KE's claims of Rs375bn against govt questioned.

ISLAMABAD -- A former member of the board of directors of K-Electric has raised serious questions over the integrity of financial results and alleged illegitimate build-up of more than Rs375 billion claims by the Karachi-based power utility against the federal government.

Former president of the Institute of Chartered Accountants Pakistan (ICAP) Asad Ali Shah in a letter to the Pakistan Stock Exchange (PSX), Securities and Exchange of Pakistan (SECP), National Electric Power Regulatory Authority (Nepra) and the ministries of finance and power pointed out that he had been pointing out irregularities in financial accounts of the utility for many years as a member of the board and the audit committee.

However, the KE management, its majority board members and the external auditor - A.F. Ferguson which is a partner of PricewaterhouseCoopers (PwC) - did not correct the situation to the accounting standards and also did not register objections raised by Mr Shah and Naveed Ismail - another board member.

His list of fiduciary concerns spreads over 15 pages that also said that not only KE's receivables but its cumulative profits were overstated by a huge amount of Rs53.5bn and there was insufficient disclosure to highlight material uncertainties with respect to recovery of such amounts in the financial statements.

Such claims, he said, were based on a misstatement of facts and misrepresentation of court orders and Nepra determinations.

Ex-director raises serious doubts over utility's financial practices

He said the auditors charged not only for auditing and accounting services but also as advisers when they pleaded KE's tariff petitions before Nepra which was a clear conflict of interest. It pointed out the violation of regulatory rules and regulations by KE for many years in heavy debt write-offs and subsidy claims without...