The Auditor General of Pakistan (AGP) has unearthed financial, procurement and governance irregularities amounting to more than Rs9 billion in the Special Communications Organization (SCO), raising serious questions over transparency, compliance with procurement laws and the handling of public funds by the military-run telecom operator.
The findings, contained in the audit report for the financial year 2024-25, identify audit observations totaling Rs9.009 billion, including Rs241.87 million relating to procurement irregularities and Rs8.77 billion under other major financial and governance issues.
The most significant observation relates to Rs6.883 billion released by the Ministry of Defence to SCO between 2021-22 and 2024-25 for sensitive projects. According to the audit, SCO refused to provide key financial records, including paid vouchers, cash books, bank statements, contract documents and expenditure details, despite repeated requests.
The auditors rejected SCO’s contention that the funds had already been pre-audited by the Controller of Military Accounts, maintaining that post-audit of expenditure incurred by SCO falls within the constitutional mandate of the Auditor General. The report cited the Supreme Court’s 2013 judgment affirming the Auditor General’s authority to examine all government records, irrespective of whether they are classified as secret.
The report also highlighted what it termed non-transparent procurement practices in the award of franchise agreements. SCO engaged 13 franchisees across Azad Jammu and Kashmir and Gilgit-Baltistan for the sale of telecom products and services without conducting open competitive bidding, allegedly violating the Public Procurement Rules (PPRA), 2004.
Another major objection concerns the procurement of 25 KVA diesel generators, where auditors found substantial price disparities within the same organization. While SCO’s Ordnance Branch purchased generators at Rs3.18 million per unit, the Development Branch procured identical-capacity generators at Rs7.09 million each, resulting in an estimated additional cost of Rs109.44 million. The audit questioned why bulk procurement failed to achieve lower prices and recommended fixing responsibility for the uneconomical purchase.
The audit further pointed to Rs103.92 million spent on machinery and equipment during a federal austerity period when procurement of such items had been banned by the Finance Division. It noted that SCO neither sought exemption from the Prime Minister-approved Austerity Committee nor produced evidence justifying the purchases.
Auditors also questioned procurement worth Rs28.51 million from Celmore Technologies (Pvt) Ltd, describing the company as an SCO subsidiary and arguing that the transaction created a conflict of interest under PPRA’s standard bidding documents.
Financial management practices also came under scrutiny. The report alleged that SCO paid Rs489.27 million in commissions to franchisees through telecom revenue streams without an approved accounting framework cleared by the Finance Division and the Controller General of Accounts. In another observation, the organization was found to have directly utilized Rs778.18 million in collected revenues to pay bandwidth charges, inter-operator settlements, satellite services and regulatory fees instead of first depositing the receipts into the Federal Consolidated Fund as required under the Public Finance Management Act, 2019.
The audit also questioned two telecom infrastructure projects worth Rs1.495 billion, alleging deficiencies in project approvals, feasibility studies, regulatory compliance, vendor qualification and technical documentation.
In most cases, the Departmental Accounts Committee (DAC) directed SCO to produce supporting records, seek clarification from relevant authorities or regularize the transactions. However, the audit report noted that the required documents had not been produced by the time the report was finalized.
The AGP has recommended detailed inquiries into the major observations, recovery of losses where applicable, fixing responsibility on officials involved and strict compliance with procurement laws, financial regulations and audit requirements.
