July 2 - 8, 20

The latest report of the Auditor General of Pakistan (AGP) about the Capital Development Authority (CDA) of Pakistan, specially its financial affairs, released last week, is a sad commentary on the affairs of this organization. Missed development targets, a sharp increase in non-development expenditures, low revenue collection above all financial irregularities of over Rs27 billion-are the main findings of the AGP audit team during audit of last year accounts of the CDA.

The report mentioned that the authority missed an enormous 65 per cent of its planned targets pertaining to the development of the federal capital during the outgoing fiscal year. During the same period, there was an increase of over 135 per cent in the non-development budget of the authority. "During the year under audit, the non-development expenditure was on the rise whereas development activities remained neglected because of lack of fund," the AGP report lamented.

The AGP also pointed out that the unrealistic and overambitious estimates in terms of collection of revenues were set in the budget on the basis of which expenditure allocations were made in the budget. The expenditures were not only kept intact - in some cases even surpassed-without realizing the major shortfall on the revenue side.

The CDA collected revenues of Rs10.23 billion against budget estimates of Rs18.9 billion. Thus, there was a shortfall of Rs8.67 billion in overall estimated receipts. "These figures indicate that estimates for receipts were either totally unrealistic or the authority miserably failed in its collection," the report said adding that such a big fall cannot happen without the involvement of corruption of the revenue collection staff of the CDA.

The audit report further pointed out that under the head of public sector development program (PSDP) for the year 2010-11, Rs326.967 million was released to the authority out of Rs2.23 billion allocations it had announced for the outgoing fiscal year. However, the authority did not fully utilize the release funds under PSDP by leaving a balance of Rs17.822 million in its accounts. The audit report has lamented weak internal controls and absence of proper monitoring for irregularities of Rs27,722.98 million. The AGP has found massive irregularities running into billion of rupees in land and estate directorate of the authority. It pointed out massive irregularity of Rs13.34 billion in an unjustified announcement of award for the acquisition of land for development of sector H-16 and I-17.

Audit observed that award was announced by director land and rehabilitation only for compensation of land and did not take into account the cost of damages and built-up property. In the absence of cost of damages and built-up property, the CDA could not take possession of the land. Meanwhile, the occupants approached the court for status quo and the matter is still pending with the court.

Audit mentioned that due to aforementioned ill planning, the CDA despite payment of Rs1.25 billion could not take possession of the land. Similarly, on another case, the audit pointed out an irregularity of Rs1.128 billion when CDA announced award for acquisition of land and built up property in Kuri and Rehara village. CDA paid the compensation but it failed to get the possession of land until to date. While over the period of time, a large part of the subject land was encroached upon. The audit observed that when initially compensation was announced, there were only 1071 houses in Kuri and Rehara villages, while in 2010 these houses were reckoned as 7096 houses.

In another case, CDA incurred a loss of Rs1.88 billion owing to non-recovery of cost of land and annual ground rent.

Audit observed that planning wing of the authority allowed establishment of gun club by an entity, which was neither registered under any law as a business concern nor as a non-governmental organization on 72 acres of land without signing any lease agreement during the year 2001. The entity did not pay the cost of land and annual ground rent.

The audit also pointed out irregularities amounting to Rs938.25 million due to non-recovery of fine due to violation of zoning regulations. Lessees would develop nursery plots in three years from the date of license, while director estate management II did not take any action towards cancellation or recovery of fines from the allottees that did not develop nursery plots within specified time of three years.

Irregular award of contracts without proper competition, deviation from contract clauses, frequent revision of estimates, award of work at higher rates, non-acceptance of highest bids, non-recovery of penalties/license/fees/income tax/withholding tax/water and property tax etc. also caused loss of millions of rupees to the authority.

Audit observed that in several cases CDA even did not bother to respond positively to directions of AGP in this regard.