Rs32bn Financial Scandal
PESHAWAR: A major financial scandal has emerged in Khyber Pakhtunkhwa (KP) involving alleged irregularities amounting to Rs32 billion in the KP Cities Improvement Project (KPCIP), an ambitious urban development initiative aimed at enhancing infrastructure and municipal services across five key cities — Peshawar, Abbottabad, Kohat, Mardan, and Mingora.
The project, valued at Rs97 billion, is jointly financed by the Asian Development Bank (ADB), the Asian Infrastructure Investment Bank (AIIB), and the KP government. Launched in late 2022, it is scheduled for completion by the end of 2026.
The controversy came to light when several provincial lawmakers, including PTI’s Muhammad Arif, JUI-F’s Sajjad Ullah, and independents Taj Muhammad, Munir Hussain Lughmani, and Muhammad Riaz, raised serious concerns about the financial mismanagement within the project. They formally petitioned the chairman of the Public Accounts Committee (PAC) demanding a comprehensive inquiry into the alleged irregularities.
According to a letter submitted to the PAC, a joint venture between a Pakistani company and an unregistered foreign firm was awarded contracts worth billions without being registered with critical regulatory authorities such as the Federal Board of Revenue (FBR), KP Revenue Authority, or the Pakistan Engineering Council.
Despite limited visible progress on the project’s sites, Rs32 billion was allegedly disbursed to the company based on falsified progress reports, weak oversight, and suspected collusion between project staff and consultants.
The letter also accused the foreign company of tax evasion, citing no records of income, sales, or withholding tax payments, which contributed to significant losses for the national exchequer.
The lawmakers have called for a formal investigation, urging the PAC to summon officials from KPCIP, the Local Government Department, and project consultants for accountability. They also requested the referral of the case to the National Accountability Bureau (NAB), FBR, and other relevant bodies to ensure that those responsible for approving payments based on fraudulent documentation are held accountable.
In response, Speaker of the KP Assembly and PAC Chairman Babar Saleem Swati has scheduled a committee meeting for July 17 to discuss the issue. Officials from the Local Government and Communications & Works Departments, along with the Deputy Auditor General (North), have been directed to attend and prepare detailed responses.
JUI-F MPA Sajjad Ullah confirmed the submission of the formal request and expressed confidence that the committee would thoroughly address the corruption allegations.
This latest revelation follows an earlier audit conducted in February 2025, which uncovered Rs8.4853 billion in financial irregularities within the same project.
The audit highlighted numerous cases of financial mismanagement, including unauthorized work, unapproved cost escalations, and payments made for work that was never carried out. Specific examples include misappropriation of Rs8.80 million for non-executed site work and a false claim of Rs11.219 million for fiberglass installation in a parking area.
These findings have raised serious concerns over governance, transparency, and accountability in KP’s urban development projects, prompting calls for stringent reforms and closer monitoring to safeguard public funds.
