For a poor country like Pakistan, corruption is a major political, economic and social issue. Despite the efforts of successive governments, this cancer continues unabated, and while the army-led governments undoubtedly provide better governance as compared to their civilian predecessors, corruption is too deeply ingrained as a way of life to disappear overnight. Hence, a mega project like HUBCO could not possibly be free from this taint. As a prominent Pakistani columnist famously retorted in response to a politician’s protest that there was no evidence of corruption, “Does a thief give you a receipt when he steals from you?”

Corporate Governance can be defined as “the system by which organizations are directed and controlled” (Naidoo, 2002). Corporate governance experts most often see state sovereignty as a hindrance that needs to be overcome. It is not the favored ordering mechanism among today’s leading thinkers of corporate governance (Alvarez). The purpose of this study is to provide an account of poor corporate governance practices in public sector organizations and understanding the issues resulting from over-reliance on iron-clad contracts and sovereign guarantees.

The study is descriptive in nature and uses case study approach to present the artifact of one of the biggest “Can’t pay, won’t pay” situations in a mega deal in Pakistan of its time. Case study is an empirical inquiry that investigates a contemporary phenomenon in depth and within its real life context, especially when the boundaries between the phenomenon and the context are not clearly evident (Yin, 2009). It is not intended to illustrate either effective or ineffective handling of managerial situation. Also names of people, political parties or governments mentioned in this case do not imply or hold them responsible for anything. Materials or statistics provided cannot be used by a third party as evidence. The interpretations presented in the case are not necessarily those of government officials or company employees.

Corporate Governance Journal, WAPDA-HUBCO Dispute, Corporate Governance Failure, Independent Power Project (IPP), Hub Power Company Ltd. (HUBCO), National Accountability Bureau (NAB), Power Development Authority (WAPDA), Power Purchase Agreement (PPA).