Passco: Audit finds evidence of irregular investments
Over Rs1.2 billion parked without inviting competitive bids
Passco management has said that it had an in-house investment committee that equipped enough to take such decisions. PHOTO: FILE
ISLAMABAD:
The Pakistan Agriculture Storage and Services Corporation (Passco) management has invested over Rs1.2 billion without inviting competitive bids, according to findings of an audit report, and chose to place funds in banks of their own choice.
The audit report for 2015-16 states that the management simply invited bids (rates) from various commercial banks of their own choice instead of placing a newspaper advertisement - in violation of the directions issued by the finance division (budget wing) - resulting in irregular investment of Rs1.281 billion.
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According to the finance division rules, it is necessary for public sector entities to use the services of professional fund managers approved by the Security and Exchange Commission of Pakistan (SECP).
According to the SECP’s regulations, the chief executives of autonomous bodies are required to issue a certificate on an annual basis that the instructions are being followed in respect of the working balance and surplus funds of the organisation.
The audit was of the view that management should have acted upon these directions. The audit report further mentions that the matter was reported to the management and ministry of National Food Security and Research (NFSR) on Nov 4, 2015 and later by the Departmental Accounts Committee of the NFSR ministry on Dec 30, 2015.
Other side
Meanwhile, Passco’s management argued that the finance division letter referred by the audit was not applicable on investment with banks in the shape of Term Deposit Receipt (TDR) or daily profit.
It further argued that Passco had an in-house investment committee which was fully equipped with Chartered Accountants, MBAs and ICMA graduates. Furthermore, Passco had issued the offer to all ‘A’ rated commercial banks as per the list of banks available on SBP’s website.
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However, the Departmental Accounts Committee did not agree with the contention of the management and directed it to seek guidance from Public Procurement Regulatory Authority (PPRA) rules on the requirement of advertisement. The audit observed that the requisite guidance was not obtained from PPRA till the finalisation of the report and recommended that the said request for guidance should be obliged.
Recovery
The audit report further noted that from 2008-15, it was found that an amount of Rs63.759 million was outstanding, awaiting recovery from Passco employees as at June 30, 2015, and the amount had been accruing for many years. This was on account of shortage of wheat and other misappropriations allegedly committed by the Passco employees.
Thus Passco funds to the tune of Rs63.759 million were blocked due to non-recoveries from respective employees. Therefore, the audit observed, Passco’s whole operation was carried out on borrowed funds and Passco pays additional mark-up on these blocked funds.
Published in The Express Tribune, October 9th, 2016.
The Pakistan Agriculture Storage and Services Corporation (Passco) management has invested over Rs1.2 billion without inviting competitive bids, according to findings of an audit report, and chose to place funds in banks of their own choice.
The audit report for 2015-16 states that the management simply invited bids (rates) from various commercial banks of their own choice instead of placing a newspaper advertisement - in violation of the directions issued by the finance division (budget wing) - resulting in irregular investment of Rs1.281 billion.
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According to the finance division rules, it is necessary for public sector entities to use the services of professional fund managers approved by the Security and Exchange Commission of Pakistan (SECP).
According to the SECP’s regulations, the chief executives of autonomous bodies are required to issue a certificate on an annual basis that the instructions are being followed in respect of the working balance and surplus funds of the organisation.
The audit was of the view that management should have acted upon these directions. The audit report further mentions that the matter was reported to the management and ministry of National Food Security and Research (NFSR) on Nov 4, 2015 and later by the Departmental Accounts Committee of the NFSR ministry on Dec 30, 2015.
Other side
Meanwhile, Passco’s management argued that the finance division letter referred by the audit was not applicable on investment with banks in the shape of Term Deposit Receipt (TDR) or daily profit.
It further argued that Passco had an in-house investment committee which was fully equipped with Chartered Accountants, MBAs and ICMA graduates. Furthermore, Passco had issued the offer to all ‘A’ rated commercial banks as per the list of banks available on SBP’s website.
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However, the Departmental Accounts Committee did not agree with the contention of the management and directed it to seek guidance from Public Procurement Regulatory Authority (PPRA) rules on the requirement of advertisement. The audit observed that the requisite guidance was not obtained from PPRA till the finalisation of the report and recommended that the said request for guidance should be obliged.
Recovery
The audit report further noted that from 2008-15, it was found that an amount of Rs63.759 million was outstanding, awaiting recovery from Passco employees as at June 30, 2015, and the amount had been accruing for many years. This was on account of shortage of wheat and other misappropriations allegedly committed by the Passco employees.
Thus Passco funds to the tune of Rs63.759 million were blocked due to non-recoveries from respective employees. Therefore, the audit observed, Passco’s whole operation was carried out on borrowed funds and Passco pays additional mark-up on these blocked funds.
Published in The Express Tribune, October 9th, 2016.