Most Urgent Request for the Special Audit of the PCB by the AGP..!

31 January, 2017

Respected Mian Muhammad Nawaz Sharif Sahab,

اسلام و علیکم

Sir,

As everyone knows that you very strictly believe and act on transparency and accountability in the government affairs and has a declared policy of zero tolerance in such matters, the following issue of payment (without conducting audit of the franchises) of about Rs.65 crores to the five PSL franchises of the PCB, alongside certain other glaring accounting and management lapses, needs your specific orders for an urgent and immediate special audit of the PCB by the Auditor General of Pakistan, on the issues raised in detail in below mentioned correspondence addressed to you and your concerned minister Mr. Riaz Peerzada.

Moreover, necessary orders may also be issued to the PCB chairman to not allow the formation of PSL as a private company, till the air is cleared after the special audit of the PCB by the AGP office.

Best Regards,

Syed Nayyar Uddin Ahmad
Lahore.
Dated 31 January, 2017

 

1 January, 2017
Payment of about Rs.65 crores to the franchises (without Audit of the franchises) by the PCB

Respected Riaz Peerzada Sahab,

AoA.

Sir,

The below mentioned write up was sent on 28 December, 2016 to all and every member (including Secretary IPC) of the BOG of the PCB, before the 30-12-2016 meeting in Karachi.

Quote:
It is reported that PCB paid about Rs.65 crores to Franchisees without conducting their audit.
If this news is correct then it is a very serious matter that how and why payment without audit was made to the franchises and on whose orders such a huge amount was paid?
PCB’s audit committee and governing members of the PCB board, must fix the responsibility of this huge lapse, if it has happened.
Unquote.

In my humble opinion PCB paying around 65 crore PKR to Franchisees without the audit of Franchisees, may land all members of the BOG (including chairman) in trouble if the they put their signatures of approval
in the BOG of 30th December, 2016.

Please request chairman Sahab to ORDER the audit of the Franchisees and refuse its approval without audit of Franchisees, come what may.

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

..https://www.snayyar.com/request-to-pm-for-govt-audit-of-pcb.html#sthash.20kxIjxY.dpbs
Best Regards,

Syed Nayyar Uddin Ahmad
Lahore.
Dated 1 January, 2017

 

29 December, 2016
Subject: Re-hashed Fresh Request to the PM for Special Audit of the PCB from the Auditor General of Pakistan

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 after certain new and important additions in my earlier email dated 26, December 2016,

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? Also how it is claimed and how the accounts were managed that profit of the PCB was shown as $2.6 million and from this figure an expenditure amount of $2.2 million was deducted as payments to the Franchises? Why not straight away deduct all expenses from the income and then state actual taxable meagre profit of the PCB as $0.4 million? Was this exercise was done to deceive the public and show profit as $2.6 million instead of $0.4 million.

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, 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
Lahore.
Dated 29 December, 2016

 
22 December, 2016
Subject: Real Reasons of Separating PSL from the PCB

Respected Mian Muhammad Nawaz Sharif Sahab, Prime Minister of Pakistan and Patron-in-Chief of the PCB.

اسلام و علیکم

Sir,

Certain new developments demands that the matter of formation of Pakistan Super League Pvt Ltd. (PSLPL), as a separate company from the PCB, be immediately brought to your kind notice.

Recently, PCB has officially stated the following three reasons for the formation of PSLPL on its website, as per link given below:(Link..http://www.pcb.com.pk/faqs-pakistan-super-league-pvt-ltd.html)

Reason # 1.
There are some serious financial and managerial issues at stake that require subsequent handling by a separate company as many such issues become complex with the addition of more teams in the near future.

First, most PCB earnings come from foreign sources, while most PCB expenses are incurred domestically. Therefore financial handling is very easy like any other Pakistani exporter. But it is the opposite with PSL in which case, most of PSL income comes from domestic sources while almost entire expenses are incurred outside Pakistan. This requires complex foreign exchange reserves and permissions from State Bank of Pakistan for forex payments to foreign venues, event managers, foreign players, boarding and lodging for teams and officials, etc. The facilities currently allowed to PCB for such foreign payments are simply inadequate to cater for the timely and significant transfers of monies required by PSL which are bound to increase with the addition of new teams, players and longer duration of the tournament in 2018 and subsequent years. A separate company with separate financial permissions from the Ministry of Finance and State Bank of Pakistan will be better geared to cope with this problem.

Rebuttal of Reason # 1.

a).

The PCB already operates about four accounts in Dubai as it is earning foreign exchange as income, from ICC and other matches abroad. Therefore, it has deposits there,

PCB is also paying for expenditures in the UAE, in connection with hosting of our matches.

As the PSL is being held abroad there is ABSOLUTELY no issue for the PCB to make payments from its bank accounts.

As such, no government red tape or other rules are any hindrance, in payments of foreign exchange or PKR, abroad or in Pakistan, respectively.

The PCB doesn’t need special permission from government to make payments as PCB already have several foreign exchange accounts in Pakistan, as well.

In view of the foregoing, there is no justification to make PSL a separate company from PCB, on such concocted or imaginary excuses.

b).

State Bank of Pakistan is a govt organisation and provides forex for all genuine requirements. Saying that procedures are difficult to comply is like criticising govt of Pakistan and its rules.

If PCB and PSL earnings and spendings pattern are inverse to each other, that should act as a blessings: as combining both, solves the problem.

Why a separate company is needed to obtain a special financial permission?

Finance ministry is always authorised to issue SRO allowing PCB to make payments in dollars to all foreign based players and organisations. All Pakistan based organisations, players and officials should be paid in local currency. This may be one of the reason why the proposal for new organisation is being fast forwarded, so that to get payments in foreign currency, resultantly getting savings on income tax.

If PSL is made a division of PSB, then a simple SRO from finance ministry will solve all their problems.

Remember, in corporate sector it is common practice to produce for local market and for exports. They keep separate details of accounts to avail export concessions, still annual accounts are prepared as one company.

Since, PCB always claims to bring corporate culture in it , why not start with this corporate practice.

Reason # 2.

Secondly, the understanding with Franchisees envisages the inclusion of independent professional managerial and financial expertise for purposes of transparency and neutrality in which meaningful and continuous consultancy with franchisees, who have invested millions of dollars into PSL, is made institutional. There is a need for a dedicated team to supervise this dynamic process and purpose.

Reason # 3.

Thirdly, the PCB is subject to political hiccups since it is a statutory body with the Prime Minister of the political party in power as the Patron. The PSL, on the contrary, cannot afford to be subjected to political instability because the investment in it is primarily from the private sector. The PSL financial model is a 10 year model, with negative results for the franchisees in the first few years and huge profits in subsequent years. It needs continuity of policies and management to be successful as additional teams are fielded and more investments are made by new franchisees.

Rebuttal of Reasons 2.

This point is a charge sheet of PCB. It says that a separate organisation is required for the reasons of transparency, neutrality, professionalism and ability to provide consultancy to franchise owners. This is straight forward acceptance that these traits are absent from PCB!!!!!

If we accept this point of view, then the decision of PCB to establish a separate private company for PSL was also non- transparent, biased and non- professional. Therefore, must be nullified by PM’s intervention immediately.

Rebuttal of Reason # 3.

This flimsy argument is not only self-contradictory, but hilarious and ridiculous, as well.

To whom this official statement on the PCB’s website is trying to deceive?

Everywhere, it is being propagated by the top notches of the PCB, in the media and also on the PCB’s website that this PSLPL will be 100% owned by the PCB.

At the same time PCB officially states on its website that “the PCB is subject to political hiccups since it is a statutory body with the Prime Minister of the political party in power as the Patron.”

Now, if the PSLPL will be 100% owned by the PCB, what difference it will make on the control of the government, when the PM of political party in power, will be naturally, the Paton-in-chief.

Furthermore, the above official statement of the PCB, that too on its website, is firstly, not only a clear NO CONFIDENCE on the PM of political party in power, who obviously can not be illegal ruler or dictator of the country; and comes into power with constitutional and legal authority: and secondly, an insult of the authority of the PM of political party in power. Moreover it is also a blatant condemnation/indictment of the political system, enshrined in the country’s constitution; and it is for the Attorney General of Pakistan and legal brains of the country, to determine, whether the top management of the PCB (a statutory body) is guilty of violation of any constitutional clause or/ and rules and regulations of the ESTACODE.

In view of the foregoing, there is now not even an iota of a doubt that the current top management of the PCB is rushing to create PSLPL, out of the PCB, for some hidden and undisclosed reasons, by putting up arguments on official website which absolute does not hold water.

Moreover, general public is being deliberately mislead with statements on media (TV interview dated 10, December 2016 at Express News TV link:- https://t.co/qYBHDk3IwD?ssr=true ) where Mr. Najam Sethi, who holds unprecedented five key positions in the PCB set up (1. Member BOG. 2. Chairman Executive Committee. 3. Chairman PSL 4. Chairman HR Committee. 5. Member Audit Committee) said that out of the PKR 26 crore profit from the 1st PSL, PCB was given profit of PKR 6 crore, instead of PKR 3 crore, due amount.

However, the official statement on the PCB’s website states absolutely a different figure quoted below:

Quote.
“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.”
Unquote.

Here, it will not be out of place to mention that PCB in its May 20, 2016 press release (also posted on the PCB’s website) admitted that the total budgeted expenditure of the 1st PSL was $7.71m while the ACTUAL expenditure was $8.93m, which was an excess of $1.22m, which is a very huge difference, requiring audit from the office of the Auditor General Pakistan, rather than leaving the matter to some other auditors.

Another deliberate wrong statement (just to impress the ordinary public) mentioned at PCB’s website is quoted as below:

Quote:
“Over and above this, the PCB’s BoG has set up an Audit Committee headed by Mansoor Masood Khan, President of UBL, to oversee all budgetary issues.”
Unquote.

However, the President of the UBL is Mr. Wajahat Husain since 1 June, 2014 and Mr. Mansoor Masood Khan.

The above contradictions in PCB statements on media are not mistakes, but to deceive, hoodwink and mislead deliberately to hide failures, incompetencies and exorbitant expenditures like spending about PKR 4 crore on a single dinner in Lahore.

It will not be out of place to mention that recently Serena Hotel Quetta, charged PKR 19.25 lacs for food items; and PKR 15 lacs as catering charges for a 400 persons VVIP function, during a visit of the PM to Pishin.

Sir, now just observe the vast difference of charges of a PCB function in the same city i.e. Lahore and out of Quetta function in Pishin.

The question which arises in this regard is that what was the Audit Committee of PCB (headed by the so called president of the UBL) was doing along with the most reputed private auditors. Here it will again be not out of place to mention that according to reports, PCB had earlier employed a GM (F&A), Manager (F) and Manager (A) who previously worked with the firm, which audits PCB accounts.

In this regard, no august member of Board of Governors, no audit committee or no independent auditors, ever questioned the PCB that why the media rights for period 2015-2020 were sold for less amount than the auction amount income of media rights of previous five years.

Now, it is high time that the Patron-in-Chief of the PCB, the Ministry of Inter Provincial Coordination and the Governing Members of the PCB ask the top notch management team, which is at the helm of affairs of PCB’s entire operations to explain, where was the money ($150m will come in 8 years from 2014 which comes to $18.75m per year) which was promised by Mr. Najam Sethi, that it will be coming from the ICC, after (according to Mr. Najam Sethi) Pakistan was made the Big4 of the ICC, as per his following statement published by the daily Express Tribune dated 30 June, 2014, extract quoted below and also link provided below:

Quote.
“That, Sethi claimed, will get Pakistan the most funds after the Big Three.

“We will get revenues on fourth number, and I can say with confidence that in the next eight year cycle we will get $150 million dollars from the ICC,” he said, bringing the total takings to $450 million.

This compares to Pakistan receiving $10 million from the ICC per year in the last seven-year (total $70m) cycle, Sethi added.”
Unquote.

Link:- http://tribune.com.pk/story/729174/big-four-pakistan-to-earn-450-million-in-cricket-cycle/

Sir, the above lengthy details of the utter and absolute management failures of the PCB’s heavy weights, proves that if all of them are allowed to continue with the PCB, they will surely ruin this national organisation, sooner than later, with ideas like formation of PSLPL etc.

As such, it is high time that the PCB is put on the right path, with an immediate surgical operation of replacing the entire set up with people, who love the glorious game of cricket genuinely, are efficient, dedicated and thorough professional and ready to work in harmony; and utilise the experience and wisdom of the senior cricketers, to make the PCB and the domestic cricket structure of Pakistan, best in the world.

Best Regards,

Syed Nayyar Uddin Ahmad
Lahore.
Dated 22 December, 2016