By Naveed Siddiqui
ISLAMABAD – A recent audit of the Pakistan Mineral Development Corporation (PMDC) has unearthed significant deficiencies in the appointment process of the Board of Directors (BoD). Conducted for the fiscal year 2022-23, the audit brought to light several irregularities in the appointment of chairpersons without the requisite approval from the federal cabinet, thus violating established regulations.
According to Section 4(4) of the Public Sector Companies (Corporate Governance) Rules, 2013, amended in 2017 and 2019, the chairman of the BoD is mandated to be elected by the board itself unless appointed by the government. However, instances were found where chairpersons were elected without proper approval, raising concerns regarding governance and accountability.
One such instance involved the election of Mr. Muhammad Iqbal Malik as Chairman of the BoD during the 195th meeting held on June 17, 2020. Mr. Malik’s appointment lacked the required approval from the federal cabinet, as stipulated by regulations. Similarly, Mr. Irshaad Ali Khokhar was elected chairman without obtaining the necessary approval, highlighting systemic oversight in the appointment process.
Furthermore, deficiencies were noted in the composition of the BoD, with several members lacking the necessary qualifications and expertise in the field of mining. This has raised concerns about the board’s capacity to make informed decisions effectively, especially in a technology-driven industry.
The audit recommends that the Ministry of Energy Petroleum Division strictly adhere to regulations in appointing independent directors, ensuring they possess relevant expertise and certification in the mineral field. Failure to rectify these deficiencies could undermine the governance structure of PMDC, consequently affecting its operations and decision-making processes.
Despite repeated calls for clarification, no response has been received from the Petroleum Division as of the finalization of this audit report. These findings underscore the imperative for greater transparency and accountability in the appointment process of public sector companies, to uphold standards of corporate governance and ensure efficient resource management.
During the audit of PMDC for the FY 2022-23, it was observed that the Ministry of Energy Petroleum Division restructured the BoD of PMDC, consisting of a total of nine members, with five independent, three non-executive / ex officio members, and one executive director/MD-PMDC, with the approval of the Federal Government. However, several deficiencies and lapses were noted.
As per records provided by the company secretary, two members of the BoD were not certified/trained, namely: Mr. Shamas-ud-din and Mr. Ijaz Ali Khan. Additionally, two independent directors were not found in the PICG data bank as of June 30, 2023, namely Mr. Shamsuddin Ahmad Sheikh (MBA qualification) & Ms. Huma Ejaz Zaman (Lawyer-advocate).
In another case, the Ministry of Energy (Petroleum Division) constituted the BoD of PMDC with a total of eight members, including four independent directors, including the chairman of BoD, three non-executive/ ex officio members, and one executive-director/MD-PMDC. However, none of the four Independent Directors possessed qualifications and experience in the relevant field of mining.
According to profiles provided by the company secretary, three members of the BoD were not certified/trained, namely: Mr. Shamas-ud-din, Mr. Agha Shahid N. Khan, and Mr. Imran Nawaz Memon. Audit records show that as of June 30, 2023, three independent directors were not found/listed in the PICG data bank, namely Mr. Shamsuddin Ahmad Sheikh (MBA qualification), Mr. Imran Nawaz Memon (LLB), & Ms. Javeria Tareen (MA mass comm.).
The audit concluded that the deficient selection/composition of the board lacks the skill matrix required for running a company in the technology-concentrated field. Moreover, the executive directors appointed by the government are civil servants and lack industry expertise.
The audit recommends that the Petroleum Division should select independent directors with relevant mineral field expertise and certification/training from PICG.
