Top officials of PSM: seven references of corruption pending with NAB, PAC body told

A parliamentary panel was informed on Thursday that as many as seven references of corruption, involving different top officials of Pakistan Steel Mills (PSM), accumulating a loss of Rs 104 billion, are pending with National Accountability Bureau (NAB).
Examining the audit reports for fiscal years 2007-08 and 2009-10, Public Accounts Committee's (PAC) sub-committee on Thursday directed the NAB officials to expedite the process of accountability on references sent to them by the PSMC. The committee was chaired by Sardar Ashiq Hussain.
Chief Executive Officer (CEO) PSMC, Wasif Mehmood informed the committee that accumulated profit of the steel mills was Rs 9.5 billion by June 2008. However, it turned into loss making entity during 2009-2013 when accumulated loss reached Rs 104 billion. He said that the business planning by the previous managements of the PSMC did not bother to implement the decisions taken by Steel Mill Board of Directors. The board's decided for renegotiations of its sale purchases agreements when there was world economic recession.
Audit Report observed that Steel Mills sold 345,651 m/tons of its main products during the period July 2008 to January 2009 at a total sale price of Rs 18.188 billion, while the cost of sale of the same was Rs 25.339 billion. The PSMC sustained a loss of Rs 7.151 billion on sale of products below cost. Wasif further informed the committee that on the directives of Supreme Court of Pakistan, the PSMC carried out a forensic inquiry along with the FIA and shared the inquiry reports with NAB.
The audit observed the corporation suffered a net loss of Rs 26.5 billion in the year 2008-09 against profit of Rs 2 billion in the preceding year 2007-08. The net loss was also due to increase in operating cost by 63 per cent over the preceding year. The committee showed its serious concerns on withdrawal of Rs 7.514 million from Employees Provident Fund at a mark up of 14-19 per cent during the first six months of financial year 2008-09 as a loan, and still did not redeposit the full amount. In his ruling, chairman committee declared withdrawal of money from Employees Provident Fund of any government department for any purpose is illegal.
Audit officials observed that delay in awarding repair contracts of two Coke Oven Batteries in the PSMC cost the national exchequer $434 million. They informed the committee that both the batteries got out of order in May, 2005 and since then the management has been importing coke as per requirement by spending foreign exchange which was to the extent of $434 million up to April 2009. Audit is of the view that closure of both the batteries indicated no mid life revamping or capital repairs by the management which resulted in their complete breakdown.
The committee directed to hold an inquiry for delay in awarding repair contract and submit report in two months. In an attempt to satisfy the members committee, Wasif said that Rs 500 million is the remaining amount which will soon to be redeposit to the fund. Sheikh Rasheed commented that the steel mills are receiving a calculated amount from the government for payment of salaries, how come it would raise such huge funds. The committee asked the Additional Secretary Ministry of Industries Khyzer Hayat to fix responsibility and arrange the redeposit of Rs 500 million to Employees Fund.
The committee was also informed that legal and professional charges increased from Rs 10 million in 2005-06 to Rs 17 million in 2006-07. Management of Steel Mills contended that during the year 2006-07 the legal and professional charges were increased due to payment to advocates engaged for cases of privatisation of the corporation in Supreme Court of Pakistan and arbitration case by Fromonto India in ICC London.
The audit report further observed that the PSMC did not promote the indigenisation policy of the government and did not explore possibilities of utilisation of huge deposits of iron ore of superior quality available in Pakistan. The CEO, Steel Mills said that mined and utilised local iron ore was 990,378 m/tons from February 2008 till January 2014, involving an expenditure of Rs 6.7 billion. The committee was further informed that the receivables of Steel Mills from National Highway Authority was Rs 39 million on account of supply and erection of metal beam guard rail barriers on Lahore-Islamabad Motorway Project in November 1993. The committee directed the NHA to pay the outstanding dues to the Steel Mills.