The board of Pakistan Revenue Automation Limited (PRAL) – a key player in the government's Rs3.7 billion plan to modernise the information technology arm of the tax machinery – has started its work without first disclosing potential conflicts of interest or developing a code of conduct, a requirement under the law.
The non-disclosure of conflicts of interest violates the State-Owned Enterprises (SOE) Act and the SOE policy – two legal frameworks developed with international financial institutions' assistance to improve governance in state-run entities. Sources revealed that the board has been holding meetings without first ensuring that newly appointed members have no direct or indirect conflicts of interest while making key policy decisions. The board is also responsible for overseeing the Rs3.7 billion PRAL restructuring plan. PRAL serves as the technology arm of the Federal Board of Revenue (FBR).
The decision to proceed with meetings without first obtaining conflict of interest declarations from newly appointed members directly violates the SOE Act, SOE Policy, and the Companies Act 2017.
The Express Tribune sent queries to PRAL Board Chairman Arif Saeed, FBR spokesperson Dr Najeeb Memon, and PRAL management regarding these violations. Only PRAL management responded, while the chairman and FBR spokesperson remained silent even after four days.
"The management of the company is fully cognisant and strives to be compliant with all applicable legal requirements and obligations," PRAL stated in a written response. This suggests the board is operating in violation of the SOE law, which could result in penalties under the Companies Act.
Sources said that after receiving the Express Tribune's questions, the PRAL board began drafting a conflict of interest policy.
Under SOE policy, all directors and managers must sign a declaration upon appointment. This declaration confirms they have received and understood the policy on conflicts of interest. It also states they will not accept payments, bribes, favours, or inducements that could influence their decisions. Failure to comply could lead to their removal.
The government recently appointed the PRAL board, which Finance Minister Muhammad Aurangzeb and FBR Chairman Rashid Langrial have praised as highly talented.
The board is chaired by Arif Saeed, with independent directors including Salman Akhtar, Dr Muhammad Fareed Zafar, Ehsan Saya, and Nazish Afraz.
The Express Tribune asked the chairman about the SOE policy's requirement for directors and managers to declare conflicts of interest. He was also asked about Section 34 of the SOE Policy, which mandates a code of conduct for PRAL board members. Additionally, the chairman was asked about Section 13 of the SOE Act, which defines the term of office for directors. Section 13(2)(f) states that a director can be removed for failing to comply with the SOE's code of conduct and conflict of interest requirements. No response was provided.
Meanwhile, PRAL has decided to hire 50 data experts through a third party. Sources raised concerns that this could compromise data protection and privacy. A third party may not ensure the security of sensitive information.
The Express Tribune also asked the board chairman if third-party hiring could put taxpayer data at risk. External firms may not be trusted with highly confidential information. Additionally, the chairman was asked whether board members were involved in the hiring process, which falls outside their policy-making role. He did not respond.
In its most recent meeting, the PRAL board approved several measures. These include creating an operational unit for FBR's requirements, forming a dedicated data wing for analytics and governance, and assigning experts to validate Change Request Forms (CRFs). The board also created an Apex Committee for project approvals and structured software development teams based on project scope.
A Data Governance Policy was implemented, and recruitment for a Chief Information Security Officer (CISO) and Chief Data Officer (CDO) began. The board also formed a committee within the FBR to streamline project prioritisation. Sources said board member Salman Akhtar suggested hiring third-party firms for technical expertise. PRAL has already invited bids for third-party hiring, with a submission deadline of March 4.
In December, the federal cabinet approved a Rs3.7 billion supplementary grant for PRAL restructuring. Official documents show the estimated recurring cost for the next fiscal year is Rs4.5 billion.
Government documents highlight that PRAL's restructuring is critical to improving the tax-to-GDP ratio. The board has a key role in this effort. According to the cabinet's decision, PRAL will receive a one-line budget, with its board approving the annual budget based on government grants and its own revenue. The restructuring has significant financial implications. The government will provide Rs3.7 billion for the current year, while recurring costs will reach Rs4.5 billion from 2025-26 onwards.
Among the major components of the PRAL restructuring are enhancing software development and maintenance capabilities through three modes: in-house development, in-house maintenance only, and outsourcing development to third parties. The plan also includes upgrading hardware and data centres, replacing end-of-life equipment, and establishing an analytics hub.
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