Energy Law in Pakistan :
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Anti-corruption laws of Pakistan and their applicability to the Oil and Gas sector

For more information on the application of corruption laws to the Energy Industry in Pakistan, please feel free to email us at [email protected]

A common query and complaint on behalf of our foreign clients wishing to invest in Pakistan is that there are no specific Pakistani Federal and Provincial laws concerning commercial bribery, but the provisions of Pakistan Penal Code 1860 dealing with general issues such as criminal breach of trust, cheating, mischief, making false documents, extortion and theft can be invoked to cover cases of commercial bribery. (See sections 405, 406 and 420 of the Pakistan Penal Code 1860). Sections 405 and 420 prescribe seven (7) years imprisonment for commercial bribery. In view of the fact that none of these provisions specifically cover commercial bribery, the applicability of these provisions could be different depending on the circumstances involved. Chapter 9 of the Pakistan Penal Code applies to the Federal and Provincial laws specifically dealing with bribes to the government officials, The Prevention of Corruption Act 1947 also relates to this subject but unfortunately very few laws discuss the legal limitations on gifts to government officials, we advise that Pakistani laws do not set any such limits.

To regulate the laws concerning kickbacks and corrupt practices of the Government officials, Federal Government issued Ehtesab Ordinance, 1996. This Ordinance was later replaced by Ehtesab Act 1997. Federal Government has now promulgated National Accountability Bureau Ordinance, 1999 on November 16, 1999. This Ordinance has repealed Ehtesab Ordinance, 1996 and Ehtesab Act, 1997. However, any proceedings pending under these repealed laws shall continue as if these laws have not been repealed. Generally all corrupt practices subject to penalties under the OECD Convention on Combating Bribery and the US Foreign Corrupt Practices Act are also subject to penalties under Pakistani laws.

Another common complaint has always been that most of these anti-corruption laws are enforced very selectively and with political agenda. Our best advice to foreign companies operating in Pakistan strictly abide by the Pakistani anti-corruption laws and if a Government Official asks for a bribe or kickback, then report the same to the concerned Government agencies as well as their Embassy in Pakistan. In any case it is very difficult to claim coercion by a senior Government official as a defense against improper practices in judicial proceedings, as the example of Hubco demonstrates liberally. Things have however improved with the whistleblowing mechanisms and the dynamic steps of Chief Justice Iftikhar Chaudhry in eliminating corruption.

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