Anomalies detected in $40m coastal community project

Dawn News May 7,2010

KARACHI: Auditors have found irregularities of millions of rupees in the Sindh Coastal Community Development Project during the period from January 2007 to February 2010, Dawn has learnt.

Highly placed sources said an audit of the $40 million project, designed for the development of coastal communities, found gross mismanagement of resources.

According to the audit report, there was only 16 per cent physical progress in nearly half of the total estimated time allocated for the project. The cumulative disbursements stood at six per cent, contract awarded were 33 per cent and almost 77 per cent of the incremental staff positions were vacant, the report said.

The Sindh Coastal Community Development Project is jointly funded by the Asian Development Bank ($36 million), the Sindh government ($3.42 million) and beneficiaries ($0.65 million).

The report prepared by Sindh Audit Director-General Nazeer Seehar found that if the implementation schedule was not followed, targets could not be achieved and the poor coastal communities for whom the project had been designed would not get its benefits.

The costal community development project was to be implemented through two consultants – the International Union for Conservation of Nature (IUCN) to plant 3,000 hectares of mangroves at a cost of Rs44 million and the National Rural Support Programme (NRSP) to establish around 1,300 community organisations for carrying out Rs976 million development works – selected by the ADB.The auditors observed that the consultants were selected on a single source selection basis without placing advertisements in the local or international media as well as on the internet, showing that there was a lack of competition, which was not completely in line with the ADB’s guidelines.

The audit report found that the NRSP Badin office transferred Rs125 million to its head office in Islamabad on July 9, 2009 without getting its approval of the project director.

Referring to the appointment and remunerations of project directors, the report stated that rules were violated in payment of salaries to the two project directors.

An officer who had retired in BPS 19 was appointed project director on Dec 28, 2006 for one year. Keeping in view the officer’s grade, his monthly salary according to government rules should have been fixed at Rs75,000. However, the project director was given a salary package of Rs150,000 a month. This way the payment made in excess was Rs900,000 during the year, the report said, seeking its justification.

In November 2008, the incumbent project director was appointed. According to the audit report, although terms and conditions of his service have not been finalised, the project director has been getting Rs50,000 every month in excess to what government rules say about the salary of a grade 20 officer if reappointed after retirement. Being an officer who claimed to have retired in a basic pay scale equivalent to grade 20, his monthly remuneration should have been fixed at Rs100,000. However, he was appointed at a monthly salary of Rs150,000 in violation of relevant rules. He had been paid Rs800,000 in excess from November 2008 to February 2010, the report pointed out, stating that the extra payment needed to be justified.

The auditors found that a double-cabin vehicle (GS-7710) was allotted to the adviser to the chief minister on the Sindh Coastal Development Authority despite the fact that the project did not allow such privilege for the official.

The funds spent on the repair of the vehicle and fuel amounted to Rs381,126 so far, the report noted. The auditors recommended that the vehicle and the amount spent on it be recovered from the adviser.

The audit report said that under the government rules the amount in excess of even Rs200 should be paid through a “crossed cheque” but over Rs13.9 million had been paid through bearer cheques and that also without any acknowledgements.

The coastal forest division of the Sindh forest department, working on behalf of the Sindh coastal community development project (SCCDP), had made various payments – including at least six payments of over Rs2 million each between April and September 2009 – through bearer cheques. The auditors said that payments done in this manner were irregular as even acknowledgement receipts were not shown to them despite repeated requests.

The auditors noted that the Sindh Rural Development Programme (SRDP), which had agreed to give 10 double-cabin vehicles to the SCCDP, had only provided four vehicles whereas it transferred a single-cabin vehicle to its Islamabad head office. The report recommended the SRDP to provide the remaining six vehicles to the SCCDP and bring back the vehicle from the head office.

Although the posts of conservator of forests and divisional forest officer had not been allocated in the project, the SCCDP hired services of two forest department officials – Riaz Wagan and Agha Tahir – on deputation in February 2009, which according to the audit report was irregular and unjustified.

The audit pointed out that the NRSP appointed more than 90 staffers, including over 50 of its employees, without consultation with the authority or setting any competitive criteria. The agreement between the NSRP and the Coastal Development Authority (CDA) clearly mentions that “project staff selection process shall be transparent and competitive and the key staff to be engaged by the consultants will be evaluated by the clients (CDA).”

The auditors also called for the recovery of Rs666,000, paid to SCDA staffers as project allowance against the guidelines prescribed by the donor.

The NRSP Badin office purchased furniture, fixtures, a camera and other material at a cost of over Rs1.735 million without inviting open tenders, which was a clear violation of the public procurement rules. In other cases, it purchased computers and accessories by inviting bids, but instead of accepting the lower bids the NRSP accepted higher bids and spent over Rs134,000 extra. The auditors said that the responsibility of the irregularity should be fixed.

Some 23 regular staffers – 18 from the forest department and five from the livestock department – were hired by the project without open competition. They were being given the project allowance, which was to be given only when a government servant was hired through an open competitive process. Otherwise, the rules said they should be paid deputation allowance only.

The International Union for Conservation of Nature, the Coastal Development Authority’s consultant, spent over Rs1.357 million between April and December 2009 under various heads such as fuel expenses, labour charges, rent, and other miscellaneous charges. However, these expenditures were shown under the head of “trainings/ seminar/ workshop” without re-appropriation orders so this expenditure was misclassified and irregular, the auditors observed.

The audit has noted that both consultants, the NRSP and the IUCN, were not maintaining proper record of the funds, which they had received directly from the ADB, in shape of cashbooks and ledger books.

When asked by the auditors the NRSP provided partial information – the bank statement – while in the case of the IUCN no record was found to be maintained separately. The agreement clearly mentioned: “The consultant shall keep accurate and systematic accounts and records in respect of the services hereunder, in accordance with internationally accepted accounting principles …”

Speaking to Dawn, Sindh Audit Director-General Nazeer Seehar said the records of investigation conducted by the ADB on the complaint about the selection of project director and the approval of the Single Source Selection (SSS) criteria for appointment of consultants was not provided to the audit for scrutiny. He said Section 14 (3) of the Auditor General’s (functions, powers, and terms and condition of Service) Ordinance 2001, clearly states that “any person or authority hindering the audit functions of the auditor general regarding inspection of accounts shall be subject to disciplinary action under Efficiency and Discipline Rules.”


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