Mumbai: Pakistan’s defence procurement has long been fertile ground for patronage. From luxury submarines to land deals, the line between military strategy and private profit often blurs. At the heart of this so-called commission culture are networks of middlemen—retired officers and contractors who grease their palms and fill their bellies and pockets behind the scenes.
As audits have repeatedly noted, big-ticket purchases such as ships, planes, submarines, and weaponry—missiles, guns, bullets, or torpedoes—routinely involve non-transparent pricing and favoured vendors. Alongside weapons, parallel rackets thrive in real estate. The Defence Housing Authority (DHA), for instance, has become a symbol of military-run profiteering. Originally meant to house officers, it now sells luxury plots to civilians and has spawned multiple unfinished townships sold at a premium.
It is no coincidence that defence lands and condos seem to accompany major procurement plans, enriching a small elite while leaving the people it was intended for with empty promises and bureaucratic lines.
THE BROKERED ARMS BAZAAR
Middlemen are an open secret in Pakistan’s arms trade. Even if the military procures “directly” from foreign governments, a cast of intermediaries often arranges the contracts. These brokers cultivate ties with high-ranking officials, then claim commissions in foreign accounts.
The infamous Karachi Affair of the mid-1990s, also known as the Agosta scandal, exposed this machinery. Secret payments estimated at €100–200 million were tied to the Agosta-90B submarine deal with France. The scandal contributed to the downfall of Admiral Mansurul Haq and, more grimly, to the 2002 assassination of French engineers in Karachi.
While many such investigations stalled, they have left a legacy wherein defence officers and their subsequent networks expect a cut of major deals.
Today, the Hangor-class submarine program is so large that it risks repeating the same pattern. The $4–5 billion contract with China (made in 2015) remains one of Pakistan’s biggest naval projects, with four boats being built in Wuhan and four at Karachi shipyard. Terms of financing have never been disclosed to parliament or the public.
Although no direct proof of corruption has emerged to date, analysts caution that the opacity mirrors conditions that previously enabled kickbacks. Every consulting firm, lobbying agent, or retired colonel might sniff a chance to negotiate a slice of the $5 billion project, and with the Pakistani economy in tatters, even a small slice translates to a very large sum in Pakistani rupees.
In practice, the favoured path is often to carve procurement into pieces and steer them to handpicked contractors. A 2024 audit of the defence services observed that contracts were sometimes split into multiple small jobs and awarded “to the favourite contractors or suppliers on the same day to bypass transparent bidding.”
In other words, instead of one big, competitive tender, procurement is fragmented to dodge oversight. An auditor’s finding about army purchases could equally apply to naval components; ads placed only on the PPRA website whilst skipping newspapers; emergency tenders claimed as secret work without formal waivers. These tactics ensure that friends of the establishment win the work, and anyone asking questions is brushed off under claims of national security.
THE MILITARY REAL ESTATE EMPIRE
The influence of defence deals extends beyond hardware into housing and land, hence the reference to “townhouses.” The Pakistani military junta has grown into one of the country’s largest property developers, through entities like the DHA and the Navy’s own Bahria Foundation (established in 1982). They have grown into sprawling business arms.
The Bahria Foundation runs dredging, marine support, IT, and educational subsidiaries. In 2025, its classification arm (BCS) was formally authorized by the government as a Recognized Organization to certify ships, blurring the line between regulator and contractor. DHA, meanwhile, operates with special legal status and little civilian oversight.
In multiple cities, retired officers, often those once responsible for overseeing procurement, find themselves in key DHA roles. An investigation by the National Accountability Bureau of Pakistan found that DHA authorities were under probe for bogus housing projects worth hundreds of millions of dollars.
The DHA runs with special legal status and virtually no civilian or governmental oversight, funneling profits into the pockets of a few. Land earmarked for public defence use is instead flipped at multiple times the market rates, benefiting associates of generals, or proxies thereof. These activities are seldom audited alongside military budgets, yet they form a major part of the shadow economy that runs parallel to defence procurement.
Meanwhile, links between deals and housing schemes are hard to ignore. Senior officers often retire into defence real estate businesses, and some believe that commissions from arms deals finance DHA projects. Although direct evidence is scarce, civil-society activists argue that the corruption uncovered in one often points to the other, if one simply connects the dots and follows the money.
When an AGP report found irregularities in a service’s accounts, they noted that defence housing schemes and other perks have been linked to procurement deals. For example, a contract to buy submarines might grease a few palms to ensure plots for non-military personnel in a new DHA colony, or a cheaper apartment in the heart of the capital; rewards not visible on any balance sheet.
ACCOUNTABILITY ENDS IN SEALED FILES
The commissions and kickbacks culture thrives in part because accountability is mostly illusory. Parliamentary committees do review defence accounts, but their reports seldom translate into prosecutions. The Auditor General has publicly lamented that only a small fraction of audit objections are ever fixed. Since 1985, less than 35% of Public Accounts Committee (PAC) directives in the Defence Ministry have been fully implemented.
The truth remains: many, if not all inquiries, are stillborn, considering the grip the Pakistani military complex has over the government; files are marked “secret”, hearings happen behind closed doors, and the trail goes cold.
To abridge, Pakistan’s civil-military system is almost engineered to protect its own. As renowned Pakistani political scientist Ayesha Siddiqa notes, the military “further(s) its own corporate interests and those of a small elite” under the guise of serving the nation.
Ordinary service members are kept at arm’s length from these deals. Enlisted sailors and soldiers might wait years for promised housing plots or bonus benefits, even while officers whose boots have never seen the soil backseat the bidding process.
THE BIGGER PICTURE
The Agosta case highlighted individual profiteering; today, foundations and housing authorities embody an institutional model. Meanwhile, the economy staggers under IMF bailouts, new taxes, and subsidy cuts. Defence spending rose 20% in 2025 even as inflation peaked at nearly 38% earlier in the year (though it has since cooled sharply).
The military’s welfare foundations, including Bahria, remain tax-exempt. India’s Navy Chief, Admiral Dinesh Tripathi, remarked in December 2024 that Pakistan “has chosen weapons over people’s welfare.” His words sting because they ring true: procurement secrecy, inflated budgets, and elite enrichment continue while civilians shoulder austerity.
One may ask, what of the promised transparency drives, that insisted that defence bodies follow PPRA rules, as a 2011 Navy memo urged? It amounts to nothing more than mere lip service.
In short, big purchases like the Hangor submarines fuel a commission culture that enriches a few and leaves the system with sealed accountability books, whilst the ordinary citizen must resort to thievery to fill their stomach.
Commodore (Dr) Johnson Odakkal is a maritime scholar, strategic affairs analyst, and Indian Navy veteran. He serves as Faculty of Global Politics and Theory of Knowledge at Aditya Birla World Academy, Mumbai, and Adjunct Faculty of Maritime and Strategic Studies at Naval War College, Goa.
