Chief of the Army Staff Gen Ashfaq Parvez Kayani.—File photo

ISLAMABAD: In another sign of the financial difficulties facing the country, Chief of the Army Staff Gen Ashfaq Parvez Kayani has directed the National Logistics Cell (NLC) to operate like other public sector commercial organisations and stop enjoying special favours and exemptions meant for defence-related entities. This is a clear departure from the past.

Major-Gen Junaid Rehmat, director general of the NLC, on Tuesday informed the Public Accounts Committee (PAC) of the National Assembly that the army chief had barred the cell from availing benefits like tax relief and duty exemptions on business activities which a military-run organisation is entitled to.

The NLC, which is engaged in infrastructure development, provision of freight services, management of border terminals and strategic inland dry ports, earlier used to enjoy these favours.

Gen Rehmat informed the PAC that, under the army chief’s orders, he was running the NLC purely on commercial basis, paying all its financial liabilities be it under the heads of taxes or import and export duties.

The PAC took up the accounts of the NLC for 2008-09 on Tuesday.

The question of whether or not the NLC was a defence organisation popped up when the committee came to know that the NLC had imported seven custom-free Toyota Land Cruisers by showing them as stores for defence services.

According to a statement submitted to the committee, the NLC imported these vehicles after getting exemption on custom duty and sales tax on the strength of a certificate that “these stores were imported for the defence services and will be paid out of the defence budget, which is exempted from custom duty and sales tax”.

Moreover, these vehicles are currently under the unauthorised use of junior officers.

Another startling revelation followed when Auditor General Tanvir Ali Agha informed the committee that the NLC management had “fraudulently imported these luxury vehicles” out of the Punjab government’s account.

“The money for these vehicles was actually paid out of Punjabs kitty, but shown against defence budget in a clear-cut fraud,” Mr Agha said.

The PAC set a deadline of two weeks to fix responsibility in the case.

Everybody sitting in the committee room was stunned when the NLC DG conceded that former bosses of the NLC, Lt Gen (Retd) Mohammad Afzal Zafar and Major General (Retd) Khalid Zaheer Akhtar, and Chief Financial Officer Saeed-ur-Rehman doled out Rs 75 million to a private power generation company as loan in total violation of rules.

Mr Saeed is presently serving as member (finance) in the Capital Development Authority.

Gen Rehmat said the loan was given to Japan Power General without seeking any guarantee. “I am afraid there is no such provision available whereby the NLC could make this kind of investment,” the director general admitted.

Chaudhry Nisar now decided to give the room a piece of his mind.

Having gone through all these audit paras, the PAC chief observed, the word bankruptcy seemed inappropriate to explain the financial health of the NLC.

Instead, he said, the organisation had hit rock bottom and was down in the dumps.

The committee asked the secretary of the Planning Commission, Ashraf Hayat, who is principal accounting officer of the NLC, to fix responsibility and report back within a couple of weeks.

STOCK EXCHANGE INVESTMENT
About NLC’s massive investment in the stock exchange from 2004 to 2008, which caused a loss of over Rs 2 billion, the committee decided to wait for the report on another audit that is being conducted.

“I know everybody is looking up toward the PAC in this regard. I can only assure this time PAC will hold accountable whosoever is involved in wasting public funds,” said the chairman.