REFERENCE / COMPLAINT NO. VI

Reference dated 18-5-2001 – Billion Rs Embezzlement - MES

May 18, 2001

Lieutenant General Khalid Maqbool
Chairman
National Accountability Bureau
Chief Executive’s Office
Islamabad

Pakistan Peoples Party
Through
Secretary General ----Complainant

Versus

Ministry of Defence ---Accused No. 1

Garrison Engineer GE (A) East and West Rawalpindi ----Accused No. 2



29 others named in an enquiry conduced by the Engineer in Chief as referred to in an article in "The Business Recorder" dated 27-4-2001 ------Accused No. 3-31

Military Accountant General 1994-96

All others involved in the scam as set out

In this complaint ------Accused No. 32 onwards

COMPLAINT UNDER S.18 (b) (iii) OF THE NATIONAL ACCOUNTABILITY BUREAU ORDINANCE 1999 (THE ORDINANCE)

1.The Accused are either the "Holders of a Public Office" or "Persons" as defined respectively in S.5 (m) and (o) of the Ordinance.


2. The Accused are guilty of corruption and corrupt practices as defined in S.9 of the Ordinance and as such are subject to punishment under S.10 of the Ordinance based upon the following facts and grounds:

FACTS AND GROUNDS
1. According to an Article in "The Business Recorder" dated 27-4-2001 headed "Rs. 1 billion embezzlement detected: Ad hoc Public accounts committee takes up defence ministry Accounts" a massive embezzlement was allegedly detected in the Accounts of the Garrison Engineer GE (A) East and West Rawalpindi ("the Article") (a copy of the Article is annexed hereto)

According to the Article:
(a). a special audit report concerning the Rs. 1 billion embezzlement was discussed by the Ad Hoc Public Accounts Committee (PAC) when the accounts of the Ministry of Defence were considered. The PAC chaired by H.U. Beg was informed that the inquiry had identified 29 persons connected with the embezzlement.

(b). the Chairman of the PAC directed the Ministry of Defence to pinpoint the persons responsible for the embezzlement and hand over the cases to the National Accountability Bureau (NAB) for necessary action.

(c ). important persons involved in the case had gone abroad. Muzafar Ahmed a member of the Committee desired that stringent punishment should be awarded to the guilty.

(d). The Military Accountant General had been accused of massive embezzlement on which an enquiry was conducted and a report was completed in 1996.

(e). The Committee also discussed the Case of illegal disposal of defence land of 46.3 acres in Lahore to the Defence Housing Authority at a low rate of 5445 Rupees per Kanal against the market rate. This lead to a loss to the exchequer of approx Rs. 493 million.

(f). In another case, military land in Rawalpindi classified as AI land was transferred illegally to the Army Welfare Trust at a nominal price. The Audit pointed out that the state lost approx 100 million Rupees on account of this illegal transfer of land without sanction of the competent authority and without payment of rent or lease agreement. This land could only be used for temporary storing of contractor's goods and equipment. Rent and premium at a commercial rate should be at least have been charged and recovered from the AWT during its occupation of the land.

(g). Maj. General Talat objected to the working of the Ministry as if it was above the law.

(h). The audit pinpointed dozens of cases where military land has been illegally converted into commercial property land causing huge loss to the Government since the commercial rate was not charged.


CONCLUSION
Based on the above facts and grounds and based upon the Article huge loss has occurred on account of the accused and others indulging in corrupt practices under S.9 of the Ordinance. Such persons are subject to punishment under S. 10 of the Ordinance.

As such the Chairman of the NAB is called upon to initiate investigations in connection with the matters set out herein under the Ordinance and proceed against those concerned for violating S.9 of the Ordinance.

Complainant

Pakistan Peoples Party
through
Jehangir Bader
Secretary General

Islamabad Dated : May 18, 2001

The Reference / Complaint is based on the source incorporated as under :

Rs 1 billion embezzlement detected:
Ad hoc Public Accounts Committee takes Up defence ministry accounts

BUSINESS RECORDER
Friday, April 27, 2001

ISLAMABAD : A massive embezzlement of one billion rupees allegedly detected in the accounts of Garrison Engineer GE(A) East and West, Rawalpindi, in a special audit report, came up for discussion by the ad hoc Public Accounts Committee(PAC) on Thursday when the accounts of the ministry of defence were taken up. The committee meeting, chaired by H.U. Beg, was told that an inquiry conducted by the engineer-in-chief was completed in February. The inquiry has identified 29 persons and action against them is in the offing.

Representative of the Auditor General, however, told the committee that the inquiry had considered "special review and inspection report on the accounts of GE (A), East Rawalpindi, for 92-95," while the material contained in the special audit report on both east and west Rawalpindi accounts between January 92 to June 97 had not been taken into account by the court of inquiry. This report still remains unresponded by the ministry.

After a long discussion, the Chairman directed the ministry to pinpoint the persons responsible for the embezzlement and hand over the cases to National Accountability Bureau(NAB). The auditor general insisted that the Board of Inquiry should not touch the special audit report of East and West Rawalpindi. At this, Major General (Retd) Talat, a member of the committee, asked what action had been taken by the ministry during the last two years.

Regarding the observation of the audit, that the records of the proceedings were not provided to the audit, the Chairman urged the ministry to accord full respect to the audit and make the records available to the Auditor General. The meeting was told that important persons involved in the case had gone abroad. Muzaffar Ahmed, a member of the committee, desired that stringent punishment should be awarded to the guilty. The chairman allowed one month to the ministry to present all the relevant records to the Auditor General and respond to the allegations of the audit report.

It may be mentioned that the Military Accountant General had been reported of massive embezzlement on which an inquiry was conducted and the report was completed in 1996. The Auditor General prepared the Special Audit Report in 1998 on the accounts of both East and West. The committee also discussed a case of illegal disposal of defence land of 46.3 acres in Lahore to the Defence Housing Society at low rate of 5445 rupees per kanal against the market rate which would have brought the exchequer nearly 493 million rupees.

A long debate took place as to why the land, originally belonging to the evacuee trust property and given to the defence for firing range, went into the possession of Qabza group who got letters of ownership from the Evacuee Property Board and sold it to the Lahore Cantonment Co-operative Housing society which allotted it to its members for residential accommodation. In another case, military land in Rawalpindi classified as A-1 land was transferred to the Army Welfare Trust. This was an illegal transfer and that the price too was nominal. The Audit pointed out that the state lost a hundred million rupees by the illegal transfer of the military land to a commercial organisation in Nov 1993 without sanction of the competent authority, and without the payment of rent or lease agreement. During the discussion, the ministry representative took the stand that the land being A-1 could not be used for any other purpose and that if the military wanted to reclaim it, it could be done in a day. It has the right to raze the structures built on the land.

Members of the committee however objected to the way the land had been transferred. The ministry has replied that the land has been given to AWT on temporary basis. Its status continues to be A-1 land and will be vacated as and when required by the army along with its superstructure without any compensation. But the audit suggested that investigation should be undertaken to fix the responsibility for the lapses reported in the audit. Further, rent and premium at commercial market rate should be recovered from AWT for the period of its occupation. It was pointed out that A-1 land could not be used for any other purpose except for temporarily storing contractors' goods or equipment. Major General (Retd.) Talat objected to the working of the ministry as if it were above law. The committee decided that the government should regularise it, but the cost should be realised from the AWT at market rates. This decision is meant for this case alone and not to be made a general rule.

The audit report has pointed dozens of cases where the military land has been converted into commercial proper land illegally, thus causing mammoth losses to the government, as the commercial rate was not charged. Most of the cases are expected to come up for discussion on Friday, as the PAC could consider only two or three such cases on Thursday. The chairman commented that this bungling might be as big as evacuee property frauds.