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Scandal rocks Erra’s squeaky clean image

Updated July 22, 2019

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EQ Memorial Bridge, Muzaffarabad.—Serra
EQ Memorial Bridge, Muzaffarabad.—Serra

For the Earthquake Reconstruction and Rehabilitation Agency (Erra), it was a bolt from the blue. Clearing its name in a major corruption scam at the fag end of its life as it merges into the National Disaster Management Agency (NDMA) is difficult if not impossible.

“It feels like a farewell kick after working diligently beyond the call of duty to reconstruct the spirit and life in the earthquake-affected region,” a person associated with the reconstruction work after the 2005 catastrophic earthquake said.

“Seeing is believing. Come visit Azad Jammu and Kashmir (AJK) and Khyber Pakhtunkhwa to witness the hustle and bustle of normal life in localities that were completely devastated in 2005,” said another person, hailing from the earthquake-hit region, who has participated in the rebuilding process in multiple capacities.

Recently, Erra was implicated in a corruption scam involving the leader of the opposition in parliament, Shehbaz Sharif. The reputation of Erra, which has long been projected as a model agency for its performance in several audit reports and evaluations by donor outfits — including the World Bank, Asian Development Bank (ADB) and Islamic Development Bank (IDB) — has been muddied by a recent story published in a UK-based paper, Mail on Sunday. The report alleged that funds meant for earthquake-affected people and areas were embezzled.

Without commenting on the merit of the case or the political dimensions, the intent here is to gain some clarity on the issue of the funds transfer to Punjab, which was beyond the purview of Erra.

‘Erra did most of its work in the first five years. The pace of progress has slowed down since’

The mandate and operations of the agency that became operational in April 2006 were limited to the reconstruction and rehabilitation of what the earthquake destroyed in KP and AJK.

The October 2005 earthquake affected an area of 30,000 square-kilometres. It left 73,338 people dead and 128,304 people severely injured. It destroyed 600,000 houses and left 3.5 million people homeless. It razed 5,772 educational facilities, 320 health units and 726 government buildings to the ground besides damaging the physical infrastructure, including roads, bridges and power, communication, water and sewerage systems.

According to data emailed to Dawn by Erra, out of 14,704 total projects covering multiple sectors, 10,805 have already been completed in 13 years. Work is in progress on 2,269 projects and 1,630 projects have yet to start. The total cost of reconstruction was estimated to be $5bn (Rs300bn at the exchange rate of Rs60 a dollar). The federal government, local sponsors and donors pitched in to share the financial burden of the mammoth task. The sector-wise breakdown is given in the table.

In response to a question regarding the said case, Erra shifted the burden of responsibility from the agency to an individual civil servant without explicitly taking a position. He joined the agency on deputation for a four year term from February 2009 to May 2013. He was later nabbed and found involved in embezzlement. He entered into a plea bargain with the National Accountability Bureau (NAB).

“NAB has confiscated the said officer’s 17 properties. The ownership documents of these properties were handed over to Erra on April 16, 2019, and the process of title transfer is underway. The Privatisation Commission has been tasked with managing their disposal and depositing the sale proceeds in the government treasury.”

There was no comment as to how he was able to beat the internal checks and filters and why external auditors could not detect misappropriations.

Erra shifted the burden of responsibility to an individual civil servant, who joined the agency on deputation for a four-year term, without explicitly taking a position

A member of the Erra board in Islamabad was baffled by the allegations. “From the word go, Erra affairs were in the spotlight because of the donors’ involvement. It was a devolved autonomous body headed by retired, well-reputed people with the military background where money was locked with projects.

“Often foreign funds were disbursed after the completion of a project. Filters and checks were very stringent. To me, it is a case of individual misconduct. The fact that the agency failed to detect it when it all started points to weakness, not collusion,” he said while defending Erra.

Responding to the criticism about Erra’s centralised hierarchal structure that resulted in avoidable delays and increased project costs, he said: “The State Earthquake Reconstruction and Rehabilitation Agency (Serra) and Erra-KP make PC1 according to their needs in consultation with their respective governments. Erra releases funds as per their recommendations.”

People contacted were mostly on the 17-member board of Erra at some point, but none wanted to own their comments for fear of reprisal. “We are not even in a position to guess on the incidence of corruption in Erra. If you are asking for my honest opinion on the agency’s performance, most of the work was done in the first five years. The pace of progress has slowed down since. The major dip in funds inflow came in 2010 when catastrophic floods incurred heavy losses.

“Since 2012, the funds started to dry up and for the past few years only a billion rupees was earmarked in the development budget for Erra projects. We know from our experience that costs double every five years. At the current pace, it will take another 20 years to complete all the leftover projects pledged,” commented a board member from Peshawar.

“During the PPP rule, I know that Rs55bn was diverted from Erra accounts to ease the fiscal pressure on the federal government. As for the current case, it is clearly a politically motivated move by the PTI government to divert public attention from its failure on the economic front,” a politician commented over the phone from Mirpur AJK.

“Any funding/loan between the federal government and AJK does not fall under the preview of Erra,” responded the agency.

Published in Dawn, The Business and Finance Weekly, July 22nd, 2019