ISLAMABAD: Auditor General of Pakistan published a damning audit report about Securities and Exchange Commission of Pakistan (SECP) for paying over Rs267 million in salaries, perks, and allowances to its chairman and commissioners without the legally mandated approval of the Finance Division, flouting the Rules of Business and a Supreme Court judgment.
The findings, part of the audit for the financial year 2023-24, identify two major categories of unauthorised expenditure. The first, amounting to Rs156.6 million, was paid as “pay, allowances, and other perks and privileges.” The second, a sum of Rs110.9 million, was disbursed as a “Rest and Recreation Allowance” to the chairman, commissioners, and other SECP employees.
The audit authorities have declared these payments “irregular and unauthorised,” stating they violate clear government regulations and lack “any legal validity.”
The report cites a clear directive from the Finance Division (Office Memorandum dated January 23, 2024) which states that “pay, allowances and their revision of all government employees including those employed in autonomous/semi-autonomous/corporate bodies requires prior approval of the Finance Division.”
It is noted that Rule 12(1)(h) of the Rules of Business, 1973, also prohibits any department from making changes with financial implications without consulting the Finance Division. The audit further refers to a 2016 Supreme Court judgment that explicitly states the Rules of Business are binding on the government, and any order failing to follow them is legally invalid.
The SECP management replied that the commissioners of SECP were appointed under Section 5 of the Securities and Exchange Commission of Pakistan Act, 1997 (SECP Act) by the federal government and Section 5(4) of the SECP Act, the commissioners and chairman are to be paid such remunerations and allowances as determined by the policy board. Finance Division‘s instructions are applicable/relevant to the extent of the employees of the autonomous bodies/semi-autonomous bodies who have adopted the federal government basic pay scales scheme in totality. However, SECP has made its own pay scales which are required to be approved by the commission and the policy board and therefore, aforementioned OM is not attracted in the case of the SECP.
The audit department, however, rejected this justification. It stated that the SECP’s status as an autonomous body under the Finance Division makes the Rules of Business unequivocally binding. The report concludes that the SECP’s interpretation is incorrect, and seeking prior concurrence from the Finance Division is a non-negotiable legal requirement, regardless of its internal pay scales. The audit has recommended an immediate halt to this practice. It has urged that the entire salary structure and all perks for the top management be sent for ex-post-facto approval to the federal government through the Finance Division to regularise the irregular expenditures.
Notably, the report mentions that the Principal Accounting Officer (PAO) and the audited formation were formally invited to discuss these irregularities in a Departmental Account Committee (DAC) meeting on January 14 and February 6 of this year. However, no response was received till the finalisation of the report, indicating a lack of engagement from the SECP management on the serious allegations.
This audit paragraph raises serious questions about governance and financial propriety at the country’s premier corporate regulatory authority. Only recently The News has reported how the CEO of an economic ministry-affiliated SOE, appointed in 2022 at a fixed monthly salary of Rs500,000, exploited “legal loopholes” to draw exorbitant perks. The board, which recommended his appointment, granted him allowances, bonuses, and benefits totalling Rs355 million.
