A major financial scandal has surfaced in Khyber Pakhtunkhwa after a departmental inquiry exposed a Rs106.04 million fraud within a World Bank-funded education project. The investigation revealed deep-rooted internal control failures, suspected staff collusion, and serious lapses in banking verification.
The inquiry was launched when the project director of the Khyber Pakhtunkhwa Human Capital Investment Project (KP-HCIP) flagged unusual withdrawals from the project’s bank account. KP-HCIP, backed by a Rs26 billion loan, was designed to enhance education quality in Peshawar, Haripur, Nowshera, and Swabi, and was later expanded to support flood-affected districts.
According to the inquiry committee, the fraud was carried out by exploiting cheque books that had already been fully used. New cheque books were allegedly obtained illegally using a fake authority letter, enabling unauthorized withdrawals. Investigators discovered that a man with no connection to the project managed to collect four cheque books without the required approval from official signatories.
The committee pointed to a former project accountant—who still held project equipment and had extensive knowledge of internal systems—as the primary suspect behind the scheme.
The inquiry also highlighted significant negligence on the part of the project’s financial management specialist and internal audit officer. It further criticized the National Bank of Pakistan, along with verification systems of FBR and Faysal Bank, for failing to detect irregularities that facilitated the fraudulent transactions.
To move the case forward, investigators have recommended lodging an FIR, placing all suspects on the Exit Control List (ECL), and forwarding the matter to anti-corruption authorities. They also advised that a forensic audit be conducted by an independent chartered accountancy firm, covering the period from the project’s inception up to September 2025.
The education department has been urged to tighten internal controls and strengthen financial oversight across all components of the project to prevent further losses and restore accountability.