Massive Rs40 Billion Scam Unearthed in Khyber Pakhtunkhwa Government Accounts

The National Accountability Bureau (NAB) has uncovered a significant financial scandal involving a misappropriation of Rs40 billion within the Khyber Pakhtunkhwa government’s financial records. The investigation is ongoing and the amount is expected to rise, according to reports.

As a result of the ongoing inquiries, authorities have taken action by freezing approximately 50 bank accounts and seizing crucial documents from several government departments and financial institutions.

Key Findings of the Investigation

During the course of the probe, a surprising discovery was made when a dumper driver’s bank accounts were found to contain roughly Rs4.5 billion. NAB promptly moved to freeze these accounts.

  • The driver allegedly established a fraudulent construction firm.
  • Evidence indicates that around Rs7 billion was deposited into the accounts through questionable transactions.
  • Initial investigations also revealed that nearly 1,000 bogus checks were issued from government accounts, with 50 account holders identified so far.

The evidence increasingly suggests the involvement of influential political personalities and high-ranking government officials at the provincial level.

Details of the Scam

Sources indicate that the investigation was initiated following credible information received by the NAB Chairman regarding extensive financial irregularities in Upper Kohistan. Despite an annual developmental budget ranging from Rs500 million to Rs1.5 billion, approximately Rs40 billion was illicitly taken from government accounts over a five-year span (2020-2024).

The complex nature of the fraud has surprised seasoned NAB investigators. Approximately Rs40 billion was embezzled from the provincial government bank account designated for Security and Deposit Works KP 10113, purportedly for contractor securities. This account, intended for development projects, contractor securities, and payments, was manipulated through falsified documents, inflated bills, and fabricated securities. Preliminary findings suggest the organised withdrawal of approximately Rs40 billion, in clear violation of KP’s financial protocols.

Modus Operandi

The sophisticated fraud involved the Communication and Works (C&W) Department, Upper Kohistan, which allegedly created fake security refunds, fabricated records, inflated project costs, and approved fictitious contractor securities.

The District Accounts Officer (DAO) of Upper Kohistan reportedly approved unauthorised payments, violating the General Financial Rules (GFR) and Treasury Rules. Private contractors, colluding with government officials, are alleged to have submitted false invoices for non-existent projects. Bank employees in Dassu, Upper Kohistan, are suspected of unlawfully transferring government funds to private accounts, in contravention of State Bank of Pakistan regulations and anti-money laundering laws.

Oversight bodies, including the Accountant General’s Office and the Directorate General of Audit, failed to detect or prevent the fraud.

Current Status of Investigation

To secure evidence, records from the District Accounts Office, C&W Department, a bank, and related accounts have been confiscated. In addition to the dumper driver’s account, other accounts totaling Rs10 billion have been frozen. Around 30 individuals have been summoned for questioning. The investigation is examining the roles of 14 bank officials and officers from DAO, C&W, the Accountant General’s Office, and the DG Audit.

The situation reveals serious flaws in KP’s provincial financial system, potentially indicating deliberate sabotage. There are suggestions of involvement of officials and elements at the highest levels of provincial leadership.

The NAB KP team spent several days in Dassu Kohistan, securing relevant records. Due to the scale of the corruption, NAB has upgraded the preliminary inquiry to a comprehensive investigation.

Some account holders have denied any involvement in fraud, asserting that they run legitimate businesses and received payments for government contracts.

Bank officials have stated that all checks were processed according to banking regulations. They verify customer details and signatures. They have offered full cooperation with NAB’s inquiry and confirmed that the accounts had been frozen legally.

KP’s Finance Advisor Muzzammil Aslam stated that the finance department was not directly involved, as departments maintain separate accounts for contractor securities. He expressed surprise at the scale of the embezzlement.

He also noted that contractors are not required to submit such large securities, yet billions were refunded under the guise of security deposits, with no oversight from relevant institutions. He stated that the issue did not arise during his tenure and supports a thorough investigation.