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Audit Pakistan


Recovery of Trillions in Pilfered Funds Mired in Procedural Issues

PAC Running Huge Backlog, Reframing Rules to Enhance Clout vis-à-vis Top Civil Servants

Article by: Asad Malik

A mysterious paralysis seems to have gripped Pakistan’s constitutional instruments of financial accountability including the PAC (Public Accounts Committee) of the Parliament – the apex forum of financial accountability of government functionaries and departments.

The PAC has more than 24,000 outstanding audit paras to process– in other words, a decade’s worth of work. Compare this number with the one hundred or so audit paras outstanding in India, a much bigger country and government.

In Pakistan, we still have audit paras for 2011 and 2012 pending. This long delay in the law taking its course means by the time retribution catches up with a wrongdoer, he is already retired or deceased.

The PAC, however, is not the only bottleneck. Audit paras pertaining to the Federal Board of Revenue (FBR) and Petroleum Division related to the recoveries of PKR 3.6 trillion (PKR 18.56 trillion of FBR and PKR 18.5 trillion of Petroleum Division) are stuck up to litigation. The PAC has to stop pursuing recovery when a private party goes into litigation and the matter becomes sub judice.

By August 2018, the PAC had a total 18,500 of audit paras pending. With roughly 2000 to 2200 new paras arriving every year, the total has since risen to somewhere between 23,000 and 24,000.

In November 2019, the incumbent PAC chairman Rana Tanveer Hussain had replaced PML-N president Shahbaz Sharif and he vowed to improve committee’s functioning. A year down the line, he blames the ministries and the federal secretaries for piling up the backlog.

In order to make PAC effective, it was decided during the tenure of the Pakistan Peoples Party that it would be headed by the opposition leader. Chaudhry Nisar Ali Khan becomes the PAC chairman but he resigned after a row with the judiciary over the jurisdiction of PAC over the audit reports of the Supreme Court. Nadeem Afzal Chan was then elected to succeed him as PAC chair.

When Pakistan Muslim League-Nawaz rose to power, the opposition leader Syed Khursheed Ahmed Shah became the PAC chairman. However, some say the sweet disposition of the Shahji of Sukkar stood in the way of him pursuing accountability. Then in 2015, Buland Akhtar Rana, the then AGP (Auditor General of Pakistan) pulled a veritable coup against Shah, maintaining Shah should not be scrutinizing audit reports pertaining to his party’s term in power because of a principle of natural justice that says no person can judge a case in which they have an interest.

The audit reports before Syed Khurshid Shah’s PAC pertained to the time when the PPP (Pakistan Peoples Party) was in power. The PAC then filed a reference against Rana before the SJC (Supreme Judicial Council).

Although the SJC found Rana guilty of misconduct and recommended his removal from office, the PAC remained unable to convene for almost a year awaiting the appointment of the next AGP.

Together, these circumstances resulted in a huge backlog of audit paras. As far as the recovery of over PKR 3.6 trillion is concerned, the litigation in the Supreme Court, Islamabad High Court, Lahore High Court, Sindh High Court, Peshawar High Court and Balochistan High Court barred the PAC to take up the relevant audit paras.

As far as the recovery of over PKR 3.6 trillion is concerned, the litigation in the Supreme Court, Islamabad High Court, Lahore High Court, Sindh High Court, Peshawar High Court, and Balochistan High Court barred the PAC to take up the relevant audit paras.

Interestingly, several tribunals of the Federal Board of Revenue are also dormant because PM Imran Khan’s government is yet to name their presiding officers.

“These appellant tribunals have been dysfunctional for two years”, testified Chairman FBR Mohammad Javed Ghani before the PAC in a recent meeting adding that defaulters also go into litigation in superior courts and secure stay orders.

According to the statistics submitted before the PAC by the FBR authorities, cases related to the recoveries worth PKR 117 billion are pending before the Supreme Court, PKR 136 billion in Islamabad High Court (IHC), PKR 228 billion in Lahore High Court (LHC), PKR 134 billion in Sindh High Court (SHC), PKR 169 billion in Peshawar High Court (PHC), and PKR 602 million in Balochistan High Court (BHC).

The litigation related to the rest of the amount is stuck with the tribunals and their appellate forums of the FBR and the majority of them are dysfunctional due to the absence of members and presiding officers.

A couple of months back, the law ministry gave the undertaking to fill up the vacant positions of these tribunals. The summary regarding the appointment of members and presiding officers for the tribunals has been forwarded to the prime minister.

A major chunk of the recovery of the Petroleum Division is related to the non-realization of Gas Infrastructure Development Cess. The Supreme Court on 2 November 2020 dismissed the petitions filed against the levy and now the Petroleum Division is pursuing the case for the vacation of stay orders in the relevant high courts.

Bureaucratic sources say the PAC has become a chit-chat point where lawmakers gossip instead of clearing the backlog and appear interested in taking up matters related to their respective constituencies with the government officials who attend the Committee meetings to address audit objections raised by the auditors.

On its part, the bureaucracy is hardly keen on this kind of activity. A PAC meeting was convened in the second week of November just to reprimand the secretaries and officials of half a dozen ministries and divisions for holding no or too few DAC (Departmental Accounts Committee) meetings.

The divisions reprimanded by the PAC were the poverty alleviation & social safety division; economic affairs division; narcotics control; federal public service commission; and planning and human rights ministries.

The PAC chairman Rana Tanveer Hussain says the Committee is not to be blamed for such a huge backlog. He said that Prime Minister Imran Khan was unwilling to accept opposition leader Shahbaz Sharif as PAC chairman – perhaps because he misunderstood the functions of the PAC.

“After an understanding with the PTI, we distributed to the paras related to PPP, PML-N and previous governments to eight subcommittees”, says Rana. “The main PAC is left with no paras since then.”

Rana says the PAC received the first audit reports for the financial year 2019-2020 about a couple of weeks back. “I will ensure the scrutiny of these reports is complete in the next few months”, he says adding that as far as the backlog is concerned, a meeting of the conveners of the eight subcommittees has been scheduled by the end of November to formulate a strategy to expedite work.

“We are also working to amend the PAC rules to empower the committee to penalize the delinquent bureaucrats as at present we cannot take any action against them except issuing direction for lowering the Annual Confidential Report (ACR)”, he said.

The Principal Accounting Officers of the ministries are BS-22 officers and lowering their ACR does not bother them in the least. Rana said the PAC is seeking the power to make a delinquent officer an OSD.

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