Rs 1.4b irregularities found in CDA contracts

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The financial irregularities worth Rs 1.4 billion have been found in the contracts of four projects awarded by the Capital Development Authority in the recent past.
The annual audit report 2011-12 on CDA’s financial accounts quoted the CDA rules that if the total cost of the project increases by margin of 15 percent or more, or scope of project changes, the permission of the executive committee of National Economic Council is required.
The audit observed that the CDA awarded works above the permissible limit in four projects, including widening of the Kashmir Highway, Ladies Club, procurement of 16 water tankers and Citizen Club. The CDA’s Roads Directorate increased the work of under widening of Kashmir Highway project by Rs 828.420 million that was around 52.79 percent above the permissible limit.
The project management office of the CDA enhanced scope of the work in Ladies Club Project costing Rs 159.523 million, 90.55 percent above the allowed limit. According to the report, the CDA had procured 16 water tankers worth Rs 48 million despite having no such provision in the contract. The CDA also awarded a contract for the construction of Citizens’ Club in Sector H-8 costing Rs 383.967 million that has been found in excess of 42.82 percent of permissible limit. The auditors found that the increase in the cost and scope of approved projects infringed upon the authority of appropriate project approving forum. “Thus, it was unauthorized and irregular,” the report commented. The report stated that irregular award of work beyond the permissible limit of 15 percent occurred due to non-adherence to the rules, existence of opportunity for violation of law, abuse of authority and material weakness in internal controls.
The audit had pointed out the award of irregular work in August 2011 in what the CDA replied that the approval of revised PC-1 was in process. However, the audit found that the CDA’s reply was not tenable as the revised approval was required to be taken before incurrence of the expenditure.
The matter was also discussed in the DAC meeting by the end of last year that directed the Cabinet Division to investigate the matter regarding the irregular award of work beyond provision of PC-1 without prior approval. However, the compliance to the DAC’s directives has not yet been conveyed to the audit authorities.
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