KARACHI : The Chairman of Public Procurement Regulatory Authority (PPRA), the major sole watchdog to ensure propriety, transparency and accountability, appears to be the biggest violator of the Public Procurement Ordinance (PPO) 2002, according to trade circles and stakeholders here.

Although the Ordinance clearly says that no goods or services bought with public funds and valuing above rupees one hundred thousand could be procured without open tender and competition, yet Federal Board of Revenue (FBR) procures goods and services worth hundred of millions of rupees each year with complete impunity of the law.

It appears that their boss, the Federal Finance Secretary who is also the Chairman of PPRA and, as secretary revenue division, FBR has no fear of reprisal in violating the law, they said. The PPRA has been empowered under Section 5 of the PPO 2002 to take such measures and exercise such powers as may be necessary for improving governance, management, transparency, accountability and quality of public procurement of goods, services and works in the public sector.

The Authority further has the function to, monitor the implementation of and evaluate laws, rules, regulations, policies and procedures in respect of, inspection or quality of goods, services and works. Stakeholders without any fear or favour speak openly that an unholy alliance exists between FBR, a public sector department and Pakistan Revenue Automation Ltd (PRAL), a private sector company. Through this collusive arrangement, tax payers' money, ie public sector funds are spent without public scrutiny at the whims of government officials.

With this anti competitive practice FBR transfers rupees hundreds of millions of public funds without any legality/public tender/advertisement/competition to its own private limited company PRAL, thereby completely bypassing the transparency, checks and balance and scrutiny that is built in the law to monitor and ensure propriety in public spending. Public funds are then used by PRAL Pvt Ltd as private funds to procure substandard goods, without justification (PC 1), at exorbitantly overpriced rates, from favoured single sources without public scrutiny and process, which would have been otherwise mandatory if the money was spent directly by FBR itself.

A typical example in this regard is purchase of hundreds of millions of rupees hardware by PRAL over the years, through a single favoured supplier. The status of this hardware and equipment is never clear, although it is bought through public funds, yet, the question is, does it belong to FBR or to PRAL Pvt Ltd? If the equipment does belong to the government, and was bought with public money, then why was government procurement process ignored? The interesting aspect is that since it is bought by PRAL private limited, with public funds, the status of ownership is not clear, the purchase is never verified, audited, inventory counted etc either under the government process or even under the private sector processes.

The private sector assumes PRAL to be government sector organisation and the government sector presumes PRAL to be the private sector organisation, hence no accountability under any process. This gross violation of PPRO 2002 is happening with impunity under the very nose of the chairperson of PPRA, stakeholders said.

In addition to purchase of goods, the funds are also used to procure, frivolous and substandard services, without justification, stakeholder input, below industry standards, without contract, time limits, budgets or independent evaluation. The services continue to fail to deliver any benefit to the public or the government but are rather sources to further corruption and evasion of taxes.

The services provided by PRAL Pvt Ltd over the years are software applications like One Customs, Sales Tax Automated Refund Repository (STARR), Sales Tax Risk Evaluation and Monitoring System (STREAM), E-Filing, and Web based One Custom (WEBOC) etc. No tenders or advertisements were floated by FBR for these software applications, no competition sought, no contract for development signed, no Requirement Specification Documents (RSDs), no user acceptance testing, no signoffs, no independent evaluation, no documentation is available, although millions of rupees in public funds have been spent into developing these over the years.

These software applications have caused major frauds and leakages in revenue and have made the life of the taxpayer more difficult. Major cases of frauds through STARR, STREAM, and One Customs etc are available on record and have been highlighted by the media from time to time.

Public funds transferred to PRAL are also used to provide employment to friends, families and favourites of FBR officials at exorbitant salaries. Since PRAL is a private limited company, it is immune from following government regulations for recruitment. A simple scrutiny of the persons employed at PRAL will reveal that the recruitment's have been made without merit and the employees in majority of the cases are the favourites of FBR officials.

Through frivolous goods, services and employment, tax payers' money and public funds are squandered by FBR with impunity through its private limited company PRAL which is setup for this purpose to bypass the government's regulatory framework for public spending.

According to the website of the National Assembly of Pakistan, only the National Assembly, through its Public Accounts Committee, scrutinises public spending and exercises control of expenditure incurred by the government. Pakistanis however continue to seek ways to coax the Public Accounts Committee out of its slumber, stakeholders said.BR