First audit in 10 years: Hyderabad’s govt spent budget but didn’t bother to keep records

Six per cent of the district’s budget was spent in dubious transactions.

KARACHI:

The bureaucrats who run Hyderabad, apparently, do not feel constrained by such trivial things as the law.

The report detailing the audit of the local government’s financial accounts – the first of its kind in over a decade – reveals a district administration with a remarkably cavalier attitude towards spending public money for the purpose intended, or even documenting where the money went.

All told, the government’s auditors found Rs392 million worth of dubious transactions, amounting to over 6% of the district administration’s Rs6.5 billion budget for fiscal year 2011. This amount does not include any bribes or other kickbacks government officials may have received in order to engage in corrupt practises.

The biggest culprits appear to be the roads department, which not only awarded contracts in violation of the law, but also felt no compulsion to keep track of the money they spent, and did not bother answering the auditors’ questions when asked about it. For instance, the Roads District Officer awarded Rs41 million worth of road construction contracts, after having sought only the approval of the Works and Services Executive District Officer (EDO), who was not authorised to grant that approval.

But the scandal did not stop there. The same official advanced Rs10 million to a Town Municipal Authority administrator, and a project director at the Hyderabad Development Authority. Auditors found no record of why this money was transferred or where it was spent.

The health department, meanwhile, managed to purchase about Rs77 million worth of medicine without the legally required drug testing laboratory report. The Health EDO claimed that such a test had been conducted, but never produced evidence to corroborate such a claim.

The Sindh government has tried to ensure that the money it allocates local government is better spent. About 25% of the development budget – Rs173 million for Hyderabad in fiscal 2011 – was meant to be spent at the recommendation of something called the Citizen Community Board, a group comprising ordinary citizens appointed to identify development projects needed in their neighbourhoods.

But the bureaucrats in Hyderabad managed to find a way to get around this constraint: they decided not to spend that amount at all. A quarter of the city’s development budget was simply not spent.

The lack of spending, however, is far from the most troubling practice of the district administration. The government’s auditors found that the District Officers for buildings, roads and education works collected all sorts of taxes – income tax, sales tax, professional tax, etc – worth about Rs74 million, but never deposited that money into any government account.

Meanwhile, even as they collected taxes that simply disappeared, officials from these same three departments kept spending money without documenting where it went. The education works department, which is meant to construct schools and colleges in the district, spent Rs733,000 on its officials, but produced absolutely no recordable reason as to why.

When they did manage to get around to documenting how they spent the money, the tale the numbers told was not pretty. On a road construction contract, the government managed to pay a contractor more than one million rupees more than was owed to him. No reason was documented for this spate of taxpayer-funded generosity and no attempt appears to have been made to recover the money. The audit department has held the District Officer (Roads) responsible for losing the money, but it is unclear what sort of punishment he may face.

The incompetence and corruption is not restricted to lower officers. It gets even worse at the higher levels of the district administration. The Hyderabad administrator, for instance, did not give back Rs36 million from the district’s budget that was not spent. There is no record of about Rs10 million that he supposedly spent on the city. The administrator also gave the Hyderabad Press Club a grant of Rs800,000, but there is no record of when or why this decision was made.

Published in The Express Tribune, August 15^th, 2012.