ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has concluded its inquiry into the controversial appointment and salary enhancement of a former acting chief executive officer (CEO) of Pakistan Reinsurance Company Limited (PRCL), finding that the PRCL board violated multiple laws and regulations.
The SECP will proceed against the board while the federal commerce ministry has been asked, “As SOE Act is not administered by SECP, the matter regarding revision of the compensation package in terms of SOE Act is being referred to the ministry for its consideration and any action, if deemed appropriate.”
In a letter sent to the ministry on October 14, the SECP said that no approval of the federal government or the commission was obtained for appointing the official in question as acting CEO. The regulator also noted that he lacked the required experience at the time of his appointment, and that the PRCL board approved an additional compensation package beyond what had been sanctioned by the federal government under the Special Professional Pay Scale-III (SPPS-III). The SECP observed that the board had prima facie disregarded several legal provisions, including the Companies Act 2017, Insurance Ordinance 2000, Insurance Companies (Sound and Prudent Management) Regulations 2012, and the Public Sector Companies (Corporate Governance) Rules 2013. It said adjudication proceedings had been recommended against the individuals concerned and the PRCL.
The commission further noted that after the promulgation of State-Owned Enterprises (Governance and Operations) Act, 2023, the PRCL board, in its 178th meeting held on October 2, 2023, once again revised and enhanced the CEO’s compensation package retrospectively from February 2023, on the pretext of aligning it with the new SOE law.
The SECP letter pointed out that such retrospective revision violated Section 36(3) of the SOE Act, which clearly states that the new law “shall not have retrospective application or effect.” Since the SOE Act does not fall under the SECP’s purview, the commission has referred the matter to the ministry of commerce “for its consideration and any action, if deemed appropriate.”
The inquiry was launched after The News revealed that the same CEO had drawn Rs355 million in salary and perks in just 32 months at PRCL, all with the board’s approval, before being appointed to head another state-owned enterprise under the same ministry. Despite those disclosures, no action was initially taken by the ministry of commerce. The PM Office, however, referred the matter to SECP.
The SECP’s findings now confirm the serious legal violations in the case and place the responsibility on the ministry of commerce to act under the SOE Act.
A copy of the SECP’s communication has also been forwarded to the ministry of finance for information.
The News had reported that the CEO, who was appointed in 2022 on a Special Professional Pay Scale III package with a fixed salary of Rs500,000, went on to pocket over Rs354 million in perks and allowances in just 32 months. The SOE’s board — empowered under the SOE Act, 2023 — approved hefty bonuses, allowances and privileges that ballooned his take-home benefits far beyond his fixed salary. These included fixed bonuses of Rs56.3 million, performance bonuses of Rs27.5 million, retrospective pay enhancements worth Rs52 million, and severance and gratuity payments of more than Rs46 million, even though he resigned to join another SOE.
He also drew massive sums for car monetization despite having multiple company-maintained vehicles, leave encashment, foreign visits costing nearly Rs59 million, and directors’ fees — all adding up to one of the most shocking cases of financial extravagance at public expense.
