Public Accounts Committee (PAC) on Tuesday directed Ministry of National Food Security +ACY- Research to conduct an inquiry into embezzlement of Rs 62 million in 2012-13 by managing director Pakistan Agricultural Storage and Services Corporation (PASSCO).
The committee met here under the chairmanship of Khursheed Ahmed Shah to review and discuss audit paras of Ministry of National Food Security and its attached departments.
The meeting was informed by the audit department over the significant financial losses caused to national kitty due to an agreement for procurement of 3,360,000 polypropylene bags at the rate of Rs 27.95 per bag (total value Rs 93.91 million), which was executed with M/s Millennium Industries (Pvt) Ltd on March 14, 2013 by the then MD PASSCO Major General Tauqeer Ahmed.
The committee directed the officials concerned to conduct a thorough inquiry into the matter and present it before the committee in its next meeting. The panel further directed the secretary Ministry NFS+ACY-R to also inform the relevant military authorities regarding the issue after probing the matter and ensure proper action against the former managing director PASSCO.
Officials of Auditor General of Pakistan told the committee that as per inspection report of PSCIR lab dated May 02, 2013, the supplier provided bags with two major deviations from the specification ie recycled material instead of virgin was used and its weight was 104.59 grams instead of 115 grams. The field wing did not raise any indent for procurement of bags and same were procured on the order of the managing director without observing PPRA Rules, they added.
The quantity of 2,236,423 bags was lying unfilled as on November 7, 2013, resulting in blockage of funds of Rs 62.51 million. The matter was reported to management on January 2, 2014. A departmental accounts committee (DAC) in its meeting held on January 31, 2014 directed the management to investigate, prima facie, excess purchase and acceptance of bags below specification. Further progress was not reported till finalisation of the report.
Managing Director PASSCO, Muhammad Khan Khichi responding to the aforementioned audit paras sated that the entity in 2013 awarded a contract to M/s Millennium Industries Pvt Ltd for supply of 3,360 bales (containing 1,000 bags each) of polypropylene bags. The party supplied 1,610 bales of polypropylene bags up to 20.04.2013. Stock was accepted at mill site after lab report (PSQCA Karachi) and dispatched to field locations. Cancellation of letter +ACM- 6911 dated 30-05-2013 was approved by the competent authority managing director PASSCO. Samples drawn at receiving end were also forwarded to the PCSIR for confirmatory lab test.
Results were received on 02.05.2013 with following two major deviations from specification ie polypropylene material was not virgin and presence of re-cycle material was confirmed as well as weight of the bag was 104.59 gm instead of 115 gm ( 5 per cent). The MD called on the party on 16.05.2013 to negotiate and resolve the dispute. Decision was made to reduce the price at the rate of 2 per cent of already supplied quantity of 1,610 bales. Party supplied another 1,409 bales from remaining quantity of 1,750 bales, managing director PASSCO again called on the party and after negotiation on 31-05-2015 imposed 2 per cent price deduction.
It is added that the carried over stock as on 31-03-2013 was 307 bales and 3,019 bales (PP Bags) were purchased in 2013 at the rate of Rs 27.95 each bag+ADs- whereas the government of Punjab rate was Rs 28.85 for each bag. Total stock of bags was 3,326 bales+ADs- the following quantity of PP bags had been consumed during 2014 +ACY- 2015 procurement, leaving a balance quantity of 154, as per detail given hereunder.
The PASSCO management apprised the DAC that in compliance with the DAC directives dated 17 +ACY- 24.11.2014 an inquiry board was constituted vide ministry letter dated 17.03.2016, which was later revised on 15.04.2016. The DAC showed its concern upon such delayed action and directed the management to ensure early completion of the inquiry and inform the ministry and audit accordingly.
The PASSCO management has furnished inquiry report vide letter dated 02.02.2017. As per inquiry, the defective material was supplied by M/s Millennium Industries. The PASSCO administration did not invoke the clause-2 of the terms and conditions of the contract, but the seller was negotiated by the then MD- PASSCO and downward price was reduced by 2 per cent and allowed to the M/s Millennium Industries to supply the remaining PP bags.
The PAC while reviewing the audit paras of Ministry of Inter-Provincial Co-ordination (IPC) was informed by the audit officials that Pakistan Sports Board (PSB) in 2012-13 had illegally granted Rs 112 million for technical sanctions of three developmental schemes without involving the third party.
The audit officials stated that the department has no objection over the work, but the objections have been raised over the illegal process. The PAC directed the PSB to devise a comprehensive set of rules on the subject within three months and present them before the panel.
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