Key projects: PAC smells corruption in use of foreign funds

Members fear projects financed via Kerry-Lugar package could be subject to financial impropriety.

ISLAMABAD:

The Public Accounts Committee (PAC) on Tuesday sought a briefing from the finance ministry, among others, on foreign-funded projects, including projects financed via the US’ Kerry-Lugar civilian assistance package.

The move comes after certain members of the committee raised concerns over the possibility of corruption and a lack of transparency in the use of the funds and also a lack of oversight over how the United States Agency for International Development (USAID) spends money in the country.

Chairman PAC, Nadeem Afzal Chan, directed the federal secretaries of the Finance Ministry, the Economic Affairs Division and the Planning and Development Division to appear before the committee by next week and present a detailed briefing on all foreign-funded projects.

PAC members raised their concerns after the Deputy Auditor General of Pakistan, Tahir Saeed, disclosed that auditors were not regularly performing their task regarding foreign-funded projects. DAG Saeed said the audit office was only certifying whether the accounts were properly maintained or not. He added that the task often encountered resistance from the Economic Affairs Department and other relevant agencies who deliberately delay handing over of the required documents.

Pakistan Muslim League-Quaid’s (PML-Q) Dr Attiya Inyatullah voiced her concern over the direct withdrawal of funds by the USAID from the Kerry-Lugar package. She said the agency subsequently spends the money according to its own priorities, without any objections from the Economic Affairs Division.

Under the five-year civilian assistance package, the US has promised Pakistan $7.5 billion from 2009 to 2014. But the flow of the committed funds is far below the annual ceiling of $1.5 billion and most of the funds are provided outside government channels. This raises concerns over the transparent use of such funding and the real objectives of it, according to PAC members.

However, contradictory figures have been reported about the actual disbursements under the Kerry-Lugar package. The US Embassy has claimed that over $3.2 billion have been disbursed so far, while Pakistani authorities put the figure slightly over $2 billion. An official of the finance ministry said the government was also reluctant to count the amount of US assistance received for flood related relief activities.

“There is no record available of how and where billions of dollars are spent. We have apprehensions that massive corruption is going on in foreign-funded projects,” Noor Alam Khan of the Pakistan Peoples Party said.

The PAC also took notice of the growth of a few organisations at the expense of poor Pakistanis. PML-Q’s Riaz Fatyana raised the issue of acquiring loans at 2% interest rate by anti-poverty entities that eventually provide them at a markup of 25% to 30% to small borrowers.

DAG Saeed said that institutions like the Pakistan Poverty Alleviation Fund and Khushali Bank were borrowing money at less than 5% interest rate, but lending at 6% interest rate to other entities for subsequent lending to borrowers.

The committee also took exception to the Federal Board of Revenue (FBR) in levying taxes and changing tax rates. In his ruling on the issue PAC Chairman Chan said that taxation was parliament’s duty and the FBR could not interfere through the use of the Statutory Regulatory Orders.

Published in The Express Tribune, December 12^th, 2012.