NAB to investigate financial fraud worth millions at Pakistan Post

Government contracted Telconet to automate the activities of seven financial services in 83 general post offices (GPOs) throughout the nation, however, system was not working effectively even after a time duration of seven years.

Pakistan post office fraud

A local newspaper has reported that the Pakistan Post Office (PPOD) has been party to a financial fraud entailing millions of rupees due to the connivance of PPOD officials.

According to documents the management of PPOD, in 2012, signed a contract with M/s Telconet to automate the workings of seven financial functions in 83 general post offices (GPOs) across the country, however, inquiry report into the Centralized Software Solutions (CSS) shows that the system was not working effectively even after a time duration of seven years.

Financial fraud case at Pakistan’s post office 

A three member committee has been formed by secretary postal services under the supervision of Senior Joint-Secretary Khalida Gulnar, alongside officers Waqar Masood and Muzammil Hussain.

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The inquiry committee after initial investigation reported that a foreign-based solution was vital, competition was forcefully restricted as bidding for the financial services was limited to only domestic contractors rather than including international contractors as well.

Furthermore, the PPOD failed to provide the draft contract between Telconet and PPOD to law and justice division for vetting and violated the pubic procurement rules set up by the Public Procurement Regulatory Authority (PPRA), particularly the clause of repeat orders at 15 per cent of the project cost, to automate 40 sub-post offices favouring the contractor.

Similarly, PPRA rules also entail the provision of an integrity pact which was not signed between PPOD and M/s Telconet. Moreover, PPOD made an advance payment Rs77.634 million in full to M/s Telconet without fulfilment of the contractual obligations whatsoever. The contract was in clear violation of the PPRA rules as it had been extended by two years in 2015 and 2017 without any performance evaluation.

Telconet violates terms of contract and fails to deliver on its promise

Documents show that the contractor Telconet violated several terms of the contract as the permission to use the application software at 83 GPOs is yet to be provided by the company, and Telconet has miserably failed to provide the implementation of its services even a year later than the agreed time span of three years. The inquiry committee mentioned in its report that despite the lapse of seven years, the contractor could not achieve its commitment about 100 per cent completion of working on the “software application of CSS for financial services of Pakistan Post.”

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Documents show that the Telconet was offered to present its statement on the above allegations and on the ‘pending tasks’. Telconet conveyed that it has paid a total amount of $657,500 to M/s Eschew Group since 2012 and pointed out that the back office module was not part of the initial contract. Furthermore, it responded by saying that PPOD management could not identify the functional details of the back office module.

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In addition to that, the contractor highlighted that it was not bound to shift the intellectual property rights in the name of PPOD according to the contractual obligations as the software is working in 83 GPOs, therefore handing off complete database backups on hard-disk does not make any sense. It further said that the customization of saving bank module has no reference in the contract, and the completion of work at 40 Sub post offices could not be made possible due to non-provision of necessary support from PPOD.

Inquiry committee refers Pakistan Post Office Department fraud to NAB

The inquiry committee, in its recommendations, stated that despite lapse of seven years the contractor Telconet, even after termination of the contract in February 2019, left a long list of pending works which include implementation of back-office at all 83 GPOs, receiving of latest installer package and customized source code of all seven services, implementation of CSS at 40 sub-offices and pending invoices of CSS project and many others.

Performance guarantees amounting to Rs3.455 million at 5 per cent in favour of Telconet should be confiscated immediately. Telconet should be banned from undertaking any future work of the Ministry of Postal Services as it was unable to provide a worthwhile solution after wasting seven years, and PPOD for openly violating its contractual obligations.

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The committee recommended referring the case to NAB to initiate necessary investigations against Raja Ikram ul Haq, Dr Aziz Ullah Khan, Rubina Tayyab, Mashal Khan, Amjad Hussain and Muhammad Yameen because there is a high probability that undue favours were extended in exchange for financial benefits from the contractor.

Sources said that Pakistan Post Office Department has effectively concealed this inquiry report from the postal ministry and Prime Minister office, saving itself from facing the consequences of comitting such financial fraud. According to sources the PPOD has intentionally concealed the inquiry report from the Postal Ministry and PM office, saving itself from getting caught in the financial fraud and to avoid the consequences associated with its actions.

GVS News Desk

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