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Corrupt practices in TCP: AGP detects losses of billions of rupees - Naveed Yaseen - 10-08-2009 05:32 AM
IQBAL MIRZA
KARACHI (October 08 2009): The Auditor-General of Pakistan (AGP) has detected losses worth billions of rupees due to corrupt practices in the Trading Corporation of Pakistan (TCP). Details of the irregularities/mismanagement have been given in the Special Audit Report-2009 (SAR) on TCP, compiled by an audit team comprising experienced auditors from the Directorate-General, Commercial Audit & Evaluation, Karachi (DGCA & E).
The AGP is now looking further into the stevedores' cartel which, according to Transparency International Pakistan (TIP), is the biggest corruption cell in TCP. TIP believes that AGP could detect at least another Rs 2 billion losses on this account.
In case corruption is found, under Public Procurement Regulatory Authority (PPRA) Rules of 'Integrity pact', these stevedores and transporters will have to pay 10 times the amount of corruption detected. According to TIP, this means that on Rs 4 billion corruption, AGP could recommend recovery up to 10 times, ie Rs 40 billion. The SAR says that the issues covered in the terms of reference were probed and further investigated.
The results of the audit scrutiny revealed some glaring facts as under:
-- Inflated transportation contract of wheat amounting to Rs 3020.780 million during 2007-08.
-- Expected loss of $10.512 million in cash foreign exchange equivalent to Rs 841 million on account of payment of demurrage on wheat carriers during wheat operations 2008-09.
-- Unjustified delivery of wheat at Gwadar port caused to extra transportation charges of Rs 1,087.582 million.
-- Loss of $1,114 million in cash foreign exchange equivalent to Rs 89.133 million on account of payment of demurrage on wheat carriers during 2007-08.
-- Loss of Rs 540 million on account of purchase of super basmati rice at inflated price.
-- Loss of Rs 222.50 million on account of purchase of super Irri-6 white rice at inflated price.
-- Unjustified changing in the tender opening date of rice and negotiations with other bidders after opening the tender (violation of PPRA Rules-2004).
-- Irregular/unjustified award of time for submission of tender documents against PPRA rules.
-- Loss of Rs 54.979 million due to import of sugar at higher rate.
-- Non-recovery of godown shortage of Rs 383.388 tons of sugar amounting to Rs 11.080 million from the custodian of TCP Pripri godown.
-- Loss of $229,240 equivalent to Rs 18.339 million due to payment of demurrage charges on imported urea.
-- Non-recovery of dispatch money from the suppliers of urea amounting to $99,281.05 million equivalent to Rs 8.042 million.
-- Loss of Rs 120.245 million due to burning of cotton bales at Rahim Yar Khan.
-- Loss due to weak security controls leading to theft of sugar from TCP godowns Rs 1,125,000.
The terms of reference related to:
COTTON: Repeated burning of cotton bales worth Rs 490 million at Rahim Yar Khan, and serious instances of irregularities of the TCP employees in recent purchase of cotton, while grading classes of cotton in field and during testing.
MANAGEMENT/SECURITY OF PIPRI GODOWNS: Large-scale theft and mixing of sand with sugar at Pipri godowns near Karachi, and irregularity in award of contract for renovation and rehabilitation of Pipri godowns.
RICE: Purchase of rice at grossly inflated prices in the last season (season starts from August).
FREIGHT/TRANSPORTATION OF COMMODITIES: Payment of $8.5 million demurrage to shippers due to incompetent TCP shipping, and inflated transpiration contracts of wheat awarded to the favourites in 2008. TIP says that stevedores' cartel comprises of 4-5 firms, who only own the handling equipment.
All of them have colluded for last many years, and whoever is awarded contract by TCP, one common person supervises the operation at KPT, PQA or Gwadar. He is authorised by all firms and given their equipment. This cartel made 300 percent of actual rates from TCP.
The supervisors have opened bank accounts in the names of five firms which are operated by them. By colluding with TCP, these supervisors got approved extra rates for ground handling of cargo at KPT and PQA and took payment from TCP at Rs 200 to Rs 350 per ton and distributed among TCP officers and supervisors Tax returns of stevedore firms would confirm that such amounts, received from TCP, have not been reported in the income tax by these firms.
Adil Gilani, Chairman of TIP, had written letters to the Chairman of TCP on January 23 and January 31 about the violation of Public Procurement Rules, 2004 in TCP procurements, and desired that all procurements in future be conducted in accordance with PPRA Rules or else TIP would withdraw from the MoU signed between TIP and TCP, and declare it through public announcement.
Since no reply has been received, TIP is likely to announce withdrawal from MoU any time. He had informed the TCP Chairman that the tender invited from enlisted firms for stevedoring & handling services for one million tons of wheat at Gwadar lacked transparency and violated Rule 15 of Public Procurement Rules 2004.
The procedure adopted by TCP is to award contracts in packages to various bidders at the lowest quoted rate. This system is known to all enlisted bidders, and is open to making a cartel. Adil pointed out that the procedure adopted by TCP in the procurement of commodities and services is against the rules and is causing colossal losses to the exchequer.
http://www.brecorder.com/index.php?id=969300