ISLAMABAD:
In yet another case of misuse of foreign funds borrowed to give small loans to the poorest, a partner organisation of the Pakistan Poverty Alleviation Fund (PPAF) has invested Rs403 million in lucrative businesses.
Asasah, a Lahore-based microfinance institution, allegedly in connivance with PPAF officials made big fortunes by pumping money into some businesses, though the amount was received for extending small loans to the poor.
The PPAF has also acknowledged that Asasah has misused its funds. However, it has so far not taken any action against the officials responsible for the misconduct. It has also not initiated any proceedings against Asasah.
The federal government borrows from the World Bank and gives the money to the PPAF as a grant aimed at disbursing small loans to the poor. The money that the PPAF gets in grants or loans is given to its partner organisations at interest rates in the range of 8% to 10%. These organisations then lend to the poor at an average interest rate of 20%.
Asasah was among the partner organisations that got funds for distribution among the poor but invested in businesses. The PPAF said it had provided Rs403 million to Asasah.
According to documents available with The Express Tribune, the PPAF also provided guarantees to a private bank for extending Rs52.1 million worth of multiple credit facilities to Asasah.
Asasah defaulted on this loan and the bank served a final notice on the PPAF on September 18, giving it seven-day time to repay the amount, otherwise it would be deducted from the PPAF accounts, showed the documents.
It is not for the first time that funds meant for the poor have been misused by the partner organisations due to negligence of the PPAF. Earlier, irregularities have been reported in the 31-million-euro grant for the Livelihood Support and Promotion of Small Community Infrastructure Project (Lacip) that Germany extended for small-scale schemes to be undertaken in Khyber-Pakhtunkhwa.
Sources said the Lacip chief, who was sacked for committing irregularities, had given favours to one of the top men of PPAF.
They added in the Asasah case too, the top hierarchy of the PPAF was responsible for the lapse. Group Head of Financial Service Group, Yasir Ashfaq and Group Head of Financial Management and Corporate Affairs, Amir Naeem were directly responsible.
When approached, Asasah Chief Executive Officer Tabinda Jaferry said in a written response that since July 2012, Asasah had been facing a lot of financial problems. As a result, she said, some of the major donors (PPAF among them) withdrew and Asasah faced a huge debt of Rs240 million.
Asasah then negotiated with the donors and scheduled loan repayments over a period of three years, she added. However, she neither denied nor confirmed the misuse of PPAF funds.
PPAF’s viewpoint
In its written response, the PPAF stated Asasah had an ambitious expansion plan, large operating expenses and its staff also embezzled Rs10 million worth of funds.
“Asasah also sanctioned heavy advances to vendors and made prepayments that resulted in liquidity crunch for the organisation, but it was not highlighted in the audit report,” said the PPAF.
It added that it commissioned an independent assessment of Asasah by Shorebank International, Pakistan, which highlighted issues of weak governance and internal control as well as absence of the second line of management.
All disbursements to Asasah had been suspended, the PPAF said, adding the current exposure to the organisation stood at Rs247 million against Rs403 million including Rs50 million in bank guarantees. The PPAF has already booked 1.4% of Rs247 million as non-performing loans.
“Issues pertaining to the mismanagement of funds at Asasah were highlighted in various appraisal and monitoring reports,” it pointed out.
However, it did not respond to questions about what action it took against its own officials and the Asasah management.
Published in The Express Tribune, October 17th, 2014.
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COMMENTS (6)
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@Landhi wala:
Sorry!although i am not a supporter of PML N govt, this loan was disbursed during PPP govt period...2012...how ever, such issues are not new with any of the present political status quo parties...
Each and every passing day corruption of PML-N government is being exposed. When is Pakistan going to wake up ?
I had respect for Qazi Azmat Isa when I met him in the World Bank some years back but these news items as well as an enquiry as to why he beefed up his salary 3 or 4 times has changed my mind. It seems that the PPAF is alleviating poverty but unfortunately, of a select few!
Another case of incompetence and misuse of funds. The NGO and PPAF are equally responsible The solution is heavy penalties and punishment and then publicise it.
Not a day goes by when new thugs are exposed. And they keep doing their nefarious schemes and deals and activities. Because everyone gets a cut. for their overseas accounts. All supported by the Govt. of Nawaz.
ET please say what really happened. Embezzlement by staff of PPAF and its affiliates in the funds extended by foreign donors. It is the same story in every government department right to the top. That's why we are where we are internationally.