The newly appointed board of PRAL, a key player in the government’s Rs3.7 billion plan to modernize FBR IT infrastructure, has commenced operations without disclosing potential conflicts of interest or establishing a code of conduct, a direct violation of governance laws. The lack of compliance with the State-Owned Enterprises (SOE) Act and SOE policy, both formulated with assistance from international financial institutions, raises serious concerns about transparency and accountability in state-run entities.
According to sources, PRAL’s board has held meetings and made policy decisions without ensuring that newly appointed members have no direct or indirect conflicts of interest. The board is responsible for overseeing PRAL’s restructuring, which is critical for enhancing the efficiency of Pakistan’s tax collection system. However, failure to obtain conflict of interest declarations before these meetings contradicts legal requirements under the SOE Act, SOE Policy, and the Companies Act 2017. When approached for comment, PRAL’s management defended its actions, stating in a written response that it is aware of its legal responsibilities and strives for compliance. However, both PRAL Board Chairman Arif Saeed and FBR spokesperson Dr. Najeeb Memon remained silent despite multiple inquiries from The Express Tribune. Sources confirmed that following these inquiries, PRAL belatedly began drafting a conflict of interest policy to address the issue.
The SOE Policy mandates that all directors and managers sign a conflict of interest declaration upon appointment, confirming their understanding of the rules. It strictly prohibits them from accepting payments, bribes, or favors that could compromise their independence. Failure to comply with these requirements can lead to their removal. Section 34 of the SOE Policy also requires the board to establish a formal code of conduct, yet no such document exists. Despite these governance lapses, Finance Minister Muhammad Aurangzeb and FBR Chairman Rashid Langrial have endorsed the newly appointed board, which comprises Arif Saeed as chairman, along with independent directors Salman Akhtar, Dr. Muhammad Fareed Zafar, Ehsan Saya, and Nazish Afraz. However, their silence on governance violations raises further questions about accountability.
Adding to the controversy, PRAL has announced plans to hire 50 data experts through a third-party contractor. This move has raised alarms about the security of sensitive taxpayer data. External firms, which may not have the same level of data protection protocols as PRAL, could pose risks to data privacy. Concerns have also been raised about whether board members are directly involved in this hiring process, which would exceed their policymaking responsibilities. In its most recent meeting, the PRAL board approved multiple initiatives, including establishing an operational unit for FBR’s requirements, forming a dedicated data wing for analytics and governance, and setting up an Apex Committee for project approvals. Additionally, the board created a structured software development team based on project scope and approved a Data Governance Policy. Recruitment has begun for a Chief Information Security Officer (CISO) and Chief Data Officer (CDO) to oversee cybersecurity and data management.
Board member Salman Akhtar proposed outsourcing technical expertise to third-party firms, a suggestion that PRAL has already acted upon. The company has invited bids for third-party hiring, with a submission deadline set for March 4. However, questions remain over whether adequate safeguards are in place to protect taxpayer data from potential breaches. The federal cabinet’s recent approval of a Rs3.7 billion supplementary grant for PRAL restructuring underscores the financial stakes involved. Government documents indicate that PRAL’s revamp is essential for improving Pakistan’s tax-to-GDP ratio. The board has been given the authority to approve PRAL’s annual budget, funded through government grants and its own revenue streams. From the next fiscal year, PRAL’s recurring costs are projected to rise to Rs4.5 billion.
The restructuring plan includes upgrading software development and maintenance capabilities through a combination of in-house work and outsourcing. Additionally, PRAL aims to modernize its hardware and data centers, replace outdated equipment, and build an advanced analytics hub to enhance data-driven decision-making in tax administration. While these efforts are critical for modernizing Pakistan’s tax system, the governance concerns surrounding PRAL’s board raise red flags about transparency, compliance, and data security. The government’s failure to ensure proper regulatory oversight could undermine the effectiveness of this ambitious reform initiative.
