ISLAMABAD: A departmental inquiry has uncovered a Rs106.04 million fraud in a World Bank-funded education project in Khyber Pakhtunkhwa, revealing serious internal control failures, suspected collusion, and banking irregularities.
The probe was initiated after the project director of the Khyber Pakhtunkhwa Human Capital Investment Project (KP-HCIP) reported suspicious withdrawals from the project’s account.
The Rs26 billion loan-backed initiative aims to improve education quality in Peshawar, Haripur, Nowshera, and Swabi, with activities later extended to flood-hit districts.
According to the inquiry report, the fraud was executed through the misuse of fully exhausted cheque books and the illegal collection of new cheque books using a fake authority letter.
Investigators said a man unrelated to the project collected four cheque books without the consent of authorised signatories.
The committee identified an ex-accountant, who had not returned project equipment and possessed full knowledge of internal processes, as the likely prime suspect.
It also found evidence of gross negligence by the project’s financial management specialist and internal audit officer.
The report accused the National Bank of Pakistan, as well as FBR and Faysal Bank systems, of verification failures and poor due diligence that enabled the fraudulent transactions.
Investigators recommended registering an FIR, placing the suspects’ names on the Exit Control List, and referring the case to the anti-corruption establishment.
They further advised a forensic audit of the project from inception to September 2025 by an independent chartered accountancy firm.
The education department has been urged to strengthen internal controls across all project components to prevent further financial losses.
