ISLAMABAD, June 23: Seventeen major state sector corporations incurred losses worth over Rs6.7 billion during the financial year 2004-05, according to the Auditor-General of Pakistan's report.
The report on accounts of audit of public sector enterprises was laid down in the National Assembly here on Saturday which speaks volumes about lapses due to which losses were incurred by the organisations.
The audit was conducted about government commercial undertakings, statutory corporations and entities, established by the federal government under Companies Ordinance, and the report contains 126 audit paras, involving Rs6.6 million.
During the DAC discussions, a number of issues were settled and recovery of Rs1.2 million was made by the respective managements.
The Printing Corporation of Pakistan sustained a loss of Rs8.589 million due to printing of books for the Government of Afghanistan without proper cost estimates.
The National Insurance Company Limited (NICL) settled the defalcation claim of Habib Bank Limited without ensuring a timely survey as required under rules and thus lost Rs3.676 million.
The NICL paid entertainment allowance to non-entitled officers during 1999-2003 amounting to Rs3.013 million.
The NICL failed to recover through adjustment of terminal benefits from ex-employees on account of house-building, motor car and Eid advances worth Rs1.020 million.
The State Life Insurance Corporation (Slic) purchased 44 new model cars of 1300cc in 2002 in violation of a government ban on purchase of new cars amounting to Rs38.677 million.
The Slic made an imprudent investment in two companies by way of purchasing redeemable capital certificates and ordinary shares from stock exchange. The case of one company was in the banking court and the other had not been trading the amount of Rs33.663 million. Rent was outstanding against various tenants as on Dec 31, 2003. The tenants had vacated Slic buildings without clearing rental dues worth Rs21.238 million.
The Slic did not withdraw facility of club membership of executives and officers despite instructions of the ministry of commerce issued in the light of Finance Division's letter of June 23, 1999.
The Trading Corporation of Pakistan (TCP) sustained a loss due to refund of forfeited bid bond money of Rs13.895 million. The
TCP procured 16 vehicles in 2003-04 during the period of the ban on purchase which amounted to Rs8.490 million.
The Pakistan International Airlines Corporation (PIAC) purchased eight GE engines from General Electric Company in 2002 for newly-inducted Aircraft B-777-200ER at exorbitant rates with high maintenance cost while option for cheaper engines of Pratt & Whitney (PW) with less maintenance cost was available with the PIAC, resulting in extra expenditure of $24.896 million equivalent to Rs1.4 billion.
The PIAC allowed discount/rebate to Allied Bank Limited (ABL) on 13,371 tickets under special Umra Scheme during October 2002 to May 2004 causing a loss of Rs76.013 million.
Funds of PIAC were stuck-up in an Iraqi Bank since 1990 due to Gulf War followed by US/UN sanctions which resulted in the loss of Rs60.986 million.
The PIAC failed to recover outstanding amounts from defaulting agents within a period of 30 days as per its credit policy, hence lost Rs18.812 million.
The PIAC purchased plots in 1987 and 1991 in Gilgit and Sukkur, respectively, for construction of its sales office buildings. As construction could not be started/completed, PIAC had to pay rental charges on hired buildings amounting to Rs5.885 million. The PIAC placed an order for procurement of spares in excess of actual requirements and without observing the laid down procedure.
On cancellation of 50 per cent ordered quantity, the PIAC had to pay a penalty of $13.150 equivalent to Rs756.914 million.
The House Building Finance Corporation extended financial assistance of Rs1 billion to Pakistan Housing Authority for resumption of construction of flats on 18 sites.
Despite modification in the agreement and restructuring of investment, the amount of Rs750 million was lying recoverable from the Authority.
The Industrial Development Bank of Pakistan (IDBP) failed to recover decreed amount in six cases which amounted to Rs1.2 billion.
A sum of Rs1.2 billion was also recoverable from seven defaulting borrowers. In certain cases, the borrowers removed the pledged machinery from the premises of projects.
Principal plus markup was recoverable by the Investment Corporation of Pakistan (ICP) from four borrowers and the amount included Rs60.372 million.
In ICP, 435,687 shares valuing Rs1.526 million became unrecoverable due to defective/cancelled and de-listing/closure of investee companies in 2000-01. Only 13,695 shares valuing Rs170,000 had been retrieved/ cleared. As a result, ICP sustained a loss of Rs1.3 billion.
As per amendment in the Central Excise Rules (vide SRO dated August 04, 1991), central excise duty was levied on advances availed of by the customers of former National Development Finance Corporation (NDFC). The amount of Rs28.6 million was recoverable from the borrowers on this account as on Dec 31, 2002.
The former NDFC sustained a loss due to invoking of repayment guarantee by the Islamic Development Bank in a lease financing of Rs23.394 million facility provided to a borrower of the bank.
The Pakistan Security Printing Corporation (PSPC) awarded contract for access control system on single tender basis in violation of provisions of purchase manual due to which a loss of Rs10.800 million was incurred.
Due to non-compliance of SBP's prudential regulations, the Zarai Taraqiati Bank Limited (ZTBL) had to pay penalties worth Rs27.115 million.
The ZTBL's funds were stuck-up due to non-recovery of loans worth Rs25.646 million from 46 borrowers after the expiry of repayment period.
As per terms of agreements with tenants, utility charges were required to be recovered on a monthly basis. However, the Korangi Fisheries Harbour Authority (KFHA) failed to recover the Rs597.715 same from tenants.
The management of Pakistan Agricultural Supplies and Storage Corporation (Passco) could not encash bank guarantees of defaulting parties who had not lifted the contracted quantity of wheat for export to Iraq hence lost Rs219.288 million.
Passco failed to recover difference of rent of godowns and residential quarters plus mark-up from a party and the matter was lying in the court of law resulting in the loss of Rs22.137 million.
The corporation sustained a loss due to misappropriation of wheat and gunny bags and non-recovery of markup accrued thereon amounting to Rs13.800 million.
The Export Processing Zones Authority (FPZA) purchased new vehicles. The Sindh Engineering Private Limited imported steel sheets for manufacturing of different parts of Suzuki motorcycles valuing $0.580 million (Rs14.349 million) in the year 1982. Motorcycle manufacturing operations were franchised to a newly-formed company M/s. Suzuki Motor Cycle Pakistan (SMCP). The stock of unutilised steel sheets was, however, not transferred/sold to SMCP. Resultantly, the steel sheets became rusty, badly damaged and no more serviceable resulting in the loss of Rs13.110 million.
The Pakistan Steel Mills Corporation Limited (PSM) purchased 3,000 MTN of ferro manganese from a party on single tender basis in September 2002 in violation of rules which cost Rs76.424 million.
In PSM, an amount of Rs43.633 million was recoverable from various suppliers/contractors/consultants as on June 30, 2004 against loans/advances granted to them. An amount of Rs21.817 million was considered as doubtful and provision thereof was made. Only an amount of Rs2.252 million had been recovered/adjusted leaving a balance as on June 30, 2005, amounting to Rs,41.381 million.
Deviation charges were recoverable by PSM from foreign suppliers (31 cases) on account of supply of defective/below specification material which amounted to Rs28.163 million.
The PSM sustained a loss due to procurement of wooden sleepers at higher rate by ignoring earlier lower rate of Rs1.799 million.
The PSM failed to finalise the purchase proposal within validity period (90 days) resulting into a loss of Rs1.054 million due to purchase of MS pipes at a higher rate.