ISLAMABAD, Nov 23: The Chief of Army Staff, Gen Ashfaq Parvez Kayani, ordered a high-level inquiry on Tuesday into charges of massive financial irregularities in National Logistics Cell (NLC).

“A serving corps commander has been nominated to head the inquiry along with two major generals as members,” said an official announcement. It said appropriate action would be taken on completion of the court of inquiry in line with army rules and regulations.

The NLC is a subsidiary of Planning Commission, but has traditionally been dominated by the army. Even today it is being headed by a serving major general, with several other officers in uniform working as his subordinates.

The army chief had recently warned the NLC to “stop posing” as a defence agency and act as a commercial entity.

The audit report had identified corruption to the tune of billions of rupees in accounts of NLC. The audit department had reported to the Public Accounts Committee that the NLC had obtained Rs4. 3 billion in loans from banks between 2004 and 2008 for investment in volatile bourses and suffered Rs1. 84 billion losses.

NLC Director General Major General Junaid Rehmat had recently told the PAC that the NLC was paying Rs2. 7 million per day on account of mark-up on loans illegally obtained to invest in the stock market.

An interdepartmental committee of the Finance, Planning and Audit Department had found three army generals and a senior civil official responsible for the losses.

Another scam against the NLC involved embezzlement of millions of rupees worth of foreign loan in drought emergency relief assistance project initiated to help the people affected by the drought in southern Punjab.

According to a report, the project director made Rs6 million payments on account of irregular appointments. He used official vehicles for 55,000km of irregular journey and on top of that, the vehicles were used on Sundays for 12,000km of personal journey. He also used drought relief money to furnish the office.

The report was, however, received by the office of the Auditor General of Pakistan a day after the retirement of the official concerned.

Two army generals had also been found involved in yet another multi-million-rupee scam in the NLC, with the disclosure that Lt Gen Muhammad Afzal and Major General Khalid Zaheer Akhtar (both retired officers now) had quietly given a loan of Rs75 million to a defunct Japanese private power company without any guarantees. The company never returned the money.

The non-performing loan was given to the private party when the NLC itself had borrowed a loan of Rs4. 7 billion from banks and was paying a considerable amount as a mark-up on this huge commercial loan.

It was also revealed during recent proceedings of the PAC that 88 vehicles, including seven luxury Prado vehicles — each costing millions of rupees — were imported duty-free by NLC’s top guns by using fake certificates testifying that they were being imported for “defence purposes”. The imported vehicles are now in the use of junior officers, mostly from the army.