Pakistan Launches Record Rs47 Billion Recovery in Petroleum Levy Fraud Investigation

Pakistan's Federal Investigation Agency has initiated the largest financial recovery in the country's history, targeting Rs47 billion ($170 million) allegedly fraudulently withheld by a major petroleum company through systematic non-payment of government levies between 2019 and 2022. The case, now under review by the Public Accounts Committee, represents one of the most significant corporate crime investigations in Pakistan's recent history.

According to a detailed report submitted to parliamentary oversight officials, the accused firm has already deposited Rs1 billion in cash as an initial payment, with post-dated cheques and bank guarantees securing the remaining Rs46.4 billion. The recovery follows a two-year investigation by the FIA's Corporate Crime Circle in Karachi, which uncovered what investigators describe as a deliberate scheme to divert mandatory petroleum levies from the national treasury.

Background and Context

The petroleum levy system in Pakistan requires fuel companies to collect government charges on every litre of petrol sold, with these funds intended for national development projects and budget support. The alleged fraud occurred during a period when global oil prices were volatile, and government revenues from petroleum levies constituted a significant portion of Pakistan's fiscal income. The scale of the alleged misappropriation—spanning three years—has raised serious questions about regulatory oversight in the energy sector and the adequacy of internal compliance mechanisms within petroleum companies operating in Pakistan.

The investigation was triggered when discrepancies were detected in levy collections and deposits by officials at the Ministry of Energy and Petroleum. This discovery led to a formal complaint by Ashfaq Ahmed, Deputy Director at the Ministry, which subsequently prompted the FIA's comprehensive forensic examination of the company's financial records.

Key Figures and Entities

The FIA's investigation, led by Ayaz Mehr, head of the Corporate Crime Circle Karachi, has identified 13 individuals as suspects in the scheme. These include the petroleum company's owners, board members, two women executives, and other senior officials. Notably, the investigation names Tabish Gauhar, former Managing Director of Engro Energy Services Company (EESC), among those implicated. The involvement of high-ranking executives suggests the alleged fraud was orchestrated at the highest levels of the organization rather than being the work of rogue employees.

Corporate records show the company operates across Pakistan's fuel distribution network, handling billions in annual revenue through petrol sales. The Public Accounts Committee, which exercises parliamentary oversight over government spending and revenue collection, has taken up the case to ensure proper accountability and complete recovery of the misappropriated funds.

Legal and Financial Mechanisms

Investigators allege the company employed sophisticated accounting methods to disguise the non-payment of petroleum levies while maintaining apparently compliant financial records. The fraud scheme allegedly involved manipulating sales data and levy payment mechanisms over multiple years, requiring coordinated action across various departments within the organization. The FIA's forensic analysis of financial records uncovered systematic discrepancies that investigators say could not have occurred without deliberate planning and execution.

The recovery agreement represents a significant development in Pakistan's corporate crime enforcement. Under its terms, the accused company has provided an unconditional bank guarantee to secure the total amount, demonstrating the seriousness with which authorities are treating the case. The payment structure—combining immediate cash payment with post-dated instruments and guarantees—reflects both the scale of the alleged fraud and the challenges of recovering such substantial sums in a single transaction.

International Implications and Policy Response

The case highlights broader vulnerabilities in financial regulatory systems across developing economies where revenue collection from critical sectors like energy remains prone to manipulation. The successful recovery and legal action in this case may serve as a precedent for future corporate crime investigations in Pakistan and potentially other countries facing similar challenges with levy collection in the energy sector. International anti-corruption organizations have long identified petroleum revenue management as a high-risk area for financial crime, given the large sums involved and complex regulatory frameworks.

The Public Accounts Committee's continued oversight of the recovery process signals a strengthening of parliamentary mechanisms to address large-scale financial crimes. This case may prompt legislative reforms to enhance transparency in levy collection systems and implement stricter reporting requirements for petroleum companies, potentially involving technological solutions to reduce opportunities for manipulation of revenue streams.

Sources

This report draws on investigation documents submitted to Pakistan's Public Accounts Committee, statements from the Federal Investigation Agency's Corporate Crime Circle in Karachi, and official records from the Ministry of Energy and Petroleum. The information presented reflects the findings of a two-year investigation conducted between 2019 and 2022, with recovery proceedings initiated in 2024.