PAC seeks report from NAB: FEB&GIF makes over Rs 2.7 billion irregular investment

Public Accounts Committee (PAC) has sought a report from the National Accountability Bureau (NAB) over Rs 2.7 billion irregular and unauthorised investment by Federal Employees Benevolent & Group Insurance Funds (FEB&GIF) in non-government shares.
Syed Khurshid Shah chaired the meeting of PAC which examined the Establishment Division's audit report for year 2013-14. The audit officials pointed out that the management of FEB&GIF invested Rs 2.7 billion in non-government shares and Terms Finance Certificates (TFCs) without approval from the federal government. The investment decision was not prudent as well as did not come under jurisdiction of the FEB&GIF board, they maintained.
Audit officials maintained that the Fund had to bear a loss of Rs 2.7 billion by not following the guidelines and safeguards formulated by Ministry of Finance in 2003. In guidelines, Ministry of Finance states that the corporate entities which are holding trust funds such as pension funds, benevolent funds or insurance funds shall not invest their surplus funds in the non-government or TFCs. Contrary to this, the management of FEB&GIF invested funds in non-government shares.
Khurshid Shah alleged that it was double standards of the NAB while dealing with EOBI and FEB&GIF. In case of EOBI, he argued those who had invested Rs 20 billion were facing jail but in FEB&GIF case, the NAB did not say a word so far. MD Shabbir Ahmad said that the Rs 2.7 billion investment was not prudent as it had been invested in fertiliser sector which faced problems in 2009. Successive management had seen the possibility of foul play and referred the case to the NAB.
Member Committee Arif Alvi argued that it seemed massive kickbacks were involved in such huge investment by violating the government's guidelines. Chairman committee said that it was a fraudulence case and directed the officials of NAB to bring details of the case in next meeting.The committee was further informed that some of the investment was made in Pace Pakistan Limited. However, an amount of Rs 31.7 million was credited in FEB&GIF account as profit for the period August 15, 2009 to February 15, 2011 and an amount of Rs 0.090 million was redeemed during the period. Due to non-payment of profit on TFC for the period February 15, 2011 to February 15, 2013, FEB&GIF had sustained a loss of Rs 37 million.
In another case, audit observed that the management of FEB&GIF paid an amount of Rs 20.4 million to 141 employees during 2012-13 as house rent allowance at 90 percent of the running basis pay instead of 45 percent of minimum of 2008 pay scales resulting in overpayment of Rs 16.2 million.
Audit is of the view that the management paid the house rent allowance at 90 percent of running basis pay without seeking approval of the federal government, which was unauthorised and resulted in overpayment. Secretary Establishment Division contended that there was no uniformity in allocation of house rent allowance by statutory bodies as EOBI also gives 90 percent on basic salaries, Civil Aviation Authority gives 80 percent and TDAP's 75 percent. Chairman Committee said that the committee would not allow spending the poor, widows and orphans money on house rents allowance on 90 percent of their basis salaries. He directed the Ministry of Finance to formulate a guideline for statutory bodies in this respect.