PESHAWAR: The Khyber Pakhtunkhwa local government and rural development department has approached the Federal Investigation Agency (FIA) to launch a probe against a contractor, who allegedly siphoned off millions of rupees in ‘Clean Drinking Water for All’ project.

In a letter addressed to FIA director in Peshawar office, the department said that the contractor, who was supposed to install 986 water filtration plants in the province, had fraudulently misrouted a huge amount that was released as 30 per cent advance of Rs549.435 million for the project.

The department had earlier requested capital city police officer (CCPO) Peshawar for registration of an FIR against Muid Faruki, the chief executive of M/S Ideal Hydrotech Systems Pakistan (IHSPL), and his co-accused for criminal proceedings against them.

CCPO Ijaz Ahmad Khan informed the department that the matter fell in the domain of FIA and it might take up the case with the agency. “It is requested to kindly proceed against the above mentioned individuals/owners of the firm,” said the letter, issued on June 30.

Govt approaches FIA to launch probe against contractor

The department said that a contract for installation of 986 water filtration plants under the ‘Clean Drinking Water for All’ project was awarded to IHSPL in November 2007.

The Central Development Working Party had approved the project in 2006 that was jointly sponsored by three federal ministries -- environment, industries and production, and special initiatives.

Under the scheme, one water filtration plant was to be installed in each union council, including the tribal areas and the northern areas, as part of a federal strategy to provide clean drinking water in urban and semi-urban areas alike. After the passage of 18th Amendment, the programme was transferred to the province.

Earlier: Scam of billions of rupees under probe in KP

Officials said that the contractor had to install 986 plants in the province but only 230 water filtration plants were installed in 14 districts.

According to the terms of the contract, the official note said, the department had released 30 per cent mobilisation advance of Rs549.435 million to the firm against two bank guarantees.

The cheques drawn on designated account of IHPL maintained with the Bank of Punjab were fraudulently misrouted by the contractor to another commercial bank (Atlas Bank) which enabled the BoP to deny encashment of the guarantees.

The letter said that chief executive of the firm produced a bank guarantee amounting to Rs594.000 million from Allied Bank, BRMB Branch Lahore in December 2010.

The same was verified by the Allied Bank and the department concerned deputed its senior officer for verification of the bank guarantee. The said officer visited the bank and obtained the required verification of the guarantee.

“The department conducted assessment of the situation which revealed that the contractor had to perform his contractual obligations,” said the note. Therefore, the department initiated action for encashment of the bank guarantees. It contacted Allied Bank in October 2013 for encashment of the bank guarantee of Rs594.000 million.

In response, the Allied Bank intimated that it had not issued any bank guarantee in favour of the government of Khyber Pakhtunkhwa. The contractor was put on notice to explain his position within three days.

However, he did not respond and finally the department approached FIA to take action against him and other co-accused.

Published in Dawn, July 7th, 2014