Federal Board of Revenue (FBR) in Lahore has been embroiled in a major corruption scandal involving the alleged distribution of “speed money” or hush money. The controversy erupted over the handling of a substantial sales tax refund issued to DWP Engineering, amounting to Rs360 million, with Rs82 million reportedly received by the Regional Tax Office (RTO) Lahore as hush money.

According to sources, the illicit funds were divided among various high-ranking officials, including the member and Chairman of FBR, who allegedly received Rs15 million, while the chief of the Large Taxpayers Office (LTO), a commissioner, and a lawyer were each purportedly allocated Rs11 million. The remaining amount was said to be distributed to the RTO Chief and Headquarters.

The situation escalated when a violent confrontation involving firearms occurred in the Chief LTO’s office between Commissioner Rana Waqar and DC Headquarters RTO Lahore Khurram Fakher, in the presence of other senior officials. This incident has highlighted the deep-rooted issues within the tax administration, as groups of officers from LTO Lahore and RTO Lahore reportedly clashed over the distribution of the hush money.

Further reports suggest that a significant refund for Gree Airconditioners, processed by LTO Lahore, became a point of contention when RTO Lahore officers allegedly intercepted the speed money intended for the company. This led to a dispute and dissatisfaction among the lower staff, who felt deprived of their share of Rs. 80 million.

In response to the scandal, the FBR has taken swift action by transferring the concerned officers, seemingly in an effort to contain the fallout. Deputy Commissioner Khurram Fakhar has been suspended for 120 days. While, Commissioner Rana Waqar is sent to Admin Pool. 

However, this incident may only be the tip of the iceberg, as allegations suggest that similar practices involving billions of rupees in hush money occur monthly in Karachi, potentially leading to trillions of rupees in government revenue evasion and unwarranted refunds.

Hush money, as defined, is a clandestine arrangement where taxpayers compensate IRS officers to overlook illegal or questionable activities. This long-standing enterprise has reportedly involved numerous IRS officers and officials, with rumors indicating that a senior IRS officer may be overseeing the operation.

The FBR has initiated an internal investigation to address these serious allegations and restore integrity within its ranks¹. The outcome of this probe will be closely monitored, as it could have far-reaching implications for tax administration and governance in Pakistan.