Thu. Jun 1st, 2023
  • State audit finds irregularities during procurements by NDMA, disbursements under govt’s poverty alleviation program and other.
  • Says NDMA used up to $62,270,874 to procure equipment from China, but no minutes of these meetings were recorded,
  • States Pak Emirates Military Hospital and CMA Rawalpindi did not provide records of their expenditure on account of Covid-19.

The audit, conducted by the Auditor-General of Pakistan from April 2020 to June 2020, examined R354.23 billion of the R1.240 billion approved by the prime minister in March 2020 to fight the virus.

The state audit report was released last week.

When you look at these three months, the audit report reveals that there were some irregularities in the procurement process by the National Disaster Management Authority (NDMA), the disbursement of funds through the government’s anti-poverty program, the protection of the security services and Utility stores, among other findings.

Here are some important highlights from the report:

Reported at NAB

The NDMA which oversaw the procurement of equipment and medical supplies during the coronavirus violence was allocated R33,248 million.

The audit report states that in terms of the National Accountability Act, 1999, all government departments must provide the National Accounting Office (NAB) with a copy of any contract with a minimum value of Rs50mn or more.

However, the NDMA entered into 55 contracts with suppliers and firms valued at Rs50mn and copies of these contracts were not provided to NAB.

Shopping in China

As of June 2020, the NDMA spent up to $ 62,270,874 on the purchase of coronavirus-related equipment in China.

But no minutes of these meetings have been recorded, the report said. A proper record of these allegations was not kept.

The study also found that the NDMA purchased ventilators at a higher cost to a Chinese company, Sinopharm Fortune Way. The difference in price per ventilator was $ 7,100.

“The purchase of the same equipment at the same time at a higher price resulted in a loss of $ 994,000 in the public exchequer,” the report said.

A further 80 ventilators were purchased, and the Chinese company they were born with was paid more than $ 700,000. The NDMA has told a team of auditors that it has asked for a refund, through the Chinese embassy.

Construction during Covid-19

China has donated $ 4mn for the construction of a 250-bed Separation Hospital and the Centers for Disease Control (IHITC) in Islamabad. Accordingly, the NDMA allocated construction work to the International Labor Organization (FWO), which provided Rs600mn in two installments.

“During the audit it was found that instead of using the China-sponsored grant to build the IHITC, the NDMA used Covid-19 funding to build a hospital. Therefore, the grant received from China was not used in the NDMA, ”reads the audit report.

Also, the report noted that prepaid payments made to the FWO for the construction of the Center had not been resolved by the NDMA until June 30, 2020. An audit has recommended that payment requests and payment vouchers be obtained from FWO.

Missing GST

The NDMA purchased various Covid-19-related items from various supplier companies, which had to be deducted by General Sales Tax (GST). But the study found that the NDMA did not pull GST out of supplier debt, which could not be exempt from GST.

This resulted in the government losing tax revenue of Rs328.903mn.

Poor cash disbursement

The total budget allocated for the Benazir Income Support Program for Covid-19 for the 2019-20 financial year was R136,377.32mn to be distributed among the poorest worst affected during the violence.

Audit found that payments were made to beneficiaries living better “due to a lack of clear policy”.

In addition to technical difficulties, such as beneficiaries who do not receive SMS withdrawals, the study also identified problems in NADRA and the government website, which resulted in unpaid beneficiaries such as government employees, pensioners, spouses or taxpayers with more than one income. Rs50,000 per month.

The report also raised concerns that 1,320,171 beneficiaries were still awaiting funding at the close of the study.

It was also highlighted that a total of 26,555 beneficiaries from Punjab received Covid-19 grants of Rs12,000 and Rs9,000 from both the BISP and the Zakat Fund, respectively, which were unusual.

“Therefore, an additional Rs318,660,000 was misappropriated, which needs to be repaid,” the study said.

In addition, there have been cases where counterfeit biometrics have been used to extort money on behalf of the deceased.

Transfers of up to Rs1,680,000 were fraudulently disbursed.

Cost of Security Services

The report states that Pak Emirates Military Hospital (PEMH) and CMA Rawalpindi did not provide records of their expenses due to Covid-19.

Separately, the Department of Defense has allocated Rs200mn to the Armed Forces Institute of Cardiology & National Institute of Heart Diseases in the Covid-19 military budget. During the course of the audit, it became apparent that all the funds allocated were spent on previous debts and the purchase of drugs related to heart disease.

The report states that these funds should have been “donated to be used by the government for other urgent needs of the epidemic.”

The audit report also highlighted cost overruns during the security crackdown. It noted that in-store medical supplies including Personal Protective Equipment (PPE), disposable items, and medicines worth Rs376.817mn were purchased locally, or that sufficient stock of similar items was already being processed.

During the CMH Rawalpindi trial, it was noted that PPEs were purchased at high prices by ignoring the low prices available, resulting in a loss of up to Rs27,923,656.

While the hospital record shows that PPEs obtained from COD Rawalpindi were in excess and remained in stock, “which was inappropriate,” the report said. “The issuance of excess PPE has resulted in a reduction in government funding amounting to Rs75.066mn.

Another concern was made for the defense services did not deduct withholding tax, which cost the state a loss of Rs17.129 million.

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