Nepali Times
Regular irregularities


Misappropriation and irregularities uncovered by this year's Auditor General's report may look petty and routine, but they add up to large losses for the exchequer. More importantly, they are violations by individuals and institutions on whom the people have put their trust. The report shows that unsettled advances taken by government officials have shot up and so have uncollected revenues. In some instances it is just poor bookkeeping, but there are more serious offences where officials have cut corners or bent rules for personal gain.

The irregularities reported in this year's report-including everything from non-compliance to rules and even corruption- adds up to Rs 25.70 billion, of which the cumulative unsettled advances total Rs 7.31 billion. This money is almost equal to what the government plans to spend on the social sector this fiscal year.

Most of the rules were disregarded at the Ministry of Finance, which is responsible for almost 28 percent of the total irregularities, followed by Ministry of Water Resources (10.6 percent), Works and Transport (8.86 percent) and Home Affairs (8.02 percent). By law, employee advances have to be settled within 35 days. The government has authority to take what is due directly from the salary thereafter, but that has not happened. Where defaulters on advances are not employees, the law authorises the government to publicise their names and realise the money. That too has been rare. The government, semigovernment agencies and district development committees taken together account for a whopping Rs 11.68 billion in advances. The top five ministries with the highest unsettledadvances are defence, local development, works and transport, education and home ministries.

What is more worrying is that successive governments have not even been able to collect revenues. The uncollected revenue in the past five years has reached Rs 13.53 billion. This is money that only needs to be collected. The Auditor General admits that though his figures may not be absolute and is an estimate culled from information gathered during the audit. All said and done, the Auditor General's report for the fiscal year 1999/2000 says as much as Rs 50.25 billion remains to be realised, in terms of uncollected revenues, foreign aid payments overdue, dividends, unaudited accounts, etc (see table).

Foreign aid also greases bad governance, sometimes. A lot of foreign aid to Nepal seems to be unaccounted for. The charitable explanation for this is that money has been spent without the government knowing about it, but it is equally possible that aid money may have been siphoned away from the targetted beneficiaries.

Aid ceases to be accounted for when it is not included in the budget. But there have been instances where grants were not budgeted, and in other cases the donors have spent the money directly, without the government knowing how it was used. The government is required to begin spending money after the agreements are signed but there are chronic delays in reimbursement. Donors, on the other hand, don't even bother to send expense reports to the concerned ministries. The Auditor General therefore does not get the accounts for many bilateral and multilateral grants. One example is a 1.2 million Kroner ($200,000) Danish grant for the implementation of the Value Added Tax. The money was not included in the budget for 1998/99 and the bilateral agreement requires the Danish Embassy to provide the government with an annual expense report. Last year the Auditor General asked for the report and was unable to get one, and neither did they get one this year. In the EC-funded Gulmi Integrated Rural Development Project the concerned ministry told the auditors that a Rs 14 million grant had been suspended. But when the auditors visited the project site they found that Rs. 51.2 million had been received of which Rs 41.1 million had been spent. The spending hadn't been audited. The money spent on building 22 bridges on the Mahendra Highway in West Nepal with Indian aid and the bridge in Pokhara constructed with Chinese aid are also not reflected in the books. But these may be innocent lapses compared to other glaring irregularities with grant aid.

Soon after the two Airbus crashes in 1993, an Italian company was ready to install a radar at Kathmandu airport for Rs 300 million, but a Japanese grant assistance costing twice as much was used instead. "No questions were asked because it was donor money," a senior official told us. "If you have seen all I have seen, you will know how hypocritical it is for donors to talk about corruption and good governance." National auditors are bypassed, necessary papers are not made available and no one knows where and how the money is spent. The Auditor General was provided information on only 40 of 448 agreements on technical and other assistance about which the government had informed parliament.

"I don't think that donors want to bypass parliament by not including their grants in the budget," says Auditor General Bishnu Bahadur K.C. "It may have happened because of miscommunication." He adds that his department is
capable of providing the information needed by donors and that he needs to be given a chance. "Trying to audit to meet their standards will also help build our capacity," he adds.

Particulars Rs. (in millions)

Irregularities and unaudited accounts 27,989
Irregularities and advances 25,705
Unaudited accounts 2,284
Uncollected revenues and other collectibles 22,267
Revenue remaining to be collected 13,530
Foreign grants remaining to be reimbursed 1,075
Foreign loans remaining to be reimbursed 3,824
Advance tax deductions not submitted to govt. coffer 202
Govt. guaranteed loans paid but not collected 1,459
Dividends payable to government 244
Other payments due from state enterprises and others 1,930
Total 50,256
Source: Auditor General's Report 1999/00

(11 JAN 2013 - 17 JAN 2013)