LAHORE: A forensic probe into the state-of-the-art Pakistan Kidney and Liver Institute and Research Centre (PKLI&RC) has detected gross misuse of public money, violation of procurement laws in the award of contracts, mismanagement and weak controls, and illegal practices in the implementation of the multi-billion-rupee scheme.

The probe also blames former chief minister Shahbaz Sharif for his interference in the project implementation, stating that his enthusiasm to complete it on fast-track for drawing political mileage out of it has resulted in a substantial increase in its cost.

Reduction in the project’s completion time from 36 months to 14 spiked the estimated cost by Rs1.2 billion. “…it has transpired that the chief minister changed the timeline to inaugurate the institute before (July) election to support his political campaign. The project was inaugurated before its completion, which is expected somewhere in 2020,” stated the 44-page forensic report prepared by a team of experts constituted by the Supreme Court for forensic examination of the scheme.

Shahbaz’s keenness for fast-track completion blamed for substantial increase in cost

Though the report does not accuse Mr Sharif or any other official of corruption, fraud or embezzlement of project funds.

Originally, the country’s largest health project was estimated to cost Rs19.5 billion to the Punjab government. But the estimates have now significantly been revised upward by the Infrastructure Development Authority of Punjab (IDAP) to Rs23.5 billion (owing to doubtful payments to contractors, misuse of official authority, weak controls and revised project completion timeline on the insistence of the former chief minister).

The Digital Forensic Research and Service Centre team that conducted the probe included two senior National Accountability Bureau (NAB) investigators, a chartered accountant and a digital forensic expert. A copy of the report that was submitted to the two-member bench comprising Chief Justice of Pakistan Saqib Nisar and Justice Ijazul Ahsan a week or so ago is available with Dawn.

The report has recommended a probe into the project by an investigative agency with experience in white collar crime to look into unauthorised payments, misuse of authority, violation of procurement laws and favouritism in the award of appointments and contracts.

PKLI&RC president and chief executive officer Prof Dr Saeed Akhtar termed the report biased and one-sided, saying that he would rebut it in court. “I am not in a position to comment on the report because of certain reasons. However, we have engaged a senior lawyer who would challenge this report in the court,” he told Dawn.

The report says categorisation of the project, which was launched without approval from relevant provincial departments, as a fast-track scheme on the orders of the then chief minister had made it 15 per cent more expensive than original estimates. “The Punjab planning manual procedures were not followed during the project evaluation. A PC-I was not prepared by the health department and proper approvals not sought before signing the related agreements,” it adds.

The PKLI&RC was created under an ordinance that was made into Act in January 2015. CPG-Arcop (JV) was hired after a tender was floated that designed the project for completing it in 36 months. In February 2016, the IDAP was created to sign an agreement with the institute to act as the executing agent. It hired the National Engineering Services Pakistan (Nespak) as project management company and recommended a Korean company, MooYoung, to work as foreign management consultant on behalf of Nespak. Nespak and Arcop signed an agreement with the IDAP to work as project management consultants and architect. Interestingly, the IDAP had no experience in building hospitals when it signed the agreement with the PKLI&RC.

According to the report, the PKLI&RC disbursed Rs390 million to Nespak on the basis of a letter of intent issued on Jan 22, 2016 by Prof Dr Akhtar without any agreement. Insistence of finding an architect with JCI Standard had cost the provincial treasury Rs200m (in foreign exchange). While awarding design and architecture tender to M/s CPG-Arcop JV worth Rs390m, the valuation criteria for prequalification was kept so strict that only two companies out of 22 achieved the minimum score for prequalification.

The CPG-Arcop, a Singapore-based company, had 65 points which were later raised to 75. M/s AGRC Shagufta Muneer was disqualified as the jurors gave it 56.25 points. As a result, only one firm was prequalified and awarded the contract. The contract value was about Rs400m and 40pc of the amount was to be paid in foreign exchange to CPG-Arcop. “Similarly, selection of foreign project management company MooYoung also cost about Rs500m,” the report says, blaming Dr Akhtar and two members the institute’s board of governors for signing payments worth Rs12.9 billion in favour of the IDAP without project evaluation reports. “Moreover, the agreement between health department and PKLI&RC appears to be unguarded as no definite amount was agreed to and the agreement was signed at the tentative amount of Rs12.7bn or revised amount… thus giving a blank cheque to PKLI&RC.”

The report alleges that the ZKB & Reliable JV were awarded the contract against procurement rules. They had a conflict of interest as Zahid Khan, the owner of ZKB, was on the PKLI&RC board till the day the tender was announced. Since ZKB had no experience of building hospitals, the question is why prior experience was not taken into consideration as the prequalification criteria.

The report recommends recovery of billions from ZKB & Reliable, which obtained a major portion of the construction worth Rs8bn. “This JV is also doing the construction of Metro project. The tender process and awarding of tender was concluded by the IDAP without the knowledge of project department, which is a breach of the agreement signed by both parties,” the report says.

Undue benefit was given in the award of transport contract to M/s Mystic Tours by designing the pre-qualification criteria in a certain manner. Investigation regarding irregularities and over-invoicing in the tender of M/s Mystic Tours was carried out by the PKLI&RC, but no action was taken or excess payments recovered.

Published in Dawn, August 13th, 2018