The Auditor General of Pakistan (AGP) has uncovered significant financial irregularities in defence sector, including non-transparent procurements and unauthorized expenditures within various defence services formations. The AGP has called for improved internal controls and thorough inquiries to determine accountability.
The Audit Report, covering the accounts of Defence Services for 2023-24, consists of 300 pages of findings highlighting issues like overpayments, non-recoveries, procurement-related irregularities, and significant losses to the state. The report also notes the non-production of records, indicating a lack of compliance with the Public Procurement Regulatory Authority (PPRA) rules.
The Ministry of Defence, which is allocated a single-line budgetary grant distributed among multiple organizations, faced scrutiny in the report. The audit examined expenditures totaling Rs.566.29 billion, split between the 2022-23 and 2023-24 fiscal years.
Key findings from the audit point to a range of financial irregularities in defence: advance payments made before work completion, improper splitting of financial powers, non-recovery of rent and taxes, violations of public procurement rules, and unauthorized execution of work. These irregularities raise serious concerns about compliance and transparency within the defence sector.
The audit also revealed that the Defence Services’ original budget for the financial year 2022-23 was Rs.1.563 trillion, later increased to Rs.1.592 trillion through supplementary grants. Despite this substantial funding, the report criticizes the defence formations’ low compliance rate with audit objections over the past four decades, with only 659 of 1,974 Public Accounts Committee (PAC) directives being followed.
The Ministry of Defence Production’s performance was also underwhelming, having complied with only 109 out of 372 PAC directives. The AGP urged the principal accounting officer to expedite compliance with these directives, given the significant financial stakes involved.
The audit report further highlighted procurement violations, where contracts were allegedly split to favor certain suppliers, bypassing the transparent bidding process mandated by PPRA. It noted that, in some cases, advertisements were only posted on the PPRA website without additional newspaper notifications, citing the “secret nature” of defence work. However, no evidence of these advertisements was produced during the audit.
The audit also uncovered that during procurement for the financial years 2021-22 and 2022-23, several transactions violated the rule that all procurements above Rs.500,000 must be advertised publicly. Instances also came to light where contracts were awarded without any proper documentation or approvals, and in some cases, at rates significantly higher than competitive bids.
The AGP’s Audit Report on financial irregularities in defence sector underscores the need for urgent reforms in procurement processes and stronger adherence to regulations to prevent future financial losses and ensure transparency in the use of public funds.
