Re-hashed Request to PM for Govt Audit of PCB..!

Posted by Syed Nayyar Uddin on December 26, 2016 in Cricket, My Views, Pakistan, Sports |

Respected Mian Muhammad Nawaz Sharif Sahab.

Prime Minister of Islamic Republic of Pakistan.

Patron-in-Chief of the Pakistan Cricket Board.

Dear Sir,

This email is in continuation of my earlier email dated 26, December 2016, after certain new and important additions.

You are requested to kindly issue necessary orders to the Ministry of Inter Provincial Cooperation, Government of Pakistan, Islamabad to look into the following very important questions concerning the PCB and to submit you a report within three days, for your perusal, before the next PCB BOG meeting planned to be held on 30 December, 2016 in Karachi.
As per the PSL’s website statement ( http://psl-t20.com/faqs-pakistan-super-league-pvt-ltd/ )
PCB’s external audit for the year 2015-16 is already complete in which year PSL was a major event and the audited financial statements are expected to be presented to the Audit Committee and to the BOG of PCB in December 2016.

In this regard, certain extremely important following issues are brought to your notice for critical examination and analysis by the experts of the government.

Certain details about PSL were made public by a PCB’s statement as below:

LAHORE – May 20, 2016: While publishing PCB/PSL Council’s clarification today (May 20, 2016), Dawn’s Lahore Sports Reporter has again misrepresented the facts viz ‘No joyriders entertained at PSL, clarifies PCB.’

“The correct position was explained by PSL chairman Najam Sethi two weeks ago but seems to have escaped notice.

“The estimated cost of the PSL was not jacked up from USD 60 million to over USD 90 million – reducing PSL’s profits to just USD 2.6million– as alleged by your reporter. In actual fact, the budgeted Operating costs were $4.17m while the actual Operating expenditure was $4.22m, showing a very small addition of only $50,000. The total budgeted expenditure was $7.71 while the actual was $8.93m largely on account of higher venue hiring fees of Dubai and Sharjah stadiums and sanction fee of Emirates Cricket Board.”

“On the other hand, the budgeted profit was $310,000 but the actual profit turned out to be $2.6m— eight times higher than projected.

“As far as the number of journalists sent over to the UAE to report on PSL, this too is far lower than the randomly reported 70 by you. The fact is that only 46 journalists from across print, electronic and digital media were sponsored. The rationale and objective was purely professional, as in PSL Council’s assessment obtaining optimal projection for the event was likely to accrue higher yields from marketing/merchandising in the subsequent seasons, thus not only offsetting the cost on this account but gaining handsome dividend. The strategy of positive image-building of the event has been deemed as successful by independent feedback.”
As per the PSL’s website (link:-http://psl-t20.com/faqs-pakistan-super-league-pvt-ltd/ ) certain financial disclosures are made as below:

“PCB invested very little as seed money (amount needs to be disclosed) in the project while the Franchisees invested $9.3m in the form of franchise fee to PCB. Upon conclusion of all PSL accounts, PCB earned $2.6m profit before tax, while the Franchisees, as expected, showed losses on their initial investment. Being cognizant of this fact, PCB reimbursed them to the tune of $2.2m out of its own profits in order to reduce their losses as pledged during marketing presentations before the process of sale of franchise rights. But the franchisees benefited from a significant rise in the value of their assets, called capital gain, by over 100% and they were able to cash in on this dimension by getting major brand name sponsors and media houses on board.”

The first question which arises from the above official PCB figures is that:

1. Why there is no mention of income from sponsorship earnings and from broadcasting deal?

2. Chairman PSL categorically declared during a TV interview of 10 December, 2016 on Express News channel that PCB will get $0.6 million out of $2.6 million earnings. Now this statement of chairman PSL is different from the 20th May, 2016 press release which stated that PCB will get $0.4 million out of the total earnings of $2.6 from the PSL-1. Why this contradiction in two statements? Moreover, it is also reported that since PCB committed to offset a minimum of 75% loss of the Franchises during the PSL-1, a whopping amount of $6.5 million was paid to the Franchises. This expenditure of $6.5 million is in fact, 72.78% of the total $8.93 million expenditure of the PSL-1. Again in the same TV program referred above, the chairman PSL told that in the next PSL-2 since no amount will be paid to the Franchises to compensate their losses, PCB will get a profit amount of $3 million. This information raises the question that instead of the entire minimum savings of $6.5 million which was paid to the Franchises in PSL-1, still PCB will get a lesser amount of profit worth $3.5 million, if we assume that other expenses will be more or less the same, as were in PSL-1. In other words, we can say that from the PSL-2, PCB will be getting $3 million profit and a plan has already been made to jack up the expenditures approximately by $3.5 million.

3. (a). As officially informed by the PCB vide press release dated 20 May, 2016 total expenditure of PSL-1 was $8.93 million and income from Franchises was $9.3 million. These figures depict a surplus or profit of $0.37 million to PCB. Now the question which needs clarification is which of the three profit figures of PCB ($0.6m, or $0.4m or $0.37m) are correct, how the total profit has been worked out and how much the income from other sources like broadcasting rights, sponsorships, gate money etc., was added in the total income?

3. (b). The below mentioned figure of $2.2 million stated on the website needs clarification because the amount paid to the Franchises for compensation of their losses is many times higher than this figure of $2.2million?
“PCB earned $2.6m profit before tax, while the Franchisees, as expected, showed losses on their initial investment. Being cognisant of this fact, PCB reimbursed them to the tune of $2.2m out of its own profits in order to reduce their losses as pledged during marketing presentations before the process of sale of franchise rights.

4. (a). Moreover, the above statement that “Being cognisant of this fact, PCB reimbursed them to the tune of $2.2m out of its own profits in order to reduce their losses as pledged during marketing presentations before the process of sale of franchise rights.”
raises serious doubts that there was no written agreement of the PCB with the Franchisees detailing requirements of their itemised verifiable (by the PCB’s internal and external auditors) budgeted expenditures, duly approved in advance, by the PCB’s Audit Committee and documentary justifications (acceptable to the Audit Committee of the PCB), for the excess expenditures, which entitled them for compensation from the PCB; thus rendering the payment of $2.2 million (actually many time over) by the PCB to the Franchisees, as ultra vires.

4. (b). Under the circumstances of the above statement of the PCB that “the franchisees benefited from a significant rise in the value of their assets, called capital gain, by over 100% and they were able to cash in on this dimension by getting major brand name sponsors and media houses on board.”
the question arises why and under which circumstances, who gave this commitment to the Franchisees to compensate their loses; and why and who allowed this ultra vires payment of $2.2 million (actually many times over) to the Franchisees?

5. It should also be deeply and throughly audited that why the total budgeted expenditure of $7.71 million exceeded by $1.22 million; and the actual expenditure was $8.93 million? In this regard, the itemised documents, bills and invoices of the entire expenditure of $8.93 millions must be got checked and re-verified by the office of the Auditor General of Pakistan, as the PCB is a statutory body of the government of Pakistan.

6. Keeping in view that PCB is neither a private club nor a private entity, but a statutory body of the government of Pakistan; and as per the requirements of the cannons of the accountability, transparency and the best corporate practises the names and amounts spent on the 46 media persons (as already admitted by the PCB vide its statement dated 20 May, 2016 quoted above) must be declared and published for the information of the general public.

7. (a). The fact that first PSL’s draft was held in Pakistan and the second PSL’s draft was held in Dubai needs investigation that who gave this approval for holding the players draft in Dubai and how much extra expenditure was incurred in holding draft outside Pakistan and was this expenditure approved in the budget?

7. (b). The fact that an exorbitant amount of about Rs.4 crore was spent on a dinner held in the year 2015, at Expo Centre Lahore in connection with launch of PSL, needs special itemised audit, to rule out any misgivings of the public that there are lavish and extravagant spendings in the PCB.

7. (c). Kind attention is also invited towards the following Wikipedia statement mentioning about a company named Tech Front, a United Arab Emirati group. The Government Auditors and the PCB Audit Committee may be advised to confirm from original documents, the real ownership of Tech Front, to rule out any chance of direct or indirect conflict of interest.

Quote.

“Sunset + Vine were awarded rights as official broadcasters for the first four seasons of the league. Ten Sports, PTV Sports and Geo Super were awarded broadcast rights in Pakistan for the first three seasons. The value of the broadcasting deal was $15 million, with the PCB selling the global television rights to Tech Front, a United Arab Emirati group, for the same duration.[29] In the first season matches were streamed live on YouTube in Pakistan, on the PSL official site and via the PSL app.[30] Viewers worldwide, excluding Pakistan and the Middle East, could live stream matches on cricketgateway.[31][32]”

Unquote.

8. Since, the PCB is a statutory body of the government of Pakistan, which has specific rules for certain payments on additional or dual jobs, who and why allowed exorbitantly high salaries to those PCB employees, doing the work of PSL, as well? This double salary payments should be recovered, either from the employees who got these illegal payments or jointly from the authorities who sanctioned these illegal payments.

9. (a) On which legal and moral grounds some employees of the PCB have been allowed to continue jobs without providing their educational qualification testimonials/degrees, on the basis of which they originally got their jobs in the PCB, which is not a private club or company, but a statutory body of the government of Pakistan?

9. (b). Why such employees who defrauded the PCB in getting employment on wrong and false grounds, have not been dismissed from service with the orders to refund the entire expenditure incurred on them by the PCB?

9. (c). At a time when it has been reported that FIA and NAB are investigating in PCB, besides other matters, unauthorised appointments, as well; and as per the orders of the IHC, many people were removed from their PCB jobs, now it has again been reported that approval from PCB BOG may be sought for appointment of Media/Marketing manager (on six figure salary), when already these departments are staffed with more than sufficient number of employees.

9. (d). In view of the FIA/NAB enquiries into the previous irregularities of the PCB, now a time has come to cancel all such extravagant previous approvals, wherein, employees have been allowed to purchase vehicles, having engine capacity, much more than allowed, as per service rules of the PCB.

10. In the name of best corporate practises, transparency and accountability the PCB should follow the rule without any discrimination that if any employee was under inquiry/investigation of the FIA or the NAB, on some criminal/financial charges, he should be kept under suspension, till he/she is cleared by the investigating agency.

11. Similarly, to avoid any complaints of conflict of interests, nepotism and favouritism or in the cases of reports of pushing or using direct or indirect influence for selection of relatives or friends in the national teams, such persons must be dismissed from the PCB in line with the best corporate practises, for which an ombudsman should be immediately appointed for the PCB, as already appointed in the BCCI, after the orders of the Indian Supreme Court, to purge it from corruption, match fixings and other irregularities, which defames the organization.

Best Regards,

Syed Nayyar Uddin Ahmad

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