proceeds had been used for any purpose other than debt retirement and poverty alleviation.

He said the finance ministry and the commission were now in the process of finalising modalities and rules of procedures for the privatisation fund and the exercise would be completed by the end of this month.

The PAC also directed the finance division to immediately get hold of yearly figures for excess expenditures of different departments approved by the National Assembly.