SECP Flags Illegal Pay Package at State-Owned PRCL

The Securities and Exchange Commission of Pakistan (SECP) has found multiple violations of corporate and public-sector laws in the appointment and salary enhancement of the former acting CEO of Pakistan Reinsurance Company Limited (PRCL), after completing its formal inquiry into the matter. According to an official communication sent to the Ministry of Commerce on October 14, the SECP concluded that the PRCL board had acted without lawful authority in both appointing and approving the lavish compensation package for the acting chief executive. The SECP said neither the federal government’s nor the Commission’s approval was obtained for the appointment. It also noted that the individual lacked the required professional experience when given charge as acting CEO. The inquiry revealed that the PRCL board went beyond its mandate by approving additional financial benefits under the Special Professional Pay Scale (SPPS-III) without federal approval. These actions, the regulator observed, breached several key laws, including the Companies Act 2017, the Insurance Ordinance 2000, the Insurance Companies (Sound and Prudent Management) Regulations 2012, and the Public Sector Companies (Corporate Governance) Rules 2013. Adjudication proceedings have now been recommended against both the individuals involved and PRCL itself. The SECP also highlighted a fresh violation made after the promulgation of the State-Owned Enterprises (Governance and Operations) Act, 2023. It found that during the company’s 178th board meeting held on October 2, 2023, PRCL again revised and enhanced the CEO’s compensation, this time retrospectively from February 2023, claiming to align the package with the new SOE law. However, the regulator pointed out that this revision violated Section 36(3) of the SOE Act, which explicitly bars retrospective application. Since SECP does not administer the SOE Act, it has referred the matter to the Ministry of Commerce “for consideration and appropriate action.” A copy of the findings has also been sent to the Ministry of Finance. The inquiry was launched after The News published an investigative report revealing that the same CEO had drawn a staggering Rs355 million in salary and perks over just 32 months, all with board approval. The revelations sparked outrage but initially failed to prompt action from the ministry until the Prime Minister’s Office directed SECP to investigate. The findings confirm serious legal breaches and now place the responsibility squarely on the Commerce Ministry to proceed under the SOE Act. According to The News’ earlier report, the CEO, originally appointed in 2022 on a fixed SPPS-III salary of Rs. 500,000 per month, was awarded enormous bonuses and privileges that inflated his total compensation to over Rs. 354 million. These included Rs56.3 million in fixed bonuses, Rs. 27.5 million in performance bonuses, Rs. 52 million in retrospective pay increases, and Rs46 million in gratuity and severance payments, even though he had voluntarily resigned to join another SOE. He also claimed large sums for car monetization, leave encashment, and foreign visits costing nearly Rs. 59 million, along with directors’ fees, creating what the SECP described as a case of financial excess at public expense.