Ministries misuse export promotion funds

The Public Accounts Committee has also been ineffective as irregularities were pointed out by the office of the AGP.

ISLAMABAD: Instead of being made available to advance exports, the export promotion fund has been misused by various ministries. The Public Accounts Committee (PAC) has also been ineffective as irregularities were pointed out by the office of the Auditor General of Pakistan (AGP). This was revealed by a member of the committee who requested anonymity.

Highlighting eight main audit objections involving Rs915.2 million, the office of the AGP made the startling discovery that the former minister for commerce, Humayun Akhtar Khan, had personally misused the export development fund and had even facilitated golf for his staff officers in Manchester from the fund. It was used for everything from playing golf to paying for ministers’ international calls to bridging the budget deficit, it has been learnt.

The export development fund is collected by levying a 0.25 per cent surcharge on all export consignments and is intended for developing projects to encourage export.

According to Secretary of Commerce Zafar Mahmood, exporters have been financing projects from their own money while the ministry of finance withheld about Rs7.1 billion from the export development fund to finance the budget.

The Director General of Federal Audit Syed Gulzar Hussain informed the PAC that the government levied the surcharge to increase exports and the fund was never meant to supplement the budget.

The AGP’s office also reported that the ministry of commerce had used Rs2.4 million from the fund to finance mobile phone bills of the former commerce minister, former chairman of the Trade Development Authority of Pakistan (TDAP) Tarik Akram and 31 grade-20 officers during their foreign tours.

The PAC failed to give a clear plan of recovery within a fixed period of time.

Nonetheless, the PAC, headed by Chaudhry Nisar Ali Khan, directed the ministry of commerce to address these irregularities with the finance ministry and issued vague recovery orders in two cases.

Khan said that the government has to stop the practice of first violating the financial rules and then regularising them from the ministry of finance.

However, in the same instance, he directed the ministry of commerce to regularise the misuse of the export development fund up to an amount of Rs162.8 million. The ministry had used this amount of the for establishing and running the Pakistan Horticulture Development and Export Board and for setting up the office of Directorate General of Trade Organisation.

Concerning this decision, Nasrul Aziz, a finance ministry official, said that using the exporters’ fund for setting up the Horticulture Board was a gross misdemeanour.

The PAC also directed the ministry to regularise the purchase of 27 vehicles out of the export market development fund and did not penalise anyone for misuse of the funds.

The auditors’ observation of an unauthorised expenditure of Rs1.48 million out of the export development funds on entertainment met the same fate, as the PAC directed the ministry to regularise the expenditure.

Another irregular expenditure of Rs50 million under the head of conducting studies for the promotion of domestic commerce was referred to the Departmental Accounts Committee, headed by the concerned secretary, to determine the extent of violation of public procurement rules.

The ministry of commerce had awarded the contract to a company by the name of Innovative Development Strategies without open and transparent bidding.

The studies were never used to formulate trade policy, thus wasting Rs50 million of the export market development funds, said the audit official.

The auditor’s office also pointed out wastage of Rs9 million in the name of a mass awareness campaign about the World Trade Organisation. The ministry itself admitted that despite paying the hefty amount to the consultants, Magnates Communication Solution, the outcome was unsatisfactory.

The instance of keeping Rs664.5 million in separate bank accounts was directed to an inter-departmental committee with instructions to report back to the PAC.

The ministry of commerce informed that the amount has been transferred back to treasury accounts.

However, the ministry could not return the interest earned on this money.

Published in The Express Tribune, September 1^st, 2010.