Financial irregularity in army milk purchases
Auditor General's office unearths glaring instances of financial irregularity in armed forces' accounts.
ISLAMABAD:
The office of Auditor General of Pakistan has unearthed a glaring instance of financial irregularity in the accounts of the armed forces relating to milk purchases.
In one of the audit paragraphs, auditors stated that Quarter Master General (QMG) – the army’s purchase department - purchased local fresh milk worth Rs678 million without getting prior sanction from the government which is a violation of rules as according to rule-5 of ‘Finance Regulations Volume-1, 1986,’ – the set of rules and regulations concerning the army’s financial matters - all defence expenditures should be sanctioned by the ministry of defence and its subordinate authorities.
The defence ministry had allowed QMG to make purchases worth Rs7.5 million in 2000 and later in a letter dated February 23, 2008, the ministry increased this limit to Rs13.5 million. Any purchase worth more than this amount therefore needed prior approval from the ministry of defence.
QMG in its accounts showed that during 2006-07 it purchased 16.5 million litres of fresh milk locally at a cost of Rs327 million while during 2007-08, it spent Rs351 million more on the purchase of 15.9 million litres of fresh milk.
The audit report is silent on this aspect for reasons best known to the AGP office. However, it looked into the legal aspect of the issue and pointed out that these purchases were much larger than the prescribed limits, terming it a glaring irregularity. The auditor’s report also says that when pointed out, the authorities concerned replied that they would get the required sanction from the ministry of defence “later”. But ex-post-facto sanctioning was still awaited till the report was finalised, the office of AGP said.
It is commonly believed that civilian institutions rarely follow the official ‘public procurement rules’ but the office of auditor general of Pakistan had last year revealed financial irregularities worth Rs2.5 billion in the Pakistan Army’s accounts too. During financial year 2008-09, an amount of Rs308.9 billion was initially allocated in the budget for defence-related expenditures which was later increased to Rs332.5 billion because of revision in pay scales, increase in the price of dry ration and revision in the ‘ration scale of army officials to bring them on a par with other services.’
The directorate general audit defence services (north and south) carried out an audit of only 167 of 3,579 formations of the defence division and 25 of 44 productions and procurement agencies of defence production division on test check basis during July to October 2009.
The office of the AGP, in its annual report for 2009-10, revealed irregularities worth Rs404 million while reviewing the record of the Pakistan Navy as well. The audit department pointed out that the Navy’s division made 1,564 local purchases, each worth Rs100,000 during 2008-2009 without any tendering or obtaining competitive prices. The Navy spent an amount of Rs404.6 million on the purchases of goods such as tiles, carpets, photocopiers, computers, paint etc, none of which were needed on an urgent basis. The auditors in their report say that “besides the nature of items/articles were self-explanatory that no urgency was involved in the same. In addition, most of these items were neither included in the warrant of the stores of the Naval Stores Depot nor the procurement of such items like carpet, paint, tiles etc were responsibility of Naval Store Depot.”
Rule-0201 of ‘Financial Regulations of Pakistan Navy 1993’ – the book of rules governing the navy’s financial matters - states that “open tender system i.e. invitation to tender by public advertisement should be used as a general rule and must be adopted in all cases in which the estimated value of the tenders to be received is Rs 40,000 or over.” Once the tenders are invited the “government, on recommendations of warrant of stores committee will approve these.” The rule book further says that the approval of concerned authorities is imperative in such cases.
Contrary to this, when the financial irregularities were pointed out in November 2009, the department concerned in its reply, as reported by the audit report, said, “It is not in the public interest to call for tenders through advertisement.”
The audit report said when the auditors approached the departmental accounts committee of the Pakistan navy which took up the matter in its meeting on January 11, 2010 but there was no progress on the issue till the report was finalised in June this year.
Published in The Express Tribune, October 11th, 2010.
The office of Auditor General of Pakistan has unearthed a glaring instance of financial irregularity in the accounts of the armed forces relating to milk purchases.
In one of the audit paragraphs, auditors stated that Quarter Master General (QMG) – the army’s purchase department - purchased local fresh milk worth Rs678 million without getting prior sanction from the government which is a violation of rules as according to rule-5 of ‘Finance Regulations Volume-1, 1986,’ – the set of rules and regulations concerning the army’s financial matters - all defence expenditures should be sanctioned by the ministry of defence and its subordinate authorities.
The defence ministry had allowed QMG to make purchases worth Rs7.5 million in 2000 and later in a letter dated February 23, 2008, the ministry increased this limit to Rs13.5 million. Any purchase worth more than this amount therefore needed prior approval from the ministry of defence.
QMG in its accounts showed that during 2006-07 it purchased 16.5 million litres of fresh milk locally at a cost of Rs327 million while during 2007-08, it spent Rs351 million more on the purchase of 15.9 million litres of fresh milk.
The audit report is silent on this aspect for reasons best known to the AGP office. However, it looked into the legal aspect of the issue and pointed out that these purchases were much larger than the prescribed limits, terming it a glaring irregularity. The auditor’s report also says that when pointed out, the authorities concerned replied that they would get the required sanction from the ministry of defence “later”. But ex-post-facto sanctioning was still awaited till the report was finalised, the office of AGP said.
It is commonly believed that civilian institutions rarely follow the official ‘public procurement rules’ but the office of auditor general of Pakistan had last year revealed financial irregularities worth Rs2.5 billion in the Pakistan Army’s accounts too. During financial year 2008-09, an amount of Rs308.9 billion was initially allocated in the budget for defence-related expenditures which was later increased to Rs332.5 billion because of revision in pay scales, increase in the price of dry ration and revision in the ‘ration scale of army officials to bring them on a par with other services.’
The directorate general audit defence services (north and south) carried out an audit of only 167 of 3,579 formations of the defence division and 25 of 44 productions and procurement agencies of defence production division on test check basis during July to October 2009.
The office of the AGP, in its annual report for 2009-10, revealed irregularities worth Rs404 million while reviewing the record of the Pakistan Navy as well. The audit department pointed out that the Navy’s division made 1,564 local purchases, each worth Rs100,000 during 2008-2009 without any tendering or obtaining competitive prices. The Navy spent an amount of Rs404.6 million on the purchases of goods such as tiles, carpets, photocopiers, computers, paint etc, none of which were needed on an urgent basis. The auditors in their report say that “besides the nature of items/articles were self-explanatory that no urgency was involved in the same. In addition, most of these items were neither included in the warrant of the stores of the Naval Stores Depot nor the procurement of such items like carpet, paint, tiles etc were responsibility of Naval Store Depot.”
Rule-0201 of ‘Financial Regulations of Pakistan Navy 1993’ – the book of rules governing the navy’s financial matters - states that “open tender system i.e. invitation to tender by public advertisement should be used as a general rule and must be adopted in all cases in which the estimated value of the tenders to be received is Rs 40,000 or over.” Once the tenders are invited the “government, on recommendations of warrant of stores committee will approve these.” The rule book further says that the approval of concerned authorities is imperative in such cases.
Contrary to this, when the financial irregularities were pointed out in November 2009, the department concerned in its reply, as reported by the audit report, said, “It is not in the public interest to call for tenders through advertisement.”
The audit report said when the auditors approached the departmental accounts committee of the Pakistan navy which took up the matter in its meeting on January 11, 2010 but there was no progress on the issue till the report was finalised in June this year.
Published in The Express Tribune, October 11th, 2010.