PAC unearths bogus paperwork in funds transfer

Illegal activity going on for the last many years

ISLAMABAD: The Public Accounts Committee on Wednesday barred the government from releasing budget after May 15 of every fiscal year after shocking disclosures that the ministries – with the consent of the finance secretary – were illegally transferring budget to non-lapsable accounts through bogus paperwork.

The illegal activity of transferring taxpayers’ money from a lapsable account to a non-lapsable account through bogus paperwork has been going on for the last many years.

“The move aimed at funding schemes submitted by politicians,” admitted Housing and Works Secretary Babar Hassan Bharwana before the PAC.

“The Ministry of Housing and Works illegally transferred Rs4.9 billion alone from a lapsable government account to a non-lapsable account during FY 2012-13, 2015-16 and 2016-17, through bogus documents,” Maqbool Ahmad Gondal, Director General Federal Audit Works told the PAC.



The Deputy Financial Adviser of the Finance Ministry also confessed before the PAC that the federal finance secretary was in the knowledge of this illegal activity and the funds were transferred with his consent in fiscal year 2015-16.

To fund the schemes in the constituency of Capitan (retd) Muhammad Safdar – the son-in-law of former prime minister Nawaz Sharif – the housing ministry transferred the funds to non-lapsable accounts during FY 2015-16.

However, Rs132 million against four schemes in Captain Safdar’s constituency could not be transferred and were lapsed.

According to the Financial Rules, the budget approved by parliament goes to the Personal Ledger Account–I (PLA-I) of the respective ministries and departments. The surplus money that is deposited in PLA-I has to be returned to the treasury before the close of the fiscal year.

There is another account, PLA-IV, which is only meant for keeping money of gratuity and pension. The money that is in the PLA-IV can be retained even after the close of the fiscal year, which ends on June 30 every year.

“Instead of surrendering the surplus funds issued for development projects to the treasury, the ministries were transferring the budget to PLA-IV by doing fake paperwork and issuing fake cheques,” said Maqbool Gondal.

He said from the PLA-IV the money was paid to the contractors through ‘private chits’ in order to defeat the government accounting systems.



“The finance ministry should not release the funds after May 15 of every fiscal year, and if it does release the funds, then this will be the personal responsibility of the finance secretary,” directed PAC chairman Syed Khursheed Shah. The PAC also summoned the incumbent finance secretary in the next meeting for an explanation.
The deputy financial adviser disclosed before the PAC that the finance secretary personally cleared the files to transfer the funds from lapsable to non-lapsable accounts.

In FY2015-16, the finance secretary was Dr Waqar Masood and from January 2017 to 18 June 2017, the slot was occupied by the incumbent State Bank of Pakistan Governor Tariq Bajwa.

“Ethically, principally and constitutionally, it was wrong to transfer funds to non-lapsable accounts,” confessed Housing Secretary Barwana.

“The ministry was transferring the funds to PLA-IV, which were released in May or June or could not be utilised before the close of the fiscal year,” said the housing secretary.

He said that the finance ministry released Rs791 million out of Rs912 million in June. This effectively gave no time for spending on the ground.

But he also blamed powerful politicians for this illegal exercise. Influential people forced contractors and government officials to make sure that the funds did not lapse even after the close of the fiscal year, said the secretary.

But the PAC chairman said that the secretary should have written on the files that the funds cannot be transferred to non-lapsable accounts. The housing secretary also did not take any action against those officers who were involved in this illegal practice, he added.

The activity of funding politicians’ schemes ahead of the next general elections was in full swing and the rules were again flouted to release the funds, said sources in the planning ministry.

PAC member Ashiq Gopang disclosed that the Housing and Works Ministry has rewarded such officials instead of taking punitive action against them.