ISLAMABAD: Allocated during the Musharraf era as an international goodwill gesture, financial assistance worth $300 million for reconstruction in Afghanistan has become the subject of intensive wrangling and investigations within various arms of the Pakistan government.

Interviews and documentary evidence suggest that the Accountant General of Pakistan Revenues (AGPR) has formally blamed the Ministry of Finance and the Planning & Development Department for the violation of public procurement rules, illegal change of contractors, over-payments and non-observance of audit and accounting procedures in the implementation of GOP-funded projects in Afghanistan.

In fact, the AGPR has filed a reference to the National Accountability Bureau (NAB) for launching investigations “to determine the extent and quantum of irregular/wrong/excess payments” and fix responsibility of “illegal/unlawful acts while effecting [the] recovery of the over-payments,” according to official records available with Dawn.

“The entire responsibility for over-payment/wrong payment/irregular payment lies with both the planning division and the finance division,” said Accountant General of Pakistan Revenue, Tahir Mahmud, who was removed twice by the government from the post and reinstated by the Islamabad High Court. He has alleged in court that he was being victimised for referring the case to NAB for investigation even though he did this on the orders of the Supreme Court.

But those in the finance and planning ministries contend that even if all these allegations were proved, the office of the AGPR was part and parcel of whatever might be considered wrong because it did not raise objections at the right time. It highlighted them at the last stage of project implementation and final payment.

Some senior officials even question the allocation of such a huge amount (about Rs32 billion at the current exchange rate) by the Musharraf administration between 2001 and 2007 to a neighbouring country without prior consultations between key stakeholders such as the ministries of foreign affairs, finance, defence and planning when millions of Pakistan’s own people lived in absolute poverty.

The AGPR has stated that the Frontier Works Programme (FWO) was appointed by the Planning Commission as the original contractor for the construction of a hostel for 1,000 students at Rehman Baba High School in Kabul, a 100-bed Naib Ameenullah Khan Logari Hospital at Logar, and a 200-bed Jinnah Hospital in Kabul under the $300m financial assistance scheme to Afghanistan through four separate announcements as part of international donor financing. The FWO engaged M/S Airrs Associates Limited as the sub-contractor.

“Subsequently, the FWO — the main contractor — withdrew and the Planning Commission, instead of re-tendering under the PPRA Rules 2002, awarded the sub-contractor the whole quantum of work in violation of the PPRA rules while also changing the terms and conditions of the contract to the benefit of the sub-contractee,” the AGPR said in the reference.

Moreover, the Planning Division continued preparing “loose bills without documentation and verification” by the consultant — Nespak — and submitted them to the pre-audit counter of the AGPR without fulfilling codal formalities. “In this backdrop, the contractor has been overpaid millions of rupees,” which was pointed out to the director-general of the Planning Division along with a number of pre-audit observations to address concerns.

Under the law, original running bills (IPCs) duly verified by the consultant Nespak were required to be submitted to the AGPR for pre-audit and payment along with all documents such as the contract agreement, amendments and foreign exchange certificate, etc, to determine the authenticity of the contractor’s claims.

“Unfortunately, the Planning Division in collaboration with the Ministry of Finance has been preparing loose bills while retaining the original copies of the IPCs with them,” thus making the AGPR release the payment on the desire of the Planning Division.

The allegation is that a part recovery of overpayment was made in a recent bill “while releasing 75 per cent of the bill amount” ahead of Prime Minister Nawaz Sharif’s visit to Afghanistan.

Deputy accountant-general Afnan Malik is reported to have observed in writing that “it transpired that heavy overpayments were made to the contractor from the public exchequer” and that he had asked the Planning Division to conduct a “thorough probe to determine the extent and quantum of over-payments” and provide evidence to the AGPR to scrutinise the claims in the light of laid-down procedures and applicable laws. The office of the AGPR had earlier pointed out that in one instance a payment of Rs239.43m was effected through a post-bid change in contract and hence it was unauthorised and irregular payment. In another case, the project cost was converted from the rupee to the dollar amount with the approval of the prime minister but an amount of Rs239.45m “was found invalid, being contrary to the summary approved” by the prime minister.

In yet another instance, an amount of Rs220m was paid to the contractor through a post-bid change in contract and hence declared unauthorised by the AGPR.

Planning Secretary Hassan Nawaz Tarar and AGPR Tahir Mahmud did not return calls made by Dawn to speak on the issue. The director-general of the Planning Division, Jamil Ahmad, who heads the relevant section said he had recently joined the office but PPRA rules had been set aside under “special circumstances” in the past because common contractors were not available to do the job in Afghanistan; the government had the power to give the contract to the FWO as a public-sector entity and the rules also allowed a contract with a premium in special circumstances.

He said all the audit observations were not entirely misplaced but it would not be appropriate to comment on the issue currently under various stages of investigation and audit. “What we are trying to ensure is that whoever is responsible should be taken to task but this should not affect the continuity of the programme,” he said. “So we are working to put in place a system that is transparent.”

The spokesman and adviser to the Ministry of Finance, Rana Assad Amin, strongly refuted the AGPR’s allegations but declined to comment officially in detail. A source close to him said the contractor had filed a complaint against the AGPR before NAB.