Govt, AGP at loggerheads over audit exemption of spy agency's secret funds

Published: June 28, 2018


ISLAMABAD: The federal government and the Auditor General of Pakistan (AGP) have got into a dispute over audit of multibillion rupees annual secret service fund of the Intelligence Bureau (IB), as the auditors have refused to accept the exemption certificate issued by two former finance ministers.

The official documents of the AGP office and Finance Ministry showed that Ishaq Dar and Shahid Khaqan Abbasi had given exemptions from audit to the IB – the country’s civilian spy agency.

These certificates have been issued under amended section 17 of the of the Auditor General’s (Functions, Powers and Terms and Conditions of Service) Ordinance 2001. However, the AGP Office has refused to accept these exemption certificates, showed the official documents.

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Sources said the AGP department, which works under the administrative control of the Finance Ministry, is considering challenging amendment in the AG’s Ordinance in the Supreme Court of Pakistan.

The section 17 empowers the federal government to issue the exemption certificate from the audit of the funds spent on national security purposes.

However, the AGP department is of the view that the finance minister cannot issue these certificates, and if the exemption has to be given, it should come from the federal government, which is the federal cabinet, the sources said.

The secretary finance was not available for comments. The office of the AGP is of the view that federal government can exempt secret service expenditures from the audit.

The dispute arose after former finance minister Ishaq Dar got legal powers to exempt the secret service expenditures of the Inter-Service Intelligence (ISI) and the IB from audit by amending the Auditor General’s Ordinance 2001 through Finance Act 2013.

The AGP Javaid Jehangir was of the stated view that proviso 17 inserted in the AGP’s Ordinance 2001 through Finance Act 2013 is “prima facie in conflict with the constitutional provisions and decisions of the Supreme Court”. The AGP has described proviso 17 as ultra vires of the Constitution, seeking its removal from the AG law.

In its 2013 judgment in Hamid Mir and Absar Alam versus federation of Pakistan case, the SC had declared the AGP is not only authorised but also obliged to seek access to any and all records.

The judgment underlined that the AGP will have access to the record of all federal and provincial governments, as well as all entities established by or under the control of the federal and provincial governments, “regardless of the designation of such records as secret or otherwise”.

However, the court had also accepted the principle of secrecy in certain cases. It wrote in its judgment that an account subject to audit under Article 169 and 170 shall be treated as ‘secret’ only if so labeled in a federal or provincial statute and the constitutionality of such legislation will be subject to judicial review on touchstone of Article 19A, 169 and 171 and other relevant provisions.

The last two finance ministers have been giving exemption certificates to the IB but the AGP has not yet challenged the legal amendment in the Supreme Court.

“The department of the AGP has again asked the attorney general to review its position on the audit of IB funds, as we cannot accept restriction on our constitutional mandate,” the AGP office.

The latest certificate was issued in February this year when the then finance minister Shahid Khaqan Abbasi, exempted Rs1.93 billion secret service expenditures of the IB for last fiscal year 2016-17 from the scope of the audit, showed the Finance Ministry document. Abbasi also certified that till the last fiscal year the civilian spy agency has Rs2.3 billion in balance in its accounts.

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For fiscal year 2015-16, former finance minister Ishaq Dar had issued an exemption certificate in December 2016, exempting Rs1.8 billion secret expenditures of that year from the scope of the audit.

But an October 2017 letter of the AGP department showed that the auditors were not willing to accept these certificates and insisting upon conducting the audit.

The official record suggested that the federal government had the authority to exempt the funds from audit but these powers did not rest with finance minister. At the same time there are limitations on the AGP’s powers to seek record.

“The Auditor General can only exercise powers by or under the Act of the Parliament…. And the insertion of the proviso in the section 17 of the (AG) Ordinance curtails the powers of the Auditor General,” said the attorney general’s office in its legal opinion.

It further stated that the audit of any secret service agency containing the certification of the federal government as relating to national security is beyond the scope of the powers of the Auditor General.


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