Sindh food dept embroiled in mega corruption scam involving wheat procurement

Published May 26, 2019
The food department is yet to come on record to share official figures regarding this massive financial bungling. ─ Dawn/File
The food department is yet to come on record to share official figures regarding this massive financial bungling. ─ Dawn/File

HYDERABAD: A multi-billion-rupee scam involving procurement of wheat and misappropriation of jute bags, also called bardana, has hit the Sindh food department after hundreds of thousands of such bags are either simply missing/ misappropriated or stuffed with chaff, it emerged on Saturday.

The scam invited the attention of the National Accountability Bureau (NAB), which first sealed and then unsealed several warehouses in upper Sindh’s Larkana and Sukkur regions after counting.

Inquiries by Dawn revealed that apart from the apex anti-graft watchdog, the Sindh Anti-Corruption Establishment (ACE) also lodged FIRs in Dadu, Sanghar and Karachi against flour mill owners, food officials and other private persons, including middlemen or other beneficiaries.

The food department is yet to come on record to share official figures regarding this massive financial bungling.

NAB’s inquiries are likely to culminate into a reference against unscrupulous elements including private persons and food department officials.

Around 2-2.5m jute bags are either missing or misappropriated from warehouses

NAB initiated action in Sukkur, Ghotki, Naushahro Feroze, Khairpur, Jacobabad, Qambar-Shahdadkot and Kashmore.

Sources in the Sindh food department told to Dawn that NAB had not shared anything with them, but it appeared that between two million to 2.5m bags were either missing from warehouses or misappropriated.

They said that the only figure available was of 194,000 bags, which according to the ACE’s findings were misappropriated in Dadu district.

NAB had investigated the position of 2017-18 wheat crop’s stocks in godowns of Sukkur and Larkana regions. This year, the Sindh government has not yet decided to procure wheat considering the commodity’s large carryover stocks.

NAB probe begins after receiving complaint

NAB intervened to look into available wheat stocks of Sindh for 2017-18 crop season following receipt of a complaint before Ramazan that wheat bags had been missing in warehouses.

“We checked warehouses first in Sukkur in the presence of magistrates following the complaint,” said a NAB source. Then, he added, similar surprise visits were paid to warehouses in other districts as well and this led to a proper investigation.

NAB completed counting of bags and the difference of missing bags was brought on record to thwart any attempt by food officials to purchase wheat from market and meet the difference. It also found out wheat bags were placed in columns and rows.

Adulterated wheat (mixed with chaff and husk) was kept in midst of bags to dodge investigators. The probe by and large involves wheat season of 2017-18 but in Larkana region’s procurement centres like Nairabad, Warah and Kambar crops of 2013-14, 2014-15, 2015-16, 2016-17 and 2017-18 seasons were not found.

“Only in Sukkur Rs2bn losses were assessed in terms of missing bags”, disclosed the NAB source. “There are reports food officials were trying to buy wheat to meet deficit of bags in official record but it is not possible. A reference is quite likely relating to financial malpractices,” he said.

Around 25 mills in Ghotki and 18 in Sukkur were also sealed off and then unsealed following verification of stocks.

Food department preserves wheat on private premises like flour mills also. It is often released to same mills on a credit basis for wheat flour production. During the last crop season, the food department had procured 1.4 million tonnes of the crop when it had around 300,000 tonnes of carryover stocks.

NAB, for instance, has estimated the value of wheat at Rs966.044m towards difference/shortage of 125,940 jute bags of 100kg and 342,609 50kg bags in Khairpur district.

A shortage of 2,059.099 metric tons of wheat of five crop seasons was missing in 6,888 jute bags of 100 kgs and 14,318 polypropylene (PP) bags of 50 kgs in procurement centre Qambar as well.

ACE lodges Rs1.46bn embezzlement FIRs

The ACE also completed an inquiry regarding Sanghar’s six talukas where FIRs were lodged for each taluka, involving Rs1.46bn misappropriation.

The ACE lodged the cases following completion of its findings in which it determined a loss of Rs461.125m in Shahdadpur taluka; Rs455.78m in Sinjhoro, Rs460.2m in Tando Adam; Rs150m in Khipro; Rs105.25m in Jam Nawaz Ali and Rs121.69m in Sanghar taluka in Dec 2018.

“Around 1.7m wheat bags were procured officially in Sanghar. But most of the bardana went to middlemen and those who don’t own land or were traders. Some traders were based in Punjab as per banking transactions,” said ACE official Zamir Abbasi.

The Rs1.46bn misappropriation includes cost in the heads of support price, incidental charges, cost of jute bags, transportation.

These cases were lodged against deputy director-food, Hyderabad, district food controller (DFC) Sanghar, godown in charges and middlemen.

“Fictitious forms-VII [a piece of revenue document] were produced to supply wheat and get support price of Rs1,300. This document is mandatory to get the support price,” Mr Abbasi said.

Likewise, 194,000 wheat bags were missing, which involved the misappropriation of Rs660m.

Resultantly, two flour mill owners (whose pre-arrest bail rejected recently), nine godowns in charges, Dadu deputy commissioner and deputy director, Jamshoro were nominated in the case.

Mr Abbasi said around Rs5bn was returned to the food department by millers, who got wheat on a credit basis. “These millers were provided wheat on a credit basis although there was no government policy to this effect,” he remarked.

Now, 45 mill owners, the DFC concerned and others face charges.

The DFC-Malir, in his May 6 letter, informed the ACE that Rs4.971bn was recovered and a balance of Rs502.099m was pending for which cheques were given and being deposited.

The letter said 1.682m bags were issued in one month on credit in Malir and East districts for wheat worth Rs5.473bn.

‘Tainted’ process of wheat procurement

The ongoing NAB investigation and registration of cases by the ACE clearly show how skewed and tainted the wheat procurement process in Sindh is. The procurement is all about support price of wheat, which has been Rs1,300/40kg for the past several years.

This subsidy is given from taxpayers’ money by the government and it is primarily meant for farmers but it hardly reaches to them due to institutional leakages and lapses in process.

Gunny bags are doled out only among political, non-political, influential landowners and government functionaries, who own land. Small farmers with 16 and 25 acres or lesser landholdings end up running from pillar to post to get bags in anticipation of the official support price.

A farmer provides his land’s document to show cultivation of wheat and to pay challan for bardana so that wheat could be supplied to the procurement centre. An amount of Rs125 is charged towards 100 kg jute bag and Rs60 for polypropylene bag. A farmer is bound to supply wheat to the procurement centre but they are forced to transport it to warehouses on their own.

“The cost towards transportation of wheat from procurement centres to godown by us is stomached by officials,” said Nadeem Shah, an old wheat grower.

He complained that a deduction of around 2.5kg was made by officials on 100kg bag in addition to the weight of the jute bag.

“It is good that the Sindh government is not procuring wheat this year. Quantitative ratio of farmers getting support price is always negligible because bardana is not supplied to them,” he said.

He claimed that offloading of wheat was to be done by food department workers but the cost was borne by farmers.

“We indeed require putting things on a right track so such lapses would not occur and a transparent procurement of wheat is ensured. To achieve the goal, this exercise should begin from at the time of cultivation of the wheat crop so that documents’ verification can easily be done and when procurement season starts genuine farmers are facilitated in terms of supply of bardana,” said a Karachi-based source.

Until recently, growers had been holding protests to press the government to procure their crop. But the government remained indecisive amid reports that the food department had moved a summary asking it to allow the procurement. The wheat crop season had almost been completed.

An illegal economy is in fact thriving behind the process of wheat procurement. As the season begins, food officials provide bardana to middlemen or traders, who purchase wheat at Rs1,050 to Rs1,110 per 40kg from growers and then sell it to the food department at the official price of Rs1,300/40kg.

The differential amount, which is pocketed by a nexus of officials and traders, is in addition to offloading and transportation charges that are to be paid by the department but practically borne by growers.

Published in Dawn, May 26th, 2019

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