Forensic auditors have acknowledged that some instances of corruption and evidence of mismanagement were not included in their report on Pakistan Steel Mills (PSM), a report compiled by the National Accountability Bureau (NAB) showed. The Supreme Court through an order on May 16 this year directed NAB to probe the matter and submit fortnightly progress reports.
In compliance with the court”s order, the authority submitted its eighth progress report on September 22. The Supreme Court observed that the previous NAB report explained certain steps taken by the bureau, but NAB authorities were directed to file the report on or before October 15 this year.
According to the NAB report submitted on October 13, FIA registered 10 FIRs in connection with various acts of corruption and corrupt practices by officials of PSM and others. Interim/final challans were filed by FIA in the court of Special Judge Anticorruption (Central) Karachi in respect of nine cases and one case was filed in the court of judicial magistrate, Karachi. The detail of FIRs is as follows: FIA FIR No 36/2009, 37/2009, 38/2009, 39/2009, 01/2010, 9/2010, 13/2010, 15/2010, 17/2010 and 18/2010 were registered. Most of alleged accused are on bail and few are absconding. Only Mueen Aftab is in judicial custody.
Applications under Section 16 A of National Accountability Ordinance (NAO) 1999 were filed before both the courts to assume jurisdiction over the cases by NAB for further action as directed by the Supreme Court of Pakistan in its letter of May 16, 2012. The Special Judge Anti Corruption (Central) Karachi in its order of September 25, 2012 transferred the cases to Accountability Court.
The report maintained that the court of Special Judge Anticorruption (C) ordered to transfer nine cases to Accountability Court under section 16(A) of NAO, 1999. The court fixed November 15, 2012 for hearing before Accountability Court. Since case record of these cases has not been transferred to Accountability Court, the Prosecutor of NAB along with the Inquiry Officer (IO) of the case visited the court for transfer of the case record to Accountability Court expeditiously so that action as directed by the Supreme Court may be completed. The Judge of Anticorruption Court intimated that the case record will be transferred to Accountability Court in due course of time. Judicial Magistrate had fixed October 20, 2010 for order to transfer of case to Accountability Court.
NAB apprised the Supreme Court that in response to the clarification it sought, the Forensic Auditor agreed that in some instances of corruption and mismanagement evidence was not included in the forensic audit report. He sought time of 8 to 10 weeks to provide evidence after examining the record collected by the firm during audit.
The report further stated that in the forensic audit report the auditors have determined a loss of Rs 7.018 billion to PSM due to non adjustment of sale prices of products by management of PSM in accordance with prevailing international price. Out of this a loss of Rs 1.235 billion has been termed as corruption due to sale of products by PSM to 85 favourite consumers/traders by giving them preference over others. Similarly, FIA has submitted challans against 41 traders/consumers for unlawful gain on account of sale of products to them at lower than prevailing prices. The said traders/consumers have been given an opportunity to voluntarily return/ plea bargain under the provisions of section 25 of National Accountability Ordinance 1999 and to inform the acceptance or otherwise within 15 days.
Customs recently provided information calculating average landing cost of material during the year under consideration. However, Customs has also suggested to access details of average cost of the material on the basis of dates of opening of Letter of Credit for imports of such material to reach a reasonable conclusion. They have sought one week time for compilation of the said information.
During the inquiry, it was detected that some local firms had requested PSM for purchase of billets, but they were not provided the material. As a result, the said firms had to either import the material or purchase the same from local market. Proprietors of three such firms were examined and details of purchases / imports made by them were obtained to ascertain the import/local prices of that product during the period under consideration.
According to NAB, forensic auditors calculated a loss of Rs 2.8 billion on procurement of coal on the basis of a long-term contract. Auditors PSM entered into a contract with suppliers when prices of raw material were at a peak. However, prices fell sharply in the first quarter of the financial year ended on June 30, 2009. PSM”s Board of Directors issued directions to form a committee to negotiate prices with suppliers. However, the PSM management did not form the committee. As such, loss was caused to PSM on procurement of coal at higher than the prevailing international prices.
During 2008-09, coal was procured from following suppliers; (i) M/s Tech Coal Canada ;(ii) M/s Vale Australia;(iii) M/s Anglo Coal, Australia ( German Greek) ;(iv) Anglo Coal, Australia (Moura Dowson and ;(v) M/s Wesfaremers, Australia.
PSM showed that four foreign companies have their local agents in Pakistan. Names of local representatives of companies were obtained and notices were issued to them. Three agents have been examined. All of them have explained that PSM had entered into long term contract for supply with their principals. They further revealed that PSM did not officially ask their principals to get prices reduced and further claimed that their principal would not have acceded to the request for reduction in prices even if PSM had approached them. Proceeding in this regard is at a final stage.