Financial scam in Pakistan Post unearthed

Inquiry committee recommends blacklisting Telconet from future dealings with Ministry of Postal Services, Pakistan Post Office Department and referring case to NAB for further investigations

ISLAMABAD: A financial scam worth millions of rupees has surfaced in the Pakistan Post Office Department (PPOD) owing to the connivance of its officials. 

Documents show that the management of PPOD, in 2012, entered into a contract with M/s Telconet to automate the workings of seven financial services in 83 general post offices (GPOs) throughout the country, however, inquiry report about Centralized Software Solutions (CSS) revealed that the system was not working effectively even after the lapse of seven years. 

Telconet, an ISO 9001 certified organization headquartered in Islamabad, is involved in a diverse range of businesses and solutions, including technology and IT infrastructure, energy systems, and software services. The company has a global presence in Afghanistan, the Middle East, and a liaison office in the United States of America as well. 

The secretary postal services had constituted a three-member committee in September 2019, on the supervision of Senior Joint-Secretary Khalida Gulnar, joined by section officers Waqar Masood and Muzammil Hussain. 

The inquiry committee was designated with the task of probing the award of extension in the existing contract, despite major shortcomings in the fulfilment of contractual obligations and severe negligence of the contractor.

The committee was responsible for calculating the aggregate amount paid after the expiration of the initial contract that went on for three years and identifying the officers responsible for the contract extension and other violations associated with it. 

The inquiry committee in its findings reported that although a foreign-based solution was vital, competition was forcefully restricted as bidding for the financial services only invited domestic contractors rather than international contractors. 

Furthermore, the PPOD failed to provide the draft contract between Telconet and PPOD to law and justice division for vetting and violated the pubic procurement rules set up by the Public Procurement Regulatory Authority (PPRA), particularly the clause of repeat orders at 15 per cent of the project cost, to automate 40 sub-post offices favouring the contractor. 

Similarly, PPRA rules also entail the provision of an integrity pact which was not signed between PPOD and M/s Telconet. Moreover, PPOD made an advance payment Rs77.634 million in full to M/s Telconet without fulfilment of the contractual obligations whatsoever.

The contract was extended by two years in 2015 and 2017 without any performance evaluation, standing in clear violation of the PPRA rules.     

Documents show that the contractor Telconet violated several terms of the contract as the permission to use the application software at 83 GPOs is yet to be provided by the company, and Telconet has miserably failed to provide the implementation of its services even a year later than the agreed time span of three years. 

In addition to that, Telconet and PPOD failed to provide any proof that user acceptance testing at pilot sites were conducted while the product was already given to the department for a 10-year usage.

The inquiry committee mentioned in its report that despite the lapse of seven years, the contractor could not achieve its commitment about 100 per cent completion of working on the “software application of CSS for financial services of Pakistan Post.”

Documents show that the contractor not only failed to provide copies of the development of manuals for the project but also enabled the PPOD to obtain and utilize the background technology.

Documents show that the Telconet was offered to present its statement on the above allegations and on the ‘pending tasks’. Telconet conveyed that it has paid a total amount of $657,500 to M/s Eschew Group since 2012 and pointed out that the back office module was not part of the initial contract. Furthermore, it responded by saying that PPOD management could not identify the functional details of the back office module.

In addition to that, the contractor highlighted that it was not bound to shift the intellectual property rights in the name of PPOD according to the contractual obligations as the software is working in 83 GPOs, therefore handing off complete database backups on hard-disk does not make any sense. It further said that the customization of saving bank module has no reference in the contract, and the completion of work at 40 Sub post offices could not be made possible due to non-provision of necessary support from PPOD. 

The inquiry officers in its report deemed the reply of Telconet as unsatisfactory, citing clause 3 at page 2 of the contract, which highlights that the TORs are an integral part of the contract, and therefore, the contractor was bound to provide the back office module which covers all seven financial services Of CSS, besides Vide clause 4.2(N) of the “contract, the customized product would be the exclusive property of PPOD and the contractor was not authorized to use or share the customized version application with anyone else.”

The inquiry committee, in its recommendations, stated that despite lapse of seven years the contractor Telconet, even after termination of the contract in February 2019, left a long list of pending works which include implementation of back-office at all 83 GPOs, receiving of latest installer package and customized source code of all seven services, complete latest database backups of the savings bank, military pension payment, provincial taxes and all other databases of MIS on the hard disk, complete message store files stored on correspondence server, further customization of saving bank modules for supervisory level, implementation of CSS at 40 sub-offices and pending invoices of CSS project. 

Therefore the performance guarantees amounting to Rs3.455 million at 5 per cent in favour of Telconet should be confiscated with immediate effect. 

In addition, Telconet should be blacklisted from performing any future work of the Ministry of Postal Services as it has not provided a Turnkey-Solution after wasting seven years, and PPOD as it has openly violated its contractual obligations. 

The committee also summoned the PPOD officials such as PPOD Ex-Secretary or DG Raja Ikram ul Haq, FS Additional DG Ejaz Minhas, DG SI Ex-Deputy Abdur Razzaq, IT Director Farrukh Basheer, DG SI Ex-deputy (Rtd) Aziz Ullah khan, PPOD Ex-DG Mashal khan, Rubina Tayyab, Amjad Hussain and Yameen as well as Telconet officials including Ali Shahan and Yaseen.

The committee recommended referring the case to NAB to initiate necessary investigations against Raja Ikram ul Haq, Dr Aziz Ullah Khan, Rubina Tayyab, Mashal Khan, Amjad Hussain and Muhammad Yameen because there is a high probability that undue favours were extended in exchange for financial benefits from the contractor. 

Similarly, the committee also recommended to forward the case to FIA for digging out further facts against Telconet officials’ Ali Shahan and Yameen and initiating departmental proceedings against Farukh Basir, Ejaz Minhas and Abdur Razzaq. 

Sources said that PPOD has effectively concealed this inquiry report from the postal ministry and Prime Minister office, saving itself from being penalised.

The scribe sent a message to the higher-ups of the Ministry of communication, Pakistan Post and CEO of Telconet but no response was received till the filing of the story. 

 

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6 COMMENTS

  1. Pakistan Post project was shelved after 7 years just bcz it was started by the previous Govt. How could all the officials that served the department since 2012 be corrupt? The current bureaucracy is just trying to please Mr. Murad Saeed. It has all been done to hand over all post operations to HBL.

  2. In all this story more than 100 of support Engineers working in GPOs are jobless and also there salaries are still in pending how can they are surviving no one is interested 😔 it is my humble request from Prime Minister of Pakistan please do some favour for support Engineers of Pakistan Post Office.

  3. Just a stupid act of duffer minister. After about 15 years of working it came to a stand but they demolished it. It’s so sad to listen that PPOD has given automation contract to a compitator bank.

  4. More then 100 support engineers are still jobless and their salaries of two months are still pending towards PPoD but no one take steps to their rights and not interesting in this story.. We sincerely perfome our duties in GPOs but not received salaries yet..

  5. Ministers are mostly fooled by the bureaucracy. In this case the DG of Pakistan Post Mr. Muhammad Ikhlaq Rana is a highly incompetent officer who made a mess of Pakistan Post automation. This also is a big question mark on the faulty promotion criteria that allows such incompetent officer to reach at such a high post.

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