General misconduct

Two top army generals found involved in yet another multi-million-rupee scam in the National Logistics Cell.

ISLAMABAD: Two top army generals have been found involved in yet another multi-million-rupee scam in the National Logistics Cell (NLC) after it was disclosed in a Public Accounts Committee (PAC) meeting on Tuesday that the pair had quietly given a loan of Rs75 million to a defunct private power company without any guarantees. The company never returned the money.

The non-performing loan was given to the private party when the NLC itself had borrowed a loan of Rs4.7 billion from banks and was paying a considerable amount as mark-up on this huge commercial loan.

The PAC members were left in a state of shock as they were regaled with the revelation that 88 vehicles, including 7 luxury Prado vehicles – each costing millions – were imported duty-free by NLC’s top guns by using fake certificates testifying that they were being imported for “defence purposes”. This was not the case and the imported vehicles are now in the use of junior officers, mostly from the army.

The PAC is already seized with a Rs4 billion scam in the NLC involving three military officers who were found guilty of making investment in the nation’s volatile bourses after borrowing cash from the banks on commercial mark-up which they eventually lost. The three army generals had invested Rs1.8 billion in the stock market after borrowing the money from banks and lost it. The money was borrowed and invested in the bourses despite orders by the then prime minister Shaukat Aziz not to throw money in the capital market.

Now this is the second scam involving two army officers who caused a loss of Rs75 million by giving a loan to a private party without seeking any guarantees.

General Junaid, a top officer of the NLC, who appeared before the committee candidly admitted that what was done by his predecessors was not defendable, as wrong decisions were taken and he did not have any excuse to justify them.

After coming to know about the sorry state of affairs in the NLC, Chaudhry Nisar Ali Khan, the PAC Chairman, observed that the once a profitable  organisation had finally got bankrupt – thanks to those individual army officers who were tasked to run the NLC during the Musharraf regime and they simply played havoc with its financial health.

These two army generals (now both retired) – Lt-Gen Muhammad Afzal and Maj-Gen Khalid Zaheer Akhtar – were held responsible by the auditor general and the planning division for a new financial scam at the NLC. During the course of audit it transpired that both had surprisingly given a loan of Rs75 million from the NLC account to the private party without taking any guarantees. The party has now refused to return the loan.

NLC’s Chief Financial Officer Saeedur Rehman was also held responsible for the scam. He is now working as Capital Development Authority (CDA)’s financial adviser in Islamabad upon his retirement from the NLC.

The matter came to light after the Auditor-General of Pakistan brought it to the notice of the PAC that the NLC, in clear violation of rules and regulations, had started acting as a commercial bank after it gave loan to the Japan Power Generation Limited (JPGL) which was payable by December 31, 2007. But the loan was not paid to-date.

The PAC meeting presided over by Chaudhry Nisar Ali Khan was attended by Khwaja Asif, Sardar Bahadur Khan Sehar, Nadeem Afzal Chann, Sardar Ayaz Sadiq, Zahid Hamid, Riyaz Pirzada, Yasmin Rehman and others to discuss the audit report of NLC. Secretary planning division Ashraf Hayat appeared before the committee along with the top guns of NLC to explain their department’s position before the committee.

The committee was informed that the loan to JPGL was sanctioned by DG NLC Maj-Gen Khalid Zaheer, although he did not have any powers to approve such a loan for any private company from the accounts of NLC.

Khan was unable to digest the shocking news that two army officers doled out a loan from NLC accounts when the orgnisation itself had borrowed Rs4.7billion from banks. He said the NLC had gone bankrupt but hastened to correct himself by saying that actually it had hit rock bottom as bankruptcy was a small word. “But we should not blame the army as an institution for such kind of scams by the uniformed men,” he remarked, adding that “we should treat them as acts of some individuals”.

When the PAC members asked whether any guarantees were sought from the JPGL at the time of sanctioning the loan, it was disclosed that not even personal guarantees were sought.

When MNA Nadeem Afzal Chann asked the secretary planning to tell the committee where those army generals were now serving after landing the NLC into financial difficulties, he was informed that both were enjoying retired life. Sardar Ayaz proposed that the loan should not be written off as the defunct company might one day be revived and the NLC might get its loan back from its borrowers.

General Junaid however confessed that in the past things were done in the greater interest of the NLC. He said the NLC had bought shares from the Japan Power Company but the company did not start work when it developed some problem with Wapda on tariff issue. The Japan Power Company had gone into arbitration against Wapda abroad and it had informed the NLC when it managed to get Rs4billon claim from Wapda, it would return the NLC loan. He, however, said a sum of Rs 6million was recovered from the company and efforts would continue to recover the rest of the stuck-up loan.

General Junaid said he was not in a position to offer any excuse to defend the loan given to the private company when the NLC itself had borrowed Rs4.7 billon from the banks on commercial mark-up.

“I can only wish that Japan company wins the case of Rs4 billion against Wapda in a foreign country so we can get our loan of Rs75 millon back”, General Junaid remarked.

Published in The Express Tribune, November 3^rd, 2010.