In response to a recent story by The News revealing that the CEO of a state-owned enterprise (SOE) accumulated over Rs355 million in benefits in just 32 months, Prime Minister Shehbaz Sharif has established a high-level committee to reform the governance framework for SOEs. A notification issued by the Cabinet Division on August 15 mandates the committee to review and streamline the appointment and governance processes of SOE boards to prevent such abuses of power.
An official source stated that it is feared that billions of rupees in taxpayers’ money are being misused by the top management of SOEs for personal gain. The source added that the SOEs law, which was amended on the advice of the IMF, is being exploited by the top management, as was exposed in The News report.
On August 8, The News revealed how the CEO of an economic ministry-affiliated SOE, appointed in 2022 at a fixed monthly salary of Rs500,000, exploited “legal loopholes” to secure exorbitant perks. The board, which had recommended his appointment, granted him allowances, bonuses, and benefits totaling Rs355 million, including:
- Rs56.3 million in fixed bonuses.
- Rs27.5 million in performance bonuses.
- Rs52.3 million in a self-approved payout on his last day, including Rs28.8 million in severance pay despite him resigning voluntarily.
- Rs58.6 million spent on 23 foreign trips to destinations like the UAE, UK, and Australia, many of which were deemed unjustified for the SOE’s operations.
The report also highlighted how the SOE Act, 2023, intended to improve governance, may have instead enabled unchecked authority by management and private-sector directors. Chaired by the Minister for Establishment, the nine-member committee includes secretaries from the Finance, Law, Commerce, Power, and Cabinet divisions, alongside the FBR chairman and private-sector experts. Key tasks include:
- Reviewing legal gaps in the SOE Act, 2023, and nomination processes.
- Eliminating delays and bottlenecks in board appointments.
- Ensuring transparency in CEO pay packages, board decisions, and compliance.
- Proposing reforms to prevent the misuse of “independent” board powers.
The committee has been given three weeks to submit its recommendations. Official sources cited in The News report have expressed alarm over the potential for similar abuses across other SOEs.
