KPEZDMC audit report flags Rs18.46 billion in financial irregularities in Khyber Pakhtunkhwa

The Auditor-General of Pakistan’s reported audit of the Khyber Pakhtunkhwa Economic Zones Development and Management Company (KPEZDMC) has highlighted financial discrepancies outstanding recoveries land acquisition delays and concerns over the use of public assets.

The Auditor-General of Pakistan’s reported audit of the Khyber Pakhtunkhwa Economic Zones Development and Management Company (KPEZDMC) has highlighted financial discrepancies outstanding recoveries land acquisition delays and concerns over the use of public assets.

According to the report supplied by Minute Mirror the audit for the 2024–25 financial year identifies a total financial impact of approximately Rs18.46 billion. This figure includes amounts that remain unrecovered reported losses payments linked to land that was not acquired or handed over and potential liabilities arising from legal disputes. These categories do not necessarily represent confirmed embezzlement or a single cash loss.

KPEZDMC is a government-owned company responsible for developing and managing economic zones to support industrial activity across the province. The audit findings raise questions about its financial controls management arrangements and oversight.
Billions in Recoveries and Land Disputes

The report lists Rs2.085 billion in outstanding decretal recoveries from industrial allottees. It states that the company was responsible for paying enhanced land compensation but was also expected to recover the relevant amounts from the beneficiaries. According to the audit substantial sums remain outstanding despite legal proceedings and payments made by the company.

Another Rs629.89 million in reported financial impact relates to delays in renewing commercial plot leases. The audit says certain leases expired in 2017 while a renewal policy was introduced in 2024 but had not been implemented by the time of the review.

The report also identifies Rs1.077 billion paid for land in Bannu, Jalozai and Mohmand where acquisition transfer of ownership or possession remained incomplete. It says these delays prevented the company from fully developing or leasing the affected land.

Separately, the audit records a reported Rs174.16 million impact linked to commercial plots allegedly allotted or used under industrial arrangements contrary to applicable rules. It also identifies Rs497.84 million in outstanding dues associated with Al-Hadeed Engineering Services at Hattar Economic Zone.

The company’s ability to meet potential future obligations is another concern. The audit estimates contingent liabilities of around Rs14 billion connected to court cases involving enhanced land compensation. It warns that adverse legal outcomes could put the company’s financial sustainability at risk.

Vacant leadership positions and board oversight concerns

The audit also reports that KPEZDMC operated throughout 2024–25 without a Board of Directors. It further identifies vacancies in key management positions including the chief executive officer, chief financial officer, company secretary and chief operating officer. The report raises concerns about staffing levels including the continued employment of personnel inherited from the former KP Development Authority.

These issues, according to the audit, limited effective oversight and created challenges for strategic decision-making and financial accountability.

Rs679 million office tower underused

The report highlights the company’s eight-storey headquarters constructed at a cost of Rs679 million and handed over in April 2025. Covering approximately 36,306 square feet, the building reportedly accommodates only 130 employees leaving substantial space unused.

Meanwhile a subsidiary with 11 employees continues to operate from rented premises costing Rs165,000 per month while some legacy staff remain in a separate building. The audit questions why available office space has not been used more efficiently.

It also identifies more than Rs54 million in liabilities transferred through a subsidiary merger alongside concerns involving procurement practices and contract management.

Audit calls for recovery and accountability

The Auditor-General’s recommendations reportedly include recovering outstanding dues with applicable surcharges investigating delays in lease renewals addressing land compensation disputes and reviewing irregular plot allocations.

Other proposed measures include appointing qualified leadership restoring effective board oversight consolidating office facilities improving procurement controls and assessing future construction projects against operational needs.

The findings concern the company’s audited financial and administrative performance. Responsibility for individual irregularities and whether any conduct amounts to criminal wrongdoing, would require further investigation and appropriate legal findings.