Millions Embezzled In Federal Government Employees Housing Foundation Projects
ISLAMABAD: Federal Minister for Housing and Works Syed Faisal Saleh Hayat has traced a scam in which millions of rupees were embezzled from the national kitty while materializing development projects worth Rs 1.3 billion initiated by a PML-Q MNA Riaz Fatiana on special grants from Prime Minister Syed Yusuf Raza Gilani in fiscal year 2009-10. Earlier, mega-thefts were unearthed in the Federal Government Employees Housing Foundation (FGEHF) and Estate Office, Karachi,
The special inquiry report into two development projects proposed by MNA Riaz Fatiana not only reveals massive irregularities in awarding contract of projects to private companies causing huge monetary loss to the national exchequer but also exposes the fact that how a PML-Q dissident (until recently) MNA Riaz Fatiana succeeded in obtaining Rs1.3 billion from the Prime Minister’s special fund for parliamentarians while a normal MNA from both the treasury and opposition benches receives only Rs20 million yearly for his/her proposed development schemes in his/her constituency.
A source in the Ministry of Housing told The News that the probe was conducted by Senior Joint Secretary of the Housing Ministry, M B Awan, on the orders of Federal Minister for Housing and Works, Syed Faisal Saleh Hayat.
The source said that following minister’s policy of zero-tolerance against corruption, the ministry would conduct probes into other mega development projects, launched by various lawmakers from both the treasury and opposition benches and executed by Pak-PWD.
“To purge the Housing Ministry and its subsidiaries from corrupt officials, a series of probes have been ordered by the minister, and the same principle of transparency is behind mass scale transfers of Xens and SEs in various departments of the ministry,” said the source. It added that the fact finding report on two development projects of Riaz Fatiana, “Construction of bridge at Mal Fatiana on the Ravi River, Kamalia-Harrapa Road” and “Widening and Improvement of Sandhianwali to Kamalia Road,” had exposed gross financial misconduct and embezzlement committed by the executing agency Pak-PWD and former high-ups of the ministry.
The source, who shared the inquiry report with this correspondent, said that the ministry’s officials were trying to ascertain whether the MNA who had proposed the said projects also received kickbacks and commissions from the private contractors for facilitating them to win award of contracts from Pak-PWD or not.
“Once the probe gets completed, the ministry intends sending the fact finding report to NAB and FIA to recover the looted public money from the culprits,” the source said.
The source further said that Federal Minister for Housing and Works Syed Faisal Saleh Hayat had ordered an in-depth inquiry into execution of the development project of the parliamentarian after receiving reports that some contractors had approached few parliamentarians offering them commissions for winning contracts of their proposed projects.
An Awami National Party lawmaker, Bushra Gohar, had also lodged a complaint with the police against a contractor who she claimed offered her a bribe (25% share from the profits—around Rs07 million) to obtain a lucrative government construction contract in Swabi.
The fact finding report of a senior joint secretary, who has also served in the Prime Minister’s Inspection Cell, reveals that construction of bridge at Mal Fatiana on Ravi River Kamalia-Harrapa Road was approved by the CDWP in end of 2009 with the original estimated cost of Rs915.706 million from the PM’s special fund for parliamentarians.
“Nespak had proposed the estimated cost of Rs1,134.568 million while the contract was awarded at the exorbitant price of Rs1,198.565 million. Even Nespak’s estimated cost was higher than the NHA set standards,” said the report.
According to the report, Pak-PWD Faisalabad Division Xen gave prequalification proposals through press advertisements for which 22 applicants submitted proposals. “For evaluation of applications, a committee was constituted, comprising Fayyaz Muhammad, Xen, Faisalabad Division; Rana Saleem Akhtar, Xen; Ghulam Abbas, Assistant Financial Adviser; and Mian Masood Akhtar, Superintendent Engineer Pak-PWD, Lahore.
The committee disqualified 18 applicants on the ground that they had insufficient experience on March 6, 2010. During inquiry, it was revealed that among those 18 contractors, there were also some high-profile companies namely Nazir & Company, HAKAS Private Limited, Shamsi Builders Limited, Ch Abdul Latif and Company and Zubair Hassan Enterprises. These were the companies which had vast experience of roads and bridges construction not only in Pakistan but also in the Middle East and South Asia, but they were disqualified by the committee,” says the report.
The report further reveals that signatures on the applications of some of the rejected companies were fake and fabricated. “After pre-qualification, only four pre-qualified companies were invited for bidding, and the bids of two companies were rejected citing the reason of ‘non-responsive’.
In collaboration with two pre-qualified contractors, the Pak-PWD manoeuvred the lowest rates with one company while in real terms the said company was non-responsive because it did not fulfill the condition of bank guarantee which was mandatory,” says the report, adding that the substantive law was violated because for award of the contract competition of minimum three bidders was required, but in this case number of bidders was only two.
The fact-finding report further reveals that the company which won the contract quoted exorbitant rates of major items.
The report says that in the same period a company, which had won contract of constructing Noori Badshah Bridge, had quoted steel rate of Rs90,000 per metric ton while the company which was awarded Kamalia Bridge contract had quoted steel rate of Rs127,000 per metric ton.
The report further reveals that there is great difference in the rates of Guilder Steel, Concrete, Piles etc and the company awarded contract of constructing Kamalia Bridge was awarded contract on exorbitant price.
The investigation team, which probed the scam felt that the contractor was given Rs156.539 million as mobilization advance from which kickbacks and commissions were received by various persons associated with the development project. The report further says that the tender had to be approved by Pak-PWD Chief Engineer Central Zone Fatehul Mulk, but he refused to approve the tender and resultantly he was transferred by the then Housing Minister Kakar.
“Mian Masood Akhtar, SE, Lahore, was given current charge of chief engineer, and he approved the tender of Kamalia Bridge though he had no powers to approve the project,” the report says.
In another development project case proposed by Riaz Fatiana regarding widening and improvement of Sandhianwali to Kamalia Road, Pak-PWD officials were found involved in awarding contract to a company, violating rules and regulations.
The project consisted two phases worth Rs33.810 million and Rs38.627 million.
“In the first phase, contract was awarded to a company, and after one year the contract of second phase was also awarded to the same contractor without any competition while the said contractor was in B + 1 category who could be awarded work up to Rs15 million only,” says the report.
Transparency International (TI) says that corruption on construction projects (which includes bribery, extortion and fraud) is damaging as it damages the developed and developing world, resulting in projects which are unnecessary, unreliable, dangerous, and over-priced and can lead to loss of life, poverty, economic damage and underdevelopment.
“It damages companies, resulting in tendering uncertainty, wasted tender expenses, increased project costs, economic damage, reduced project opportunities, extortion and blackmail, criminal prosecutions, fines, blacklisting, and reputational risk. It damages individuals, resulting in reduced morale, criminal prosecution, fines and imprisonment,” says TI.
Transparency International (TI) believes that corruption on construction projects can only be eliminated if all participants in construction projects co-operate in the development and implementation of effective anti-corruption actions, which address both the supply and demand sides of corruption. These participants include governments, funders, project owners, contractors, consultants, and suppliers, and the business and professional associations, which represent these parties.