KARACHI: A customs clerk orchestrated the fraudulent release of a government auction lot worth an estimated Rs.165 million by forging payment documents and removing the official file from the auction office, according to an internal incident report reviewed by The Associated Press.
Muhammad Shahzad, a sepoy who was serving as acting clerk in the Auction Section at Custom House in Karachi, allegedly devised the scheme to sell Lot No. ASO-101/2025-HQ — a consignment of tablets and mobile accessories — without depositing any money into the government treasury. The report was signed by Superintendent Javed Iqbal and Preventive Officer Imran Maqsood and dated Aug. 31, 2026.
The fraud was reported to the Additional Collector (Enforcement) on Aug. 26, 2026, according to the report. Investigators found that the original auction file and the corresponding record at the Auction Section office were both missing, with no entry or receipt documenting their removal.
State Warehouse-I held a file for the lot containing a Rule 72 certificate, delivery order, examination sheet, gate pass, copy of a national identity card, a Computerized Payment Receipt and a Challan. Cross-checking against auction records showed the certificate, delivery order, payment receipt and challan were all fake, the report said.
Independent verification confirmed that PSID No. 20016236345260130 and CPR No. IT-20260209-0101, 1056798 had no record in the treasury system. Investigators concluded that no money had been deposited against the lot, and the payment documents were forged to simulate payment and secure the release of the goods.
The goods were nevertheless delivered to Talha Hafeez, son of Abdul Hafeez, according to warehouse records.
In a statement to investigators, Hafeez said he was offered the lot in February 2026 through his friend Khan Muhammad, who knew Sepoy Muhammad Tehseen of Custom House. Tehseen had been approached by Shahzad, who asked whether any party was interested in the lot.
Hafeez told investigators he insisted on paying nothing in advance and would only hand over money after taking physical delivery. According to the report, Shahzad overcame that condition by claiming he would arrange the deposit through another investor and would collect cash from Hafeez after delivery. No such investor was ever identified, and treasury records confirm no deposit was made.
Shahzad obtained a tender and a Rs. 3 million pay order from Hafeez and placed them on the auction file for approval, which was granted through normal procedures, the report said. Immediately afterward, Shahzad allegedly removed the original file from the Auction Office to prevent reconciliation between the approval and treasury records.
According to the report, Shahzad then fabricated the Rule 72 certificate, delivery order, identity card copy, payment receipt and challan and gave them to Hafeez to obtain a gate pass. Hafeez presented the documents at the ASO Auction Office, where Preventive Officer Mahwish issued a release order without independently verifying the payment instruments, the report said. Preventive Officer Mariym at State Warehouse-I then handed over the goods on the strength of those documents, again without verification.
After removing the goods, Hafeez paid Rs. 15 million in cash to Tehseen, who passed the entire sum to Shahzad, according to the report. The routing through Tehseen was described as a precaution by Shahzad to insulate himself from a direct financial trail with the buyer. No part of the money reached the national exchequer.
The report identifies Shahzad as the principal offender, saying he conceived the scheme, disclosed protected auction information, negotiated the terms, invented the fictitious investor, removed and suppressed the official file, forged the documents and received the proceeds.
The report recommends a fact-finding inquiry, reconciliation of all auction lots handled by Shahzad during his tenure in the Auction Section, recovery of the missing original file from Shahzad and recovery of the Rs.165 million loss from those found responsible.
It was submitted for information and necessary orders.
