NAB unearths Rs40bn scam in KP govt contracts

• Issuance of around 1,000 fake cheques to 50 accounts discovered.
• Multi-layered fraud involves Upper Kohistan's C&W Department.
• Scandal exposes serious flaws in KP’s provincial financial system.
  

PESHAWAR: The National Accountability Bureau (NAB) has unearthed a whopping Rs40 billion scam in the Khyber Pakhtunkhwa government's accounts concerning misappropriation of funds, The News reported on Wednesday.

As the staggering amount continues to rise as investigations unfold, the ongoing investigations have led the authorities to freeze nearly 50 bank accounts and seize records from various government departments and financial institutions.

During the probe, a startling revelation emerged as a dumper driver's bank accounts were found holding approximately Rs4.5 billion, which was immediately frozen by NAB.

The driver had set up a fake construction company. Evidence revealed that a total of nearly Rs7 billion had been deposited into his accounts through suspicious transactions. Initial investigations also uncovered the issuance of nearly 1,000 fake cheques from the district’s government accounts, with 50 account holders identified so far.

Evidence increasingly points to the involvement of influential political figures and senior government officials at the provincial level.

Sources said the inquiry began after the NAB Chairman received credible information about massive financial irregularities in Upper Kohistan. Despite an annual developmental budget of only Rs500 million to Rs1.5 billion, nearly Rs40 billion were misappropriated from government accounts over five years (2020 to 2024) — a figure far exceeding decades of the district’s developmental grants.

The sophisticated fraud has astonished even seasoned NAB investigators. As per details Rs40 billion were embezzled from the provincial government bank account titled Security and Deposit Works KP 10113 under the pretence of contractor securities. This account, meant for development projects, contractor securities, and payments, was manipulated through forged documents, inflated bills, and fake securities. So far, the inquiry has found that approximately Rs40 billion were withdrawn in an organised fashion, in blatant violation of KP’s financial system.

The highly complex and multi-layered fraud involved the Communication and Works (C&W) Department, Upper Kohistan, which prepared fake security refunds, fabricated records, inflated project costs, and approved fictitious contractor securities, flouting all regulations, exaggerated project costs, and issued fake securities.

The District Accounts Officer (DAO) of Upper Kohistan approved unauthorised payments in blatant violation of the General Financial Rules (GFR) and Treasury Rules. Private contractors, in collusion with government officials, submitted fake bills for non-existent projects, while some employees of a bank in Dassu, Upper Kohistan, unlawfully transferred government funds to private accounts, flouting State Bank of Pakistan regulations and anti-money laundering laws.

The oversight agencies, like the Accountant General’s Office and the Directorate General of Audit, failed to detect or prevent the fraud, raising serious questions over accountability mechanisms.

To preserve evidence, records from the District Accounts Office, C&W Department, a bank, and related accounts have been seized. Along with the dumper driver’s account, additional accounts worth Rs10 billion have been frozen. As many as 30 notices have been issued to summon individuals for questioning. Investigations are also probing the roles of 14 bank officials and officers from DAO, C&W, the Accountant General’s Office, and the DG Audit.

The scandal exposes not only serious flaws in KP’s provincial financial system but also hints at deliberate sabotage. Evidence suggests the involvement of rogue officials and elements at the highest levels of provincial leadership, who deliberately allowed financial regulations to be bypassed.

The NAB KP team spent several days in Dassu Kohistan, securing all relevant records. Given the massive scale of corruption, NAB authorities have elevated the preliminary inquiry to a full-fledged investigation. As the investigation deepens, further explosive revelations are expected, with senior provincial officials likely to be implicated in the scam. As part of its ongoing investigation in Kohistan, the National Accountability Bureau (NAB) has frozen some bank accounts also.

However, when contacted, some of the account holders rejected the allegations of fraud and embezzlement, stating that NAB may be under some misunderstanding. They claimed to be running their companies under the law and insisted that the payments were received against government contracts.

Officials from commercial banks also clarified that all the cheques were processed and credited strictly according to banking rules and regulations. The banks merely verify customer signatures and credentials, and if any embezzlement has occurred, the banks have no involvement whatsoever.

They emphasised not receiving any complaints from the government regarding these transactions. The banks assured full cooperation with NAB’s inquiry and confirmed that the accounts had been frozen under the law.

When KP's Finance Adviser Muzzammil Aslam was contacted regarding the issue, he clarified that the finance department had no direct involvement, as various departments maintain their separate accounts for contractor securities. However, he expressed shock over the embezzlement of such a huge sum.

According to him, the contractors are not required to submit securities of this magnitude, yet billions of rupees were refunded under the pretence of security deposits, and the relevant institutions remained silent. He added that the issue did not arise during his tenure, so he could not comment further but emphasised that a thorough investigation should take place.