Rs32bn financial irregularities unearthed in KP Cities Improvement Project

PESHAWAR: A major financial scandal has surfaced in Khyber Pakhtunkhwa, with official documents revealing alleged irregularities worth Rs32 billion in the KP Cities Improvement Project (KPCIP), which aims to enhance urban infrastructure and municipal services in major cities of the province.

The Rs97 billion urban development project is jointly funded by the Asian Development Bank (ADB), the Asian Infrastructure Investment Bank (AIIB) and the KP government.

The project’s objective is to enhance urban infrastructure and municipal services in five cities — Peshawar, Abbottabad, Kohat, Mardan, and Mingora. It was launched at the end of 2022 and is expected to be completed by the end of 2026.

The irregularities prompted several provincial lawmakers — including PTI MPA Muhammad Arif, JUI-F’s Sajjad Ullah, independent lawmakers Taj Muhammad, Munir Hussain Lughmani, and Muhammad Riaz — to write to the chairman of Public Accounts Committee (PAC), demanding an inquiry into the matter.

According to the letter — a copy of which is available with Geo News — a joint venture involving a Pakistani and an unregistered foreign company was awarded contracts worth billions of rupees, which were not registered with the Federal Board of Revenue (FBR), KP Revenue Authority, or the Pakistan Engineering Council.

Despite limited progress on the ground, Rs32 billion were allegedly disbursed to the company. The payments were reportedly made based on falsified progress reports, poor oversight and alleged collusion between project staff and consultants, the letter stated.

It further claimed that the foreign company evaded taxes, with no record of income, sales, or withholding tax payments — causing significant losses to the national exchequer.

The lawmakers have demanded a formal investigation into the illegal payments, summoning relevant officials from the KPCIP, the Local Government Department and project consultants.

The letter also urges the matter to be referred to the National Accountability Bureau (NAB), FBR, and other regulatory bodies, holding all officers accountable who approved payments based on fake or incomplete documentation.

Taking notice of the complaints, Speaker KP Assembly and PAC Chairman Babar Saleem Swati have summoned a meeting of the committee on July 17 to discuss the matter. Officials from the Local Government and Communications & Works Departments, along with the Deputy Auditor General (North), have been directed to attend.

The PAC chairman has directed all relevant departments to prepare detailed responses on the matter.

Speaking to Geo News, JUI-F MPA Sajjad Ullah confirmed that a formal request was submitted to the PAC regarding the alleged large-scale corruption. “The speaker has summoned a session, and everything will be made clear,” he added.

In February 2025, an audit of the cities improvement project uncovered similar financial irregularities, misappropriations, unlawful payments and wasteful expenditure.

The audit findings indicate total financial discrepancies amounting to Rs8.4853 billion, raising serious concerns over governance, oversight and accountability in the province.

The audit report highlights multiple instances of financial mismanagement, including misappropriation of funds, unauthorised work, unapproved variations and deliberate cost escalations. Funds were disbursed for work that was never executed, resulting in significant losses. Payments of Rs8.80 million were misappropriated for non-executed work at the site, while Rs11.219 million was falsely claimed for fibre glass installation in a parking area.