PAC unearths mega scandal of Rs2.76 billion

By
Asim Yasin
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PAC unearths mega scandal of Rs2.76 billion

ISLAMABAD: The Public Accounts Committee (PAC) on Tuesday dug out a mega scam of the Federal Employees Benevolent Fund and Group Insurance Fund of investing of Rs2.76 billion in private entities and lost all the investment made in the sectors of fertilizer, telecom, CNG stations and textiles.

The Public Accounts Committee took a serious note of loss of investments from a fund which was kept for the pensions of the government servants, widows and their siblings into non-government shares and Terms Finance Certificates (TFCs) without approval from the federal government.

The PAC held its meeting presided over by Chairman Syed Khursheed Shah in which the audit paras relating to the Establishment Division for the year 2013-14 was take up.

The monthly deductions made from the salaries of the government employees for the Benevolent Funds and more than 580,000 federal government employees are being covered under its welfare schemes.

It was revealed in the PAC how the management of the Federal Employees Benevolent Fund and Group Insurance Fund has irregularly and unauthorizedly increased house rent to 90 percent for its employees itself without the approval of the federal government and causing loss to Fund of Rs16.26 million due to overpayment.

The employees of the federal government were given 45 percent of the basic salary as house rent but the Federal Employees Benevolent Fund and Group Insurance Fund took it to 90 percent of their basic salaries.

In another audit para, a stunning revelation was made that the head of department of Human Organ Transplant Authority (Hota), which is a subsidiary of the Capital Administration and Development Division, has availed his own house on rent for office on monthly rent of Rs229,880 per month and conditions were made in the lease agreement which only benefit the owner of the house. While examining the audit para relating to irregular investment of Rs2.7 billion, the audit officials told the committee that the management of Federal Employees Benevolent Fund and Group Insurance Fund invested Rs2.76 bn in non-government shares and Terms Finance Certificates without approval from the federal government as the investment in non-government shares and securities were irregular and unauthorised.

Initially, the officials of Establishment Divisions and MD justified the investment of Rs2.7 billion in different non-government sectors yet when the PAC repeatedly ask the question, then they admitted that it was not a prudent business decision of the previous board that resultantly lost the investment.

When Chairman PAC Syed Khursheed Shah and other members of the committee repeatedly asked the top officials of the Establishment Division and Federal Employees Benevolent Fund whether any internal inquiry on the wrong business decision was held or not and asked them to also fix responsibility.

Dr Arif Alvi observed that the whole matter needed to be investigated as prima facie it seems that the whole board of the Federal Employees Benevolent Fund is involved.

The MD of Federal Employees Benevolent Fund told the committee that the case has been referred to National Accountability Bureau for investigations.

The Chairman PAC and committee members grilled the officials of Federal Employees Benevolent Fund for not telling this fact to the committee saying that for last one hour the justifications were being given for not any wrong doing but now they admitting that the matter has been refer to the NAB for the Investigations.

Chairman PAC Syed Khursheed Shah directed the NAB officials to present the update status of its Investigation on this issue today (Wednesday).

The Chairman PAC also questioned from the NAB official why there was double standard of the NAB as in one case relates to EOBI in which whole board was arrested for Rs20 million fraud  and the case was pending with the Supreme Court but in this case where Rs2 billion investments were lost but the NAB was silent.

The audit officials told the committee that section 7 (f) of the Federal Employees Benevolent Fund and Group Insurance Act, 1969 states that the board shall have power to invest moneys held in the Benevolent Fund in government securities and units of Investment Corporation of Pakistan or national Investment Trust, in the construction of buildings for purpose of raising not income, and in other profitable ventures the plans where of having been previously approved by the federal government.

They further told that the para 4 of Finance Division O.M No F.4(1)/2002-BR.II dated 02.07.2003 states that the corporate entities, which re holding trust funds such as pension funds, benevolent funds or Insurance funds shall not invest their surplus funds in the non-government securities/term Finance Certificate/shares and they will devise their investment politics through their own Boards.

While examining another audit para, it was revealed in the PAC that how the management of the Federal Employees Benevolent Fund and Group Insurance fund has irregularly and unauthorisedly increased house rent to 90 percent for its employees.

The PAC was deeply annoyed with increase of 90 percent in house rent of employees of Federal Employees Benevolent Fund and Group Insurance Fund while observing that this fund was for the widows and orphans and how the management Federal Employees Benevolent Fund and Group Insurance Funds then whether it suited them to used the funds of widows and orphans for their used for their privileges. "If this decision of the board of extravagant spending. Whether there were no one to make them accountable,” the PAC questioned.

Secretary Establishment Division took a position that the raise of 90 percent in house rent would be regularised by the Finance Division.

But Chairman PAC Syed Khursheed Shah took a strong position on it saying that the PAC would never settle this para until the Establishment Division get it regularised from the Finance Division.

Secretary Establishment Division was of the view that the EOBI also gave 90 percent house rent to its employees.

The Chairman PAC replied that the EOBI gets the money from the industrialists and private companies of their share but it was not case of the Federal Employees Benevolent Fund and Group Insurance Funds.

The Audit officials questioned that if the Board gave the permission to raise the 90 percent house rent on which legal ground as there was clearly enacted in the Act that the Board did not have the powers to make such financial decisions.

The PAC referred this issue to the Finance Division while keeping the audit para pending.While examining the audit para, it was revealed that a head of department of Human Organ Transplant Authority (Hota), which is subsidiary department of Capital Administration and Development Division, has availed his own house on rent for office on monthly rent of Rs229,880 per month and conditions were made in the lease agreement which only benefit the owner of the house.

The audit officials told the committee head of department of Human Organ Transplant Authority Dr Qazi Abdul Saboor has leased his house to Hota on such conditions that are only in favour of the owner of house.

The audit officials told the committee that the management of Hota signed lease agreement for five years from 16.06.2011 to 16.06.2016 at the rate of Rs229,880 per month and paid an amount of Rs2,548 million for the period of 16-06-2011 to 15-04-2012.

The audit officials were of the view that clauses 3 and 9 of the lease agreement were of unusual character and were against the interest of the government, thus, resulting in loss of Rs3.908 million.

Secretary Capital Administration and Development Division told the committee that it was gross irregularity and now he was referring the matter to the NAB and FIA. “If I was on seat of Secretary at that time then I would have sent him to jail but now referred this matter to NAB and FIA for investigations,” he added.—Originally published in The News