Financial debacle worth trillions goes unnoticed in NHA SC, NAB need to act upon news before too late

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Rana Tassaddiq Hussain

Islamabad

Financial mismanagement worth trillion of rupees has gone unnoticed by the Supreme Court of Pakistan and the National Accountability Bureau (NAB).
If PTI government led by Imran Khan allows wrongdoing to continue as it was done in the past, self reliant entity like NHA actively engaged in the development of Pakistan is likely to meet the same fate as of Pakistan Steels Mill (PSM), Pakistan International Airlines (PIA), Pakistan Tourism Development Corporation (PTDC) and Pakistan Railways.
PTI regime has taken unprecedented steps by making public reports of the inquiries into the sugar, wheat crisis and the plane crash.
The incumbent government conducted an inquiry into the plane crash and dubious pilot licenses and made it public despite knowing the risks.
Multi Billion Dollar Projects procured by NHA at heavy costs in foreign exchange (most of which were already pledged by the Finance Division to gain heavy financial debts from the international debt market) have arbitrarily been dished out, devolved to concessionaires which is surely an attack on NHA assets and revenue generation which was meant to maintain existing roads and highways across the country.
The questionable terms of engagement of the concessionaire including their initial business proposals, dubious financial commitments, allocation of resources, debts, sovereign assurances, bank guarantees, inventory and assets dished out to them, terms and conditions, limitations would be an extremely thorny issue to be decided by the controlling ministry and NHA in times to come.
The Competition Commission of Pakistan in year 2018 had advised NHA to apply exemption with the Commission for Concession agreements executed between the NHA and the successful bidders (concessionaire). This was specified in the CCP study ‘Competition Assessment of the Road Sector in Pakistan’ conducted under section 28 (1) (b) of the Competition Act (the Act), which mandates the Commission to carry out market studies to promote competition in all spheres of commercial economic activity. CCP held and noted that since the concession agreement between NHA and the concessionaire, an exemption application should have been filed with the Commission. The exemption department had asked NHA to apply for exemption for concession agreements executed however no such application was ever filed by the NHA management.
Despite being fully aware that “concession agreement” was a failed strategy and meant to grab public assets for extorting public funds, PAS selected officers on deputation to NHA deliberately closed their eyes towards National Accountability Bureau’s reference dated 5.12.2006 with regards to non recovery of dues amounting to Rs. 308 Million from M/s. Daewoo Pakistan Motorways Services Limited (DPMSL) under concession agreement signed between the NHA and Daewoo Corporation in 1997. It was also alleged that DPSML never paid the profit share to NHA or the applicable taxes to the Government of Pakistan and not only this but also started unethical, immoral and unlawful ways on service areas on M2 because of which criminal cases were registered against DPMSL. It was also alleged that NHA officers received heavy kickbacks as DPMSL being an illegal company continued its operations in the country although it was not registered with the security exchange commission of Pakistan (SECP) under company’s Act. M/s. Daewoo later declared itself as having bankrupt and liquidated globally. Interestingly the said liquidated Daewoo reemerged in Pakistan in partnership with Sammi Corporation (Private) Limited. The terms of engagement between the foreign Defaulter Company Daewoo and M/s. Sammi Corporation allowed to operate on national highways and strategic roads after default is worth investigation by the NAB.
Giving a complete blind eye to earlier financial losses and dubious negotiations the PAAS officers on deputation to NHA took extra mile in dishing out Multi Trillion Dollar Projects to build personal repute and public relations with the power corridors in return succeeded in getting grade 22, residential plots, prized postings and what not.
For example, for the rehabilitation of the Lahore-Islamabad Motorway Project (M-2), the contract was awarded to FWO under public private partnership mode. A separate company called “More” was formed, with which NHA signed the concession agreement. M/s. More although being a private company would not be subject to the tax and other exemptions available to FWO. The concessionaire has entered into scores of agreements for various aspects of the project, e.g., leasing, revenue generation, construction and technical matters etc Role of PPRA, CCP is nowhere to be found. Without approval of the Apex Regulator-NHA, the contractor more than four times grabbed the liberty to revise Toll Rates of M-2 for taxpayers from Rs.280 to Rs. 750 to increase their financial digits with no incentive whatsoever to NHA. The NHA officers while on official duty are subjected to Toll Tax by the said private toll operator employees, even humiliated at times on their very own network. This is the level of degradation extended by PAS officers to NHA.
On 28.12.2017 another concession agreement was signed by the NHA with M/s. Lahore Sialkot Motorway Infrastructure Managment (Private) Limited (concessionaire) for the construction of Lahore Sialkot Motorway on BoT. Interestingly Section 23.1 “Step in by the financiers” of the concession agreement provides assurances that NHA undertakes to sign and/or endorse any direct agreement as required by the concessionaire and /or the financiers.
The questionable concession agreements executed by PAS officers on behalf of NHA in respect of Lahore-Islamabad Motorway Project (M-2) with M/s. More (Private) Limited, Karachi-Hyderabad Motorway (M-9) with Score (Private) Limited, Lahore-Sialkot Motorway with LSR (Private) Limited, Habibabad Bridge with Home (Private) limited, OMC Collections of more than 100 Toll plazas (motorways and GT road) need to be minutely seen by the NAB financial auditors for dragging a success story like NHA towards a big time failure.
Corrective action with regards to following is much needed:
Non-implementation of various clauses of the above concession agreements;
Appointment of quality control inspectors which were supposed to be jointly appointed by the NHA and concessionaire (the ones appointed and salaried by concessionaire would certainly report in favor of the concessionaire and not NHA. Needs to be cross checked on merit with all reports so far;
Joint auditors were required to be appointed as per concession agreement but concessionaire appointed them directly without involvement of NHA and have been submitting one sided reports to favour the concessionaire only, thereby unfair reporting. Needs to be cross examined on merit.
Evidence of this can be noted from a simple fact that top layer of asphalt of Lahore-Islamabad Motorway (M2) carried out by More (Private) Limited was not in accordance with concession agreement. Job Mix Formula was adhered by the said company which spoils the quality of roads and makes them bumpy resulting in numerous road accidents and colossal losses to live and public property.
In Build Operate Transfer Agreements there is no concept of Mobilization Advance. But Mobilization Advance amounting to Rs. 3 Billion to M/s. Score (Private) Limited in respect of Karachi-Hyderabad Motorway was unlawfully arranged.
Not only this but VGF (Via Gap Funding Facility) was also provided by the NHA amounting to Rs. 32 Billion in respect of LSM which is cost of the complete road with 100% land acquisition. So what exactly have the concessionaire invested remains a billion dollar question?
FWO sub companies have also drawn loans from different financial entities on NHA’s sovereign guarantees which show that NHA is directly responsible for their loans. Again the question arises as to what have the concessionaire actually invested or their stakes involved?
If they have not invested practically then how NHA has authorized them to collect toll with no share whatsoever to NHA remains a multibillion dollar question?
Money minting carried out by the NHA officers in the light of above questionable business proposals, concession agreements, profit sharing, latest financials and assets possessed by either parties need to be probed by the Supreme Court and NAB through most experienced chartered accountants and financial auditors to save NHA from anticipated financial collapse. What did the concessionaires commit at the time of signing agreement and what was given to NHA needs to be evaluated on merit.
NHA former and present officers including its Chairman, Member PPP/BoT, Member (Finance), Member Admin, GM (Revenue), GM (B&A), GM (Internal Audit), Deputy Director (Revenue) are directly responsible for all above gimmick including the brokers appointed by the concessionaires including Masood and Rizwan for extending illegal courtesy offerings to the above positioned in NHA .
Private properties received by the NHA officers in Sector E-11, luxury flats in G-11 and financials received by the above in lieu of their official signatures, in self and titles of their kith and kilns by the concessionaires need to be investigated viz money trail.
Lastly the engineers involved in providing girls, hotels and what not including Progressive Multi Engineers, National Engineers, Toll Link and M/s. Afridi and Company need to put their house in order before all such catalogs are shared with people and masses.
Time to test the vow of Justice Javed Iqbal, Chairman National Accountability Bureau whereupon he said that NAB believes in Zero Corruption, 100% Development has arrived.

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