CDA invested billions without open competition
Authority okayed marquees on land meant for motel violating master plan
Authority okayed marquees on land meant for motel violating master plan. PHOTO: FILE
ISLAMABAD:
The Auditor General of Pakistan (AGP) has pointed out irregularities worth Rs5 billion the Treasury Division of Capital Development Authority (CDA).
The report found that the authority had opened different types of bank accounts in as many as 38 commercial banks at different rates of profit ranging from 3.85 per cent to 7.5 per cent, investing Rs5.02 billion in them. However, some ‘unauthorised’ accounts had been opened without open competition.
The AGP’s report reveals that as per the decision of the CDA Board, the CDA Treasury Division was supposed to undertake trading and investment activities under various limits and parameters as per the approved investment policy of 2007. Any activity which was not covered in the policy would be brought to the notice of the CDA’s board for approval.
The approved investment policy would be passed on to the treasury division by the CDA investment committee which will meet once a month to review functions of the treasury division of CDA. Moreover, all investment activities at the treasury division would be reported through daily activity report to the financial advisor, director audit and account CDA for audit purposes.
The audit noted that the treasury division had opened different types of bank account in 38 commercial banks at different rates of profit ranging from 3.8 to 7.5 per cent. The statement of bank balances certified by the head of treasury showed balances of Rs5.022 billion on June 30, 2015.
The audit observed that while investment was made in different banks at different rates of profit through open competition, some investments in Habib Bank and National Bank were made at low rates of five per cent which were not reviewed in the meetings of the investment committee.
Moreover, the meeting of the investment committee had not been held for last two years - as confirmed by the head of treasury.
The audit maintained that the irregularity was due to the inadequate mechanism of enforcing relevant rules and regulations and the internal and financial control system.
Further, the report pointed out the irregularity in May 2016, but the CDA did not reply, nor was the matter discussed in the Departmental Accounts Committee meeting despite repeated requests made by the auditor general from October 2016 to January 2017.
The AGP report recommended that banks accounts be maintained for best value of money and investments be made in accordance with the approved policy.
Moreover, the auditor general noted that authority had to suffer losses worth Rs3.339 billion due to the post-allotment amendment in plot 5 (New No.3) on Club Road in Islamabad.
The AGP report further revealed that a plot was allotted on lease to Travelodge Ltd on May 27, 1974, measuring 1,000 square yards at a rate of Rs20,000 per square yard for setting up and running a single storied motel.
The auditor observed that later on, the lessee requested to temporarily build two marquees measuring 72,076 square feet of covered area. CDA approved the move on June 13, 2013, in violation of the city’s master plan and a nonconforming use in violation of allotment conditions.
The report maintained that the allotment of the plot should have been cancelled and auctioned for proper use apart from earning revenue in the shape of fresh allotment at current market rates.
By not doing that, the CDA caused the exchequer a loss of Rs3.339 billion.
The report adds that the audit had pointed out the loss in August 2016.
The AGP report recommended action against those responsible in addition to adopting measures which would ensure that no post-allotment amendments are made against authority’s interest.
Published in The Express Tribune, August 26th, 2017.
The Auditor General of Pakistan (AGP) has pointed out irregularities worth Rs5 billion the Treasury Division of Capital Development Authority (CDA).
The report found that the authority had opened different types of bank accounts in as many as 38 commercial banks at different rates of profit ranging from 3.85 per cent to 7.5 per cent, investing Rs5.02 billion in them. However, some ‘unauthorised’ accounts had been opened without open competition.
The AGP’s report reveals that as per the decision of the CDA Board, the CDA Treasury Division was supposed to undertake trading and investment activities under various limits and parameters as per the approved investment policy of 2007. Any activity which was not covered in the policy would be brought to the notice of the CDA’s board for approval.
The approved investment policy would be passed on to the treasury division by the CDA investment committee which will meet once a month to review functions of the treasury division of CDA. Moreover, all investment activities at the treasury division would be reported through daily activity report to the financial advisor, director audit and account CDA for audit purposes.
The audit noted that the treasury division had opened different types of bank account in 38 commercial banks at different rates of profit ranging from 3.8 to 7.5 per cent. The statement of bank balances certified by the head of treasury showed balances of Rs5.022 billion on June 30, 2015.
The audit observed that while investment was made in different banks at different rates of profit through open competition, some investments in Habib Bank and National Bank were made at low rates of five per cent which were not reviewed in the meetings of the investment committee.
Moreover, the meeting of the investment committee had not been held for last two years - as confirmed by the head of treasury.
The audit maintained that the irregularity was due to the inadequate mechanism of enforcing relevant rules and regulations and the internal and financial control system.
Further, the report pointed out the irregularity in May 2016, but the CDA did not reply, nor was the matter discussed in the Departmental Accounts Committee meeting despite repeated requests made by the auditor general from October 2016 to January 2017.
The AGP report recommended that banks accounts be maintained for best value of money and investments be made in accordance with the approved policy.
Moreover, the auditor general noted that authority had to suffer losses worth Rs3.339 billion due to the post-allotment amendment in plot 5 (New No.3) on Club Road in Islamabad.
The AGP report further revealed that a plot was allotted on lease to Travelodge Ltd on May 27, 1974, measuring 1,000 square yards at a rate of Rs20,000 per square yard for setting up and running a single storied motel.
The auditor observed that later on, the lessee requested to temporarily build two marquees measuring 72,076 square feet of covered area. CDA approved the move on June 13, 2013, in violation of the city’s master plan and a nonconforming use in violation of allotment conditions.
The report maintained that the allotment of the plot should have been cancelled and auctioned for proper use apart from earning revenue in the shape of fresh allotment at current market rates.
By not doing that, the CDA caused the exchequer a loss of Rs3.339 billion.
The report adds that the audit had pointed out the loss in August 2016.
The AGP report recommended action against those responsible in addition to adopting measures which would ensure that no post-allotment amendments are made against authority’s interest.
Published in The Express Tribune, August 26th, 2017.