Audit finds massive irregularities in Covid spending

Published November 30, 2021
People stand in a queue outside a Utility Store in Rawalpindi. — APP/File
People stand in a queue outside a Utility Store in Rawalpindi. — APP/File

ISLAMABAD: An audit report on Covid-19 expenditures has pointed out irregularities of up to Rs5.24 billion in purchases of sugar, ghee and wheat flour by the Utility Stores Corporation (USC), including procurement of unfit ghee and edible oil worth Rs1.40bn.

The report on “expenditures incurred on Covid-19 by federal government” released by the finance ministry has pointed out irregularities in government interventions to ensure availability of five essential items — sugar, wheat flour, oil and ghee, pulses and rice — in Utility Stores at subsidised rates.

The audit report has highlighted that apart from financial misappropriations and irregularities, the relevant officers at the USC procured spurious food items that have been graded unfit for human consumption by the Punjab Food Authority and other quality standard authorities.

Apart from financial misappropriations, USC officials procured food items unfit for human consumption

Following the outbreak of Covid-19 in the country, the government had launched the Prime Minister’s Relief Package in 2020 and Rs10bn was released to the USC in March that year to provide food items at subsidised rates to the vulnerable section of society. Earlier, the government had also released Rs21bn between December 2019 and March 2020 for procurement of five essential items through 3,989 outlets of retail utility stores.

The audit report has highlighted irregular procurement of ghee and cooking oil worth Rs1.60bn, as it was completed without competitive tendering process and obtaining competitive rates. Besides, it added, ghee and oil worth Rs1.40bn placed at the shelves of USC retail outlets had been declared unfit for human consumption by the Punjab Food Authority.

The audit report stated that except for the Sukkur region where food items from 11 out of 15 vendors were tested from any laboratory, the USC management neither itself tested the quality of the commodities purchased nor were the quality and safety parameters ensured from the venders. “Additionally, as per USC manual, no product can be placed in shelf at any outlet unless provision of PSQCA (Pakistan Standards and Quality Control Authority) certificate and ISO certificate by the manufacturer concerned,” it added.

The audit report has recommended that the matter may be investigated to fix responsibility for violation of PPRA (Public Procurement Regulatory Authority) rules as well as purchase and sale of substandard ghee/oil without fitness certificates.

Similarly, it said, the USC had failed to obtain lab test reports resulting in doubtful payments against substandard wheat flour and excess payments. “The regional managers, USC, accepted atta (wheat flour) and made payment amounting Rs1.67bn during 2019-20 to flour mills without ensuring the prescribed specification of atta.”

The report highlighted that the USC regional mangers failed to get lab reports from the Punjab Food Laboratory and any other laboratory, which was a violation of government’s instructions. Other violations included procurement of 119,110 bags (20kg) of wheat flour valuing Rs95.28 million from January to August 2020, without conducting the bidding process.

According to the report, the USC faced a loss of Rs322.80m due to non-observance of prescribed flour specifications as its officials ignored the standard for maximum moisture contents in flour from 12 per cent and raised it to 14pc, while the ash contents ratio was increased from 2pc to 2.5pc.

The USC also made Rs77.12m irregular business contracts with blacklisted flour mills and allocated excess wheat quota to the flour mills of choice, leading to a financial loss of Rs60.30m.

The audit report has also highlighted a loss of Rs1.37bn due to irregular and ill-planned procurement of sugar. The procurement through tender was made at Rs65.90 per kg in November 2019, while the purchase was made in April 2020 at the rate of Rs78.32. The USC made payments worth Rs237.33m for transport of sugar without verifying toll tax and weighbridge receipts from the point of origin to the destination.

Other irregularities by the USC include non-replacement of expired and unsalable stocks worth Rs28.34m by the vendors and the irregular arrangement of local transport without advertisement amounting to Rs46.87m.

Published in Dawn, November 30th, 2021

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