The Auditor General of Pakistan (AGP) has recommended the government to conduct detailed investigations by National Accountability Bureau (NAB) or Federal Investigating Agency (FIA) to ascertain the position of donations received by Earthquake Reconstruction and Rehabilitation Authority (ERRA) during the period of 2005 to 2015.
The AGP in its special audit report titled "Special audit of the international and national funds received for rehabilitation of 2005 earthquake affectees for the period of 2005-15 of ERRA" has pointed out serious irregularities and mismanagement in the functioning of authority.
Para 3.2 of ERRA Operational Manual states, "All money consisting grant, loans, credit and donations received by the government and its contributions meant for reconstruction and rehabilitation activity in the earthquake affected areas, shall be deposited in the federal consolidated fund with the State Bank of Pakistan (SBP)."
Para 26 of the Accounting Procedure of ERRA states that the receipts, if any, generated by the Authority shall be the receipts of the government and shall be deposited in the Government treasury. During a departmental Accounts Committee (DAC) meeting held on December 27, 2013, it was observed that ERRA spent an amount of Rs 715 million in excess of their allocated budget.
Audit issued requisition enquiring the details of national and international donations received by ERRA since inception. In response, the ERRA vide letter F No 2-87/ERRA/Fin Special AudiiJ2O 15-16/1546, dated November 27, 2015, showed the information regarding donations as "nil". The same status was reconfirmed by ERRA vide letter, dated December 16, 2015.
Audit is of the opinion that this is in contradiction with stance of ERRA already adopted during previous DAC meeting, that during certification audit for the year 2012-13 it was observed that ERRA expended an amount of Rs 715 million in excess of their allocated budget.
Audit contends that the current viewpoint of ERRA negates their present stance that they have not received any kind of international and national donations directly. From the above it is quite evident that ERRA is concealing facts from audit as well as parliamentary authorities. Audit is of the view that acceptance of donation direct from different sources was in violation of rules and procedures.
Audit is also of the view that details of such donations (cash and kind) be provided to audit for verification and the same may be reconciled with AGPR and EAD. The special audit report said that ERRA was unable to effectively utilize the available funds as the cash inflows remained always higher as compared to cash outflows.
The AGP observed that ERRA was unable to efficiently utilize the available cash as the cash inflow was always higher as compared to the cash outflow. Thus the repeated contention of ERRA of being under financial constraints comes in contrast with the reality.
The management of ERRA transferred the unspent portion of the funds provided to them, into personal ledger deposit (PLD) account while treating it as expenditure, and gave an impression that the authority was utilizing the available funds.
Audit observed that in reality these funds remained in their PLD account and were not spent on development work, which clearly shows that every year the cash inflows far exceeded the outflows, in spite of erroneous/wrong booking of transfers into PLD as expenses. Audit is of the opinion that ERRA management transferred the year-end available lapsable fund to non-lapsable account to avoid surrender of the funds back to Federal Consolidated Fund.
The matter was pointed out to management on 22.07.2016 and the ERRA management stated that the same para was raised in AR 2011-12 and the management requested to delete the para from special audit. The reply of management was not tenable as the matter is still outstanding because no remedial action has been taken by the management. Audit recommends that the matter may be investigated and responsibility be fixed on the person(s) at fault under intimation to audit.
The management in its reply stated that Finance Division allowed opening a separate bank account for receiving donations from the individual donors. Later on, ERRA fund was established in November 2012 with the approval of Finance Division & in said A/c no donations have been received and same position was conveyed to Audit.
The reply of the management is not acceptable because, during DAC meeting on December 27, 2013, ERRA management had accepted that differential figures were met from the extra budgetary receipts and opening balances, which comprises the amounts of donations.
The audit report also said that ERRA failed to complete 14,512 projects over the past 10 years in earthquake-hit areas. The report said that due to weak monitoring and feedback mechanism, the government of Pakistan funded projects are lagging behind and not received the required focused attention of the ERRA management. Out of 9,671 government-funded projects, only 5,362 projects were completed during the period while 2,272 are under construction and 1,580 are other projects.
The report said that government of Pakistan over the years provided over Rs 168 billions to ERRA of which Rs 102 billion were from government accounts and Rs 66 billion were foreign aid for the completion of various projects but ERRA management didn't utilize provided funds in a proper manner which resulted in delayed completion of projects.
The report said that progress on donor funded projects remained outstanding as out of 1,139 projects, 1,048 projects have been completed, while 72 donor-funded projects are under construction and only 2 percent of the projects are incomplete. The report said that out of 3,702 sponsor-funded projects, 3,586 have been completed while 46 projects are under construction and 70 sponsor-funded projects are incomplete.
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