KARACHI, Sept 8: An audit report revealed that over Rs18.2 billion had been embezzled, lost due to fraud, theft, misuse of public resources by the defence services comprising the ministries of defence and defence production, it emerged on Sunday.

“Reported cases of fraud, embezzlement, thefts and misuse of public resources [is] Rs18,226.836 million,” stated the Auditor General of Pakistan (AGP) in his report for the year 2012-2013.

He called for immediate institution of inquiry, fixing of responsibilities and recovery of the funds.

In the report, the AGP also pointed out very little compliance of the directives of the Public Accounts Committee of the National Assembly by the defence services.

The report said that the total budget of the defence services — the ministries of defence and defence production — for the financial year 2011-2012 was over Rs528bn. AGP staffers audited Rs324bn, around 61 per cent of the audited amount, and the irregularities, frauds, embezzlement, unauthorised expenses, etc, pointed out by the audit and observations and objections raised by it totalled to over Rs289bn, which comes to over 89pc of the audited amount.

It said that the audit pointed out that over Rs39bn was to be recovered, but the defence officials accepted that only around Rs6.2bn was be recovered. However, only around Rs1.2bn was actually recovered from the guilty persons/organisations.

Giving some details of the amounts under audit observation/objections, the report said over Rs6.2bn was misappropriated or overpaid, while record relating to over Rs3.45bn was not shown to the audit teams; over Rs82bn was spent in violation of rules and regulations; and over Rs132bn had been put under the category of negligence, accidents, etc, by the audit.

The report showed the poor performance of the defence services regarding implementation of the PAC directives in relation with the ministry of defence production and said that the PAC had discussed 344 audit objections from 1985 to 2009 and issued directives in 231 objections, of which only 18 directives (7.7pc) were fully complied with, while 27 directives (11.69pc) were partially complied with and no compliance was reported in relation to 186 directives (80.5pc).

The result in relation with the compliance with the PAC directives by the ministry of defence was slightly better as the PAC discussed 914 audit observations / objections from 1985 to 2009 and issued directives in 638 cases. The ministry of defence fully complied with 108 directives (16.9pc); whereas 146 directives (22.8pc) were partially complied with; and the ministry showed no compliance in 384 cases (60.1pc).

Call to fix responsibility

The AGP suggested that the misappropriation/ embezzlement cases pointed out in the report be investigated to fix responsibility and appropriate steps be taken to prevent recurrence of these instances by strengthening internal audit.

It also pointed out that a large number of government dues were outstanding against various firms and individuals and more vigilance was required to be exercised for avoiding accumulation of such dues and prompt actions were stressed to for their instant recovery.The report said that diversion of public receipts to non-public accounts had not yet been stopped despite pointing out by the audit in every report and specific directives of the PAC on this issue.

It suggested that the ministry should look into the matter to avoid such diversions of public receipt in future. The amounts pointed out in the report should be deposited in the government treasuries immediately.

It said that the serious irregularities, specifically relating to delayed decisions, had been repeated in management of the government land and procurement of stores contracts. The ministries were required to be more vigilant in these areas to avoid such lapses in the future, it added.The report said that the compliance ratio of the PAC directives in respect of the ministry of defence production was only 7.7pc, which needed immediate attention of the ministry.

It said a significant amount of expenditure and receipts pertaining to the military land and cantonments (ML&C) department was not subjected to internal audit in the absence of which the possibility of occurrence of errors / irregularities and their persistence was very high. The ministry should ensure that internal audit was instituted in that department.

It said in order to reduce incidents of failure of internal controls, pre-audit authorities needed to be more vigilant and effective in implementing the rules in all areas, particularly in the Military Engineering Services (MES) works expenditure.

It stressed that the internal audit department should focus on contracts of procurement directorates.

The ministry needed to ensure preparation of appropriation accounts on prescribed format by providing figures for employee-related expenses, operating expenses, physical assets, and civil works with review of MES expenditure and disclosure of cases involving regularisation from the ministry of defence, added the report.