REFERENCE / COMPLAINT NO. X

Reference dated 29-7-2002 – Use of Privatization Proceeds - Secrets

July 29, 2002

Lieutenant General Munir Hafeez
Chairman
National Accountability Bureau
Chief Executive Secretariat
Islamabad

Dear General Muneer Hafeez

On behalf of Pakistan Peoples Party (PPP) I bring to your notice a news item captioned “Use of Privatization proceeds kept secrets” by Rauf Klasra printed in THE NEWS dated Saturday July 27, 2002 (copy enclosed).

The PPP and people of Pakistan would like to know as to where had such a massive sum of Rs. 80 billion collected from the sale of state run institutions, gone. According to the report surely it was not used for debt retirement purposes as propagated by the government from time to time.

The PPP demands a full accounting of this amount and action against those misusing their offices by keeping it a secret.

It is hoped that in the best national interest NAB will investigate the matter and initiate appropriate action against the culprits with the goal of retrieving the misappropriated money.
Nayyer Bokhari, Advocate

On behalf of the Pakistan Peoples Party

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

Use of Privatization proceeds kept secrets
By Rauf Klasra
THE NEWS dated Saturday July 27, 2002

ISLAMABAD: The Public Accounts Committee despite its repeated attempts and requests badly failed here on Friday in its eventful meeting to find an answer to its troubling question that where had a massive sum of Rs80 billion collected from the sale of state run institutions had gone when it was disclosed hat this money was not used for the debt retirement purpose as propagated by the military government from time to time.

In addition to it, indiscriminate use of billions of rupees collected from the privatisation money on consultant salaries and legal experts also raised many troubling questions that who was actually benefiting from the whole privatisation process after laying off thousands of people as this heavy amount was not being used for the purpose of debt retirement. The Rs5billion have been spent on these consultants, advisors etc.

The mysterious and confusing replies aimed at hiding the actual "use" of this money both from the Privatisation Commission and Finance Ministry officials made the things cast serious doubts on the actual use of such a big money that was collected after rendering thousands of people jobless on the excuse that that money would be used for debt retirement.

But, now all of sudden, no body is telling the helpless and bewildered members of the PAC that where have this money has gone if not spent on the debt retirement.† No government official is ready to disclose the unknown areas where this money has been spent by the finance ministry wizards."

Earlier, the PAC took the audit reports pertaining to PC where irregularities to the tune of Rs4 billion were detected. The meeting was presided over by the HU Beg, and attended by its members Shaukat Kazmi, Lieut Gen (retd) Talat Masoud, Ahdul Akmal, Hassan Bhutto, Mujahid Shahi. The Auditor General of Pakistan† Yunis Khan participated for the first time after taking the oath of new AGP on July 20. Deputy Auditor General (Senior) Ch. Mohammad Ilyas was also there to grill the PC. The whole trouble with regard to sorry state of affairs in the governance of the present government started when some of the PAC members wanted to know from the secretary Privatisation Commission Waqar Ahmad that where had the entire amount collected form the state run institutions gone.

The charged and aggressive Secretary PC Waqar Ahmad clearly refused to divulge the information about the use of this money saying the Privatisation Commission had nothing to do with the use of this money as they had transferred that money to the Finance Ministry after keeping Rs10 billion for their own expenditures.

An arrogant Waqar Ahmad frankly asked the PAC to put that very question to the finance ministry as his job was to transfer that fund to the Finance and they might be knowing its use. † But, a day earlier, the finance secretary Nawaid Ahsan had also refused to disclose that where had the full money of privatisation gone.

The PAC members were really at a loss to understand that why the government official were not ready to give reply to a simple question that where the government had spent the Rs80 billion if not on the debt retirement. But, it was clear that the government officials had vowed not to disclose that million dollar question as to who and where had the funds gone.

Earlier, the Secretary Waqar Ahmad told the house that a total of Rs79.858 billion were collected from the sale proceeds of privatisation of state run institutions. Only Rs3 billion were pending against different parties on accounts of commitments, otherwise, the government had received the entire amount. According to Waqar, a total of Rs 56.99billion was transferred to the finance ministry from this total of collection of Rs79.8billion. Rs5.5bilion were spent on the golden hand shake schemes, due of lawyers and voluntary retirement schemes. While, Rs4.8 billion were spent on the salaries, and cost of the financial advisors, legal expenditures and advertisements. † Thus, a total of Rs 69.988 billion were spent on all these activities.

While, Dr Waqar still had some bomb shell to drop in the PAC meeting when he pointed out that Rs9.87 billion were still lying with the privatisation commission from the total collection. And Rs7.62bilion are in addition to it were also lying with the commission in the form of foreign exchange reserves received on account of oil well proceeds. And, he said that the PC had already asked the ministry of finance to tell it what to do with that very amount.

A very unpleasant situation developed in the PAC proceedings when the Secretary PC Waqar Ahmad started to give very sarcastic remarks against the auditors and other officials who "unlike PAC traditions and decorum used very authoritarian language with both the PAC members and Auditor officials."

The deputy auditor general (senior) Ch. Mohammad Ilyas however, took Waqar Ahmad to the task saying it was unfair to use such language in the PAC as nothing was personal in such meetings and only officials matters were discussed in the meeting for the best national interests and that very spirit must be maintained.

But, Waqar Ahmad did not give any heed and continued to attack the auditors The PAC also note that sarcastic and arrogant style of Waqar Ahmad and on certain occasions, asked him to lower his voice. But a charged and over confident Waqar Ahmad did not listen and had another direct clash with the PAC and auditor general when it was pointed out that why the PC was utilising the huge money collected from the sale of state run institutions. He was immediately challenged by Finance Ministry representative Muhammad Nasrul Aziz who said under the law the PC is provided funds from the secretariat budget, in addition to commission grants.

But, Mr Warqar who was not ready to listen to anyone in the PAC, said he was authorised to use funds from the money collected from the sale of state owned institutions mostly sold at the throw away prices to the buyers.

Waqar Ahmad was also grilled by the PAC when the audit pointed out that due to PC's policy the factory workers of General Refractories Ltd could not be hired by the buyers. And this strange policy resulted in the loss of about Rs35million as the buyer had offered to buy that factory at the cost of Rs65 and now it has been sold at Rs35 million to some other buyer.

Lieutenant General Talat was quite furious over this PC policy, saying "it was not only ridiculous but a stupid policy" that Rs35million were lost just because of the fact that the buyer wanted to re-employ the technical people running that factory. PC secretary Waqar Ahmad defended the policy saying it was a policy which should have been followed and which they did.