ISLAMABAD: The Auditor General of Pakistan (AGP) has observed that the Pakistan High Commission in London put the government into a loss of Rs2,682.184 million by mishandling the Hyderabad Fund case in 2013.
In its latest audit report, the AGP observed that the Hyderabad Fund Case was dealt with by mission's management in an injudicious manner, leading to a loss of £11,232,395 in addition to losing right over the fund valued at £35 million.
The report pointed out that according to para-23 of GFR Vol-I, “every government officer should realize fully and clearly that will be held personally responsible for any loss sustained by the government through fraud or negligence on his part.”
Ministry of Foreign Affairs vide letter No. hid (I)-8/2/2016 dated 28.10.2016, conveyed to Pakistan High Commission, London, instructions of then Advisor to the Prime Minister on Foreign Affairs that the Commission should not accept the lawyers’ bills, without carefully examining of claims.
The audit observed during scrutiny of the record of the Pakistan High Commission, London for the year 2019-21, that the High Commission incurred an expenditure of £ 11,232,395 (Rs2,682,183,602) on the mishandling of Hyderabad Fund Case in 2013.
The brief study of the case revealed that the last Nizam of Hyderabad, Mir Osman Ali Khan, deposited £1 million in the UK account in 1948, held by the then Pakistan high commissioner, Habib Ibrahim Rahimtoola.
For over 70 years, the sum accrued interest and was valued at £35 million by 2013. Nizam VII sought the return of funds in 1950s, claiming that the transfer had been made without his authority but the Bank was unwilling to return the fund without the agreement of Pakistan, which had legal title to the fund.
The case reached the House of Lords, which held that the question of ownership of the fund could not be decided because of the sovereign immunity claimed by Pakistan.
In 2013, the audit further observed that Wajid Shamsul Hassan (late), the then Pakistan High Commissioner waived off Pakistan’s immunity without the consent/ prior approval of the Ministry of Foreign Affairs, by claiming a beneficial interest in the fund that opened the way for the current case to proceed.
Pakistan applied to withdraw the suit months later, but the court dismissed the plea and issued notice to Nizam's sons/ Government of India informing them about Pakistan's claim, it added.
The audit further observed that Pakistan’s lawyer Khawar Qureshi failed in establishing the point that Nizam had transferred the money in the purchase of weapons in order to resist India's attempts to forcibly annex Hyderabad.
UK High Court Judge ordered the Government of Pakistan to pay nearly £ 5.800 million in legal costs in addition to granting Nizam of Hyderabad the right over £ 35.000 million funds. Moreover, Pakistan paid £ 5.232 million in legal costs to the firm hired to defend the case, the audit further observed.
The audit observed the following irregularities during the course of sample audit: Due to injudicious claim of funds filed by the then High Commissioner, Government of Pakistan was put into loss of £ 11.032 million (£ 5.232 million to the legal firms and £ 5.800 Million as legal cost imposed by court). An amount of £ 5,800,091 was paid out of FIGOB irregularly.
It was learnt that the Government of India was ready for out-of-court settlement. This option was not availed by the mission. The criterion for selection of the lawyer/ firm to precede the court case was not made available to audit. The Ministry has approved the payment with the condition that the High Commissioner of Pakistan, London should not accept the lawyer's bills without carefully/ technically examining the lawyer's claims.
Till June 2021, the audit pointed out that about 56 invoices had been paid by Pakistan High Commission, London and the typical examination is that "the invoice has been examined and seems to be in order" and payment was released to the legal firm.
It added that the legal firm in its invoice mentioned that their lawyers reviewed the documents for so and so period and other allied staff worked for this case for this duration.
It further stated that the management of the mission released the payment as per the outputs achieved/ inputs rendered as conveyed/ claimed by the legal firm and did not develop any systematic and objective evaluation criteria to carefully examine and evaluate the law firms' bills and then process these for payment.
“Audit is of the view that the Hyderabad Fund Case has been dealt by Mission's management in injudicious manner leading to a loss of £11,232,395. In addition to losing right over the fund valuing at £ 35 million,” it added.
According to the report, the observation was discussed with the drawing and disbursing officer (DDO) and head of mission in November 2021, the management didn't render any reply. It further stated that the matter was reported to Ministry in December 2021 and ministry replied that the matter is under investigation by NAB and the relevant record is in possession of the NAB.
The departmental accounts committee (DAC) in its meeting held on January 25, 2022, directed the ministry to share the TORs of inquiry/ investigations being carried out by the NAB.
“No progress was reported till finalization of this Audit Report. Audit recommends that the updated status of inquiry by NAB be shared with the Audit to proceed further in the matter,” the audit observed.
Copyright Business Recorder, 2022
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