Rs11m embezzlement detected in PIA food division
LAHORE – The Audit Department has pointed out Rs11 million embezzlement in procurement of catering items for VVIP and VIP flights by PIA Food Service Division, it is learnt.
Sources said on Monday that auditors detected that the procurement was made neither through annual contract nor quotations from the approved vendors.
They reported that Islamabad Flight Kitchen, with prior approval of the Food Services Division manager, made direct procurement and raised 148 Internal Requisitions (IR) costing Rs11 million from January to August.
The Islamabad Flight Kitchen provides catering services and meal arrangement for VIP flights (PAF) and VVIP flights (chartered).
Moreover, it provides catering services to local as well as international airline carriers like Air China in case of technical grounding of aircraft.
The auditors said the Procurement Division entered into an agreement with the Air China and per recipe rates were agreed among the parties as per provided menu.
They said: “Meal menu of the airlines and flights require specific items, ingredients which are not in use of the Flight Kitchen. Thus, the procurement of specific items is made on an ad hoc basis from four prequalified vendors among existing approved vendors at various rates. The Flight Kitchen generated revenue of Rs 95 million and Rs 76 million in 2016 and 2017 respectively through catering services to outsiders in eight months till August.”
They added: “The procurement was made without involvement and intimation to the Islamabad Procurement Section. On our inquiry from the management, we were informed that items used for such flights are not in use by the corporation, thus not available in the stores and procured from the local market.
“In some cases, IR against such item was raised after receipts due to requirement of these items at very short period or after normal working hours.
Islamabad Procurement and Logistic (P&L) manager floated tender on ‘single stage two envelops basis’ for supply of VIP and VVIP flights dry ration items. M/S MM Traders being sole bidder participated and quoted competitive rates as compared to the market.
On August 15, 2017, the manager raised a minute comprising list of items with their competitive rates and submitted it to the Store Purchase Committee for review and approval. But the committee disapproved it till October 30, 2017.
“The User Section was procuring such items through IR on an ad-hoc basis at higher rates as compared to competitive rates quoted by M/S MM Traders, resulting in procurement of items at costly prices.”
Moreover, the auditor pointed out segregation of duties cannot be ensured in the procurement process due to direct procurement by user section through IRs.
Further procurement at non-competitive rates from vendors without obtaining quotations may become costly to the corporation.
User Section should not procure items through IR without involving respective Procurement Section. The selected party (M/S MM Traders) and rates quoted along with quality of items should be reassessed and presented to competent authority for approval.
Once approved, a formal annual contract should be entered with the party to supply items on an ad-hoc basis.
Otherwise a fresh tender should be floated to invite parties for supply of specific items for a year used for VVIP/VIP etc flights.
Till the time, all procurement should be made from existing approved vendors at competitive rates.
When contacted, a PIA spokesman said that if the audit objection could not be addressed, the matter would be referred to the Public Accounts Committee for further action.