Utility Stores Corporation: A Tale of Corruption and Incompetence

By Muhammad Ahmad –

Asia’s largest retail network – the Utility Stores Corporation (USC) – is faced with a plethora of serious challenges emanating out of maladministration, rampant corruption. These combined with poor governance and irregular practices have dented the reputation of the retail network, in addition to compromising the professional standards besides of course deteriorating the state-run enterprise’s financial condition.

Allegedly, immense corruption is witnessed during the procurement of commodities from favorite companies; the commodities are usually substandard. The corruption is done in connivance with the senior management; war of words between the Sindhi Federal minister and the Managing Director (MD) USC are a common occurrence in the USC daily matters. Pro-active involvement of the mighty rulers in the USC affairs, and controversial appointments, are all inflicting jolts to the corporation and its governance structure.

Corruption exceeding allegedly about Rs15billion per annum is mega loss to the USC. This is despite the fact that corporation’s income has reached up to Rs70 billion showing an annual increase of 35 per cent. The cooperation since 1971 has earned profits, each year, with only 20 outlets in different parts of the country. However, there is a need to pay greater attention to end the menace of corruption, especially stopping the favors to the blue-eyed companies and their patrons through direct procurement in the USC.

Here, the Pakistan Muslim League (Nawaz) government is requested to look into the matter, and respond accordingly. It is its prime responsibility of the government to streamline the affairs of Corporation by giving an end to the ‘political’ and ‘mafia’s’ active involvement in the matters of USC. In addition, it is also important that the purchases especially for the food items are passed through lab tests and quality management exercise especially for the purchased commodities being displayed at outlets. This simple exercise will ensure quality and save the lives of millions of poor customers, as reportedly substandard pulses are causing dangerous affects to public health.

Similarly the importance of sending a fact finding commission to company outlets cannot be omitted, as such a mission is necessary to ascertain the truth pertaining to the issue of the ongoing sale of low quality commodities at the outlets.

Sub-standard procurement of daily use items, financial irregularities, tussle between the Sindh based Feudal Minister Ghulam Murtaza Khan Jatoi and Khaqan Murtaza a 23rd common officer of Pakistan Administrative Services (PAS – old DMG) etc has been yet another cause of the dysfunction at the cooperation and has resulted in colossal losses and brought bad name to the corporation and the PML-N government as well.

The operational activities of the USC are managed by the MD who is assisted by three senior and twelve General Mangers (GMs); a newly formed Board of Directors, which periodically provides policy guidelines, is monitoring this group as well as the entire operations of USC. The Secretary, Industries and Production is Chairman of the Board of Directors.

The USC has presently sixty five (65) Regional Offices which are headed by Regional Managers and monitored / supervised by Ten Zonal Managers besides 6015 outlets across the country in which over 16000 employees are working, the main aim of the group is to sell commodities at very cheap price to the poor segment of the country. So as to provide essential and other items of daily use to the public, especially the poorer segments of the society, at prices comparatively lower than the market. This is to be carried out while acting as a price moderator and deterrent to profiteering, hoarding and black marketing, thereby the aim is to provide economic relief to the public.

Three high officials of the USC are under the National Accountability Bureau (NAB)’s gaze as it is probing corruption charges against these top ranking officials, namely the General Manager Human Resource Wing Inayatullah Daula, Senior General Manager Coordination Sultan Mehmood and General Manager Vigilance Raja Ijaz; all are accused of financial irregularities amounting to aroundRs60 million.

It has been alleged that the said three high officials at USC had played a role in investing Contributory Provident Fund (CPF) heavily in National Investment Trust without seeking approval from the competent authority and that had resulted in losses worth approximately Rs60 million to the corporation.

The record showed that the USC already held two interval inquiries into the matter in 2011 and 2012 and findings of first inquiry was rejected by the governing board terming it a ‘mala fide attempt’ while the second report gave a clean chit to all officials who were probed in CPF funds case.

In another case, GM Human Resource Wing Inayatullah Daula and other officers have been blamed for more than 2,000 illegal appointments but interestingly NAB has sought the record of these appointments from Inayatullah Daula who is himself accused in the case.

It is pertinent to mention here that the PPP-led government not only inducted all these persons in USC but also announced that it would regularise their services through the Khursheed Shah Committee, but this could not materialise due to some bureaucratic hurdles.

According to the official record, around 9,000 USC employees are regular, 4,520 employees are working on contractual basis and 2,443 daily wagers work in the USC throughout the country. The Cabinet Sub-Committee on Regularisation of the contract/daily wages employees in previous government approved regularisation of the 3,925-contract/daily wages employees of USC but the relevant authorities did not implement the decision.

The official record also shows that the USC administration has already dismissed some 1,100 daily wagers inducted during the PPP’s government besides showing the door to those 150 wagers recruited by the caretaker government.

It is also learnt that the internal inquiry into the case ‘officially’ established the fact that the relevant officials did no wrong and they are again ready to face the probe into the CPF case initiated by the NAB. “The inquiry done in 2012 also concluded that no ill intentions were involved when CPF funds were invested in National Investment Trust,” said an official at the USC. He added that there should be no reservations about inquiry into recruitments made during the PPP’s government because if there had been violation of rules then the incumbent government has the authority to take action in this respect.

The USC has so far failed in maintaining quality of different commodities according to International Standardization Organization (ISO) certification, as standards of ISO have been compromised in USC for a long time. The quality of pulses, oil and ghee, grains, rice and spices which are to be provided at reasonable rates at USC outlets are no better than those available in the open market.

This is despite the fact that the USC hired country’s ‘big brands’ for packing of grains, rice and spices and these brands were expected to be held responsible if there were quality failures but no action has been taken against them. Customers have had to deal with bad quality found in the commodities at various outlets of the corporation. “One can visit any of the USC center situated in remote areas of the country to verify the facts,” a senior official at USC said on the condition of anonymity.

Surprisingly, the Ministry of Industries & Production had recently moved a summary to the ECC, seeking approval to allow the USC to directly procure sugar from mills. Ahead of this proposal, the Trading Corporation had been waiting for a clear-cut ECC policy and a decision on price matching offers had also been put on hold to respond to this request but this practice has not been followed. At present, the USC is directly procuring other commodities such as pulses, rice, wheat flour and cooking oil, while TCP is responsible for purchasing sugar for USC and to build strategic reserves.

Sources in the Ministry of Industries and Production told Pique that procurement and purchase department of USC makes the purchase orders, allegedly through a “selective bidding” rather than open tendering. This has resulted in the purchase of sub-standard commodities worth billions of rupees each year. They said the procurement of commodities to some extend has never been conducted through open bidding as the corporation purchased low quality and most times ‘expired’ commodities through selective bidding only. This occurred because its management pocketed the ‘commission’, from the hands of mafia that allegedly greased the palms of the senior management on every so-called case of ‘open bidding’.

Recently, an audit team visited the outlets for an audit and informed the top “baboos” of USC about billion rupees worth substandard purchase of commodities from different companies. The team has also disclosed that fake procurement had been made in remote areas especially of Sindh, Gilgat-Baltistan, and Balochistan, sources said.

Sources in USC also revealed to this scribe that an official of the corporation hailing from Balochistan province has written a letter to the MD, USC and disclosed that he had done corruption worth above Rs3-5crore only because massive corruption was being practiced from the top to bottom level in the corporation for a long time.

The official in question has now fled to Dubai. “The official is in Dubai but the top management of USC has so far not taken any concrete steps to bring him back to Pakistan”, as it is shocked and has decided to keep mum on the matter of enormous financial irregularity, a source claimed.

Interestingly, incumbent Managing Director (MD) of the USC has so far taken action against 1500 USC employees involved in various corrupt activities.

The tussle between the “baboos” and Sindh based feudal minister saw a climax over the controversial 68 appointments in USC made all over the country. The Prime Minister secretariat instead of listening to the Ministry of Industries and Production, asked MD (USC) Khaqan Murtaza to continue to work in his own way despite the fact that the Minister went to that extent that he decided to surrender his own services and request the premier to appoint any other person.

Khaqqan Murtaza was not only the batch mate of the Press Secretary to Prime Minister Mohi Uddin Wani but was also his roommate during training. Mr. Wani had managed to get him appointed as MD USC. When the Minister wanted him to hire a few people on daily wages, he refused and said that there was a ban while he himself hired 68 people on daily wages, however, after getting the special permission from Board of Governors (BoG) , they were added to the list of employees.

It was learnt through sources that Khaqan Murtaza was appointed as the MD USC a post of 21 grade official in violation of the orders of the Islamabad High Court (IHC), who asked the Secretary to appoint the senior most official. As per the desire of the IHC, secretary nominated three senior most officials (from grade 21) to the secretary establishment. Secretary Establishment besides these three names, added four more names (all grade 21) and sent them to the Prime Minister’s office but the PM Office set aside all these seven names and appointed Khaqan Muratza (a grade 20 official) as MD, depriving the senior most officials of USC from legal right to become MD.

It is worth mentioning here that the ECC has approved a Rs 2 billion Ramzan Package. The ECC also approved a subsidy of Rs6 per kilogram on floor, Rs10/kg on oil, pulses, basin, drinks etc besides Rs50/kg subsidy on tea.

However, the need of the hour is to heed the complaints of consumers regarding continued sale of sub-standards commodities on the outlets of USC. Although the poor segment of the society has complained about the low standards of commodities at the advent of each Ramazan, no measures have been taken so far to end the sale of low quality commodities during Ramzan or as daily use items at USC outlets across the country.

Here, strong vigilance is required to make the USC a success story in the region especially in south Asian countries by overcoming on shortcomings being faced by the corporation.

The writer is a journalist based in Islamabad.