ISLAMABAD, July 7: The Auditor General’s office has detected “financial irregularities of serious nature,” including corruption, fraud and thefts amounting to Rs38.549 million in a subordinate organization of the Ministry of Science and Technology (MoST), official documents obtained by Dawn show.

The special audit had been conducted in May, 2002, and the report was sent to the MoST and the National Accountability Bureau for action, sources said.

The Auditor General’s office has asked MoST to constitute an inquiry, fix responsibility on the persons concerned and recover the loss incurred by the public exchequer.

When contacted, senior officials in the ministry said the managing director of the Pakistan Software Export Board (PSEB) had been directed to give detailed replies to the audit findings. Action will be taken once the replies are received, they said.

The report detected violation of rules and regulations and loss to the government in doubtful and irregular award of contracts worth millions of rupees, irregular payments, misuse of government funds, irregular appointment of chartered accountants, purchases on higher rates without approval, irregular appointments of people with lower qualifications than those prescribed, irregular pay package for consultants and no pre- audit check on any payment by the account sections.

It also pointed out a number of instances where loss to public exchequer was caused due to foreign and local travel by the PSEB management in violation of rules.

The report noted serious financial irregularities committed by the director administration, in which unauthorized expenditure worth Rs3.68 million was made. It said, in numerous cases, rules and regulations were violated by the official in sanctioning expenditure amount beyond competence and the same were not noticed by the managing director.

The report noted that a fictitious payment was made on account of production of video documentary on information technology in Pakistan. Observing various irregularities in the award of contract, it said a more alarming aspect was that no evidence was available to show that the video was ever received by the PSEB.

The entire transaction is dubious on account of absence of tendering procedure, non-certification of work by the PSEB authorities and non-availability of any information to show that actual travelling and lodging took place with regard to the work.

The report said the PSEB sponsored the visit of three persons to Pakistan for personnel purposes. “The visit by the three persons at the cost of the PSEB was for personnel purposes and it was not the responsibility of the board to bear the travelling expenses.”

In another instance, the report said, the PSEB management purchased an over-invoiced old-model car when a new one was available at cheaper rates. The board has caused a loss to the public exchequer by not accepting the lowest bid available on record, it said.

Interestingly, in its reply to the audit, the PSEB management stated that it had to pay extra amount since the company had stopped manufacturing the old-model because of the launching of the new-model car.

Detecting an “imprudent agreement” signed with a guest house on January 29, 2002, the audit report said the entire agreement was detrimental to organizational interests. It added that the PSEB still retained the previous office premise in F-7/2 for which Rs40,000 per month rent was being paid and the same could be used as a guest house.

Recommending forthwith cancellation of the agreement so that the unnecessary government liability worth Rs1.2 million may be dispensed with, the report said the PSEB conceded that the guest house projections and market survey were not carried out before hiring.

In another instance, the audit found that payments were made to a hotel for the stay of consultants from a company that was headed by the PSEB managing director. Moreover, it said, the PSEB management failed to substantiate the arrival and stay of the consultants through tickets and assignments carried out by them.

The report said instead of guests, permanent PSEB employees, drawing house rent allowance at their station of service, stayed at the hotel without any such provision in their contracts.

It noted that an amount of Rs550,000 received on account of registration and renewal fee of software companies had been misappropriated in the PSEB. The amount was remitted in cash to the PSEB and no deposit record, cash book or account for the relevant period was available.

The audit report said an amount of Rs1.1 million had been misappropriated on account of purchases and income tax due on various firms to be paid directly to the income tax officer on the same day. “Contrary to rules, the payment was self-drawn and there was no evidence that the amount had been deposited to Income Tax Department,” the report said.

The audit noted that the PSEB failed to deduct at source, income tax from the salary of its managing director, amounting to Rs178,533.

The audit findings include doubtful payments on account of promotional material; misappropriation of amount received on account of registration and renewal fee of software companies; misappropriation of amount on account of sales tax paid to a construction company; misuse of authority for irregular award of contract to a construction company; violation of the memorandum and articles of association and misuse of power by the managing director; irregular purchases to the tune of Rs3.2 million; irregular payment to employees on account of examination fee; non-reconciliation with the bank; irregular expenditure incurred on foreign tours by the officers of the PSEB; manipulation of rules by the managing director to draw house rent advance; irregular payment on account of insurance premium to a private insurance company; irregular payment on account of book- keeping charges; unauthorized foreign tour by a PSEB official; unauthorized domestic travelling etc.