PM Forms Committee to Reform SOE Governance After Mismanagement Report

ISLAMABAD: Following a report detailing how the CEO of a state-owned enterprise (SOE) received over Rs355 million in benefits within 32 months, Prime Minister Shehbaz Sharif has established a high-powered committee. The purpose of this committee is to conduct a thorough review of the governance structure governing SOEs.

The directive, issued by the Cabinet Division on August 15, tasks the committee with assessing and improving the processes for appointing and managing SOE boards. This is intended to prevent future abuses of authority.

There are concerns that substantial taxpayer funds are being inappropriately used by SOE executives for personal gain. According to an official source, the SOEs law, amended based on IMF recommendations, is being exploited by SOE leadership, as highlighted in the initial report.

On August 8, it was revealed that the CEO of an SOE linked to an economic ministry, appointed in 2022 with a fixed monthly salary of Rs500,000, utilized “legal loopholes” to acquire excessive benefits.

The board that recommended his appointment approved allowances, bonuses, and benefits totaling Rs355 million. This included:

  • Rs 56.3 million in fixed bonuses
  • Rs27.5 million in performance-based bonuses
  • Rs52.3 million acquired through a self-approved payout on his final day, including severance pay (Rs28.8 million) despite his voluntary resignation
  • Rs58.6 million spent on 23 international trips to locations such as the UAE, UK, and Australia, many considered unnecessary for the SOE’s activities

The report emphasized that the SOE Act of 2023, designed to enhance governance, inadvertently granted unchecked power to management and private-sector directors. The nine-member committee, headed by the Minister for Establishment, comprises secretaries from the Finance, Law, Commerce, Power, and Cabinet divisions, along with the FBR chairman and experts from the private sector. The committee’s primary objectives include:

  • Examining legal deficiencies in the SOE Act of 2023 and nomination procedures
  • Removing delays and obstacles in board member appointments
  • Assuring transparency in CEO compensation packages, board decisions, and regulatory compliance
  • Recommending changes to prevent the misuse of powers by “independent” board members

The committee is required to present its recommendations within three weeks. Sources mentioned in the report have voiced concerns about potential similar abuses occurring in other SOEs.