Education Ministry under Fire after Failure to Utilize German Funds

President Dr Arif Alvi criticized the Ministry of Education for criminal waste, inefficiency, and irresponsibility in the non-use of a Rs 13.707 million grant from Germany in 1993-94.

He had said a donation given 30 years ago to purchase paper which would enable the printing of low-cost textbooks has remained untouched till now. However, the government continues to seek international grants and loans to fulfil its immediate needs.

The President ordered the current Ministry of Federal Education and Professional Training to conduct an in-depth investigation, holding specific people accountable and taking legal action against them.

He urged the Ministry of Education not to pressure such investigations on retired employees, and he requested the compliance report to be sent to the FTO within 45 days.

The President noted this in his judgment issued today on the appeal filed by the Central Directorate of National Savings (CDNS) against the Federal Tax Ombudsman's verdict. He emphasized that the fund had been in the non-profit bearing account for six years and that no one had noticed. If it had been an officer's funds, he would not have let even one day pass before investing it in a profit scheme.

He registered that the damage caused due to leaving the money dormant totalled Rs 17,490,730, far exceeding the principal sum of Rs 13.707 million.

According to President Alvi, the money was put in Special Savings Certificates (SSCs) from July 23, 1999, until July 23, 2014. During this time, the government's policy for SSC was an automatic three-year rollover that didn't require investors to ask for it. He went on to say that after the automatic rollover of investments ceased on March 23, 2014, there was not a single person in the Education Sector who cared about the money. The Ministry let the total sum sit idle, producing no profit whatsoever.

He called the Ministry of Education's act of not using the principal amount "shameful" because the money supposed to be used to purchase papers to make cheaper school textbooks was stagnant in an investment scheme without being used.

When the government declared in 2020 that all cash held by ministries be placed in the national treasury, the audit uncovered the grave oversight of maintaining the German donation in the non-profit account. The Ministry withheld the funds in response to an audit objection; however, the issue of Zakat deduction and withholding tax arose.

President Alvi noted that the Ministry of Education had also failed to secure Income Tax and Zakat Deduction Exemption Certificates to claim exemption from withholding tax and Zakat deductions, which were permissible to the Ministry under current policy.

As a result of the Ministry of Education's failure to provide the exemption certificate, the CDNS withheld withholding tax and Zakat. This reflects poorly on the Ministry of Education's ability to manage government investment prudently and efficiently. Due to a lack of exemption certificates, CDNS was acquitted for acting in good faith and deducting the withholding tax and Zakat.

The President authorized the Ministry of Federal Education and Professional Training to contact the FBR and Zakat Department for retrospective exemption certificates and consider providing Exemption Certificates in line with the Regulations and Laws.