SC order audit of all secret funds

The Supreme Court of Pakistan on Tuesday declared that all expenditure from the public exchequer must be made in a transparent manner and each Rupee of such expenditure must be audited by the Auditor General of Pakistan (AGP), to ensure compliance with law.

Giving its detailed judgment in media commission case today‚ the court noted that the existing mechanism of audit of funds is not transparent. It said audit of secret funds is imperative for elimination of irregularities. 

The Supreme Court directed the Auditor General of Pakistan to evolve mechanism for transparent audit of secret funds.

The twenty-page judgment said funds should be utilized from the national exchequer in a transparent manner.

The apex court announced a detailed order in Constitution Petition 105/2012, also referred to as the Hamid Mir case.

Arguments on the subject matter of this Order were heard by a three-member bench comprising Justice Jawwad S. Khawaja, Justice Khilji Arif Hussain and Justice Ejaz Afzal Khan.

The order concerns issues related to media freedom and governmental spending on the media. The petitioners have sought the abolition of Secret Service Funds which have purportedly been used by governments to buy the loyalty of journalists and other opinion-makers.

The Order declares Rule 37(5) of the General Financial Rules (GFR) of the Federal Government as unconstitutional. This rule had up till now been used to shelter Secret Service Funds from independent audit by the AGP – funds which existed in the budget of no less than 27 ministries FY 2012-13 and amounted to more than Rs. 3.57 billion.

The Court has clarified that after the 18th Amendment, on account of Article 170(2), the AGP enjoys a strong constitutional mandate to audit all public spending without exception. Funds which have been declared as secret either by an executive order or ordinary legislation do not fall outside this purview. Furthermore, autonomous public bodies which do not receive any government funding, but are established by the government or are under its control, are also not beyond the AGP’s duty and power to audit.

The Court has clarified that the AGP is allowed, in fact obliged, to exercise oversight over accounting procedures adopted by the government. Article 170(1) of the Constitution and Section 5(1) of the Controller General of Accounts (Appointment, Functions and Powers) Ordinance, 2001 make this amply clear. The AGP should therefore examine the adequacy of the accounting system prescribed for Secret Service Funds, under Rule 37(1) to (4) of the GFR. It may be mentioned by way of background that the method prescribed by these rules is extremely sketchy, relying entirely on the good faith of the users of these funds. This system is clearly open to abuse. If the AGP, after independent assessment, finds the mechanism below par, the Government would be obliged to substitute it with a more transparent one.

The Court has also clarified that under Article 171, the AGP’s reports must be shared with the President, Governor, the Parliament and the provincial assemblies.

Writing the Court’s opinion, Justice Khawaja has highlighted that accountability of those who hold high office in government represents ”the very foundation for the levy and legitimacy of taxes etc.” Citing the famous incident of Hazrat Umar being held to account for his two pieces of cloth, Justice Khawaja emphasizes that “[i]t is through such levels of financial probity and pubic accountability that governments exercising authority in the name of the People, derive legitimacy.”

The judgment cites the example of countries all over the world, including the UK, France, Germany and even the security state of Israel, who have gradually moved towards more rigorous standards in public accounting and audit.

Nonetheless, the judgment also acknowledges that there may be exceptional circumstances where certain audit information would need to be kept outside the public purview. If such exceptions are to be claimed, they must claimed through legislation and not in an arbitrary manner. Furthermore, such legislation would be subject to judicial review to ensure compliance with constitutional requirements.

The judgment has been announced in both Urdu and English and is available on the Court’s website i.e. www.supremecourt.gov.pk.

Short URL: https://www.newspakistan.pk/?p=40931

Posted by Tahir Khan on Jul 16 2013. Filed under Latest News, National, Pakistan. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.