AGP Raises Objections on Huge Irregularities, Illegal Expenditures, Anti-Competitive Practices in Defence Sector

The Auditor General of Pakistan (AGP) has unveiled significant financial irregularities, unauthorized expenditures, and non-transparent procurement practices in the defence sector. The findings were detailed in the AGP’s audit report on Defence Services accounts for the audit year 2023-24. The report shows numerous audit objections including non-recoveries, overpayments, procurement irregularities, state losses, and the non-production of records. The audit examined expenditures amounting to Rs. 566.29 billion, covering both the latter half of the 2022-23 audit and the initial phase of 2023-24. One of the key concerns raised by the AGP is the Defence Services’ ongoing non-compliance with regulations, particularly regarding advance payments, improper splitting of financial powers, and violations of public procurement rules. The audit also criticized the Defence Ministry’s handling of a Rs. 1.563 trillion budget for the fiscal year 2022-23, which was later increased to Rs. 1.592 trillion through supplementary grants. The report also pointed out the slow response to audit objections and directives from the Public Accounts Committee (PAC). Since 1985, the Ministry of Defence has only complied with 659 out of 1,974 PAC directives. The report said there have been cases where contracts were improperly split and awarded to preferred contractors, often bypassing transparent bidding processes. Some procurements were made without proper advertisements, under the pretext of the work being of a “secret nature.” The audit found that exemptions from public procurement rules, which only the Defence Secretary is authorized to grant, were not properly obtained in such cases. Moreover, the report noted that in one Army formation, purchase orders were issued at rates nearly three times higher than the lowest bid. The audit also uncovered irregular expenditures at an Army School, where renovation work and procurement were carried out illegally. The Departmental Audit Committee (DAC) recommended the initiation of inquiries to take responsibility for these irregularities and called for the regularization of unauthorized expenditures by the competent authority. However, these directives had not been implemented by the time the AGP report was released.