The Bank of Punjab Corruption Scandal

77 Billion Rupees Fraud Report Presented in SC ISLAMABAD: The Punjab government on Wednesday submitted a report before the Supreme Court ...

77 Billion Rupees Fraud Report Presented in SC

ISLAMABAD: The Punjab government on Wednesday submitted a report before the Supreme Court on the Bank of Punjab (BoP) scam of Rs9 billion and revealed that former Chief Minister Punjab, Ch Pervaiz Elahi, siphoned Rs5.4 billion from the BoP while Chairman Federal Board of Revenue (FBR), Salman Siddique, approved unlawful credit proposals of Rs1.1 billion in July 2006.

The 5000-pages-long report has been prepared by Punjab Additional Inspector General Police, Aftab Sultan, who heads a joint investigation team set up by the SC in June last year to look into irregularities in the BoP. The SC set up the investigation team because it was not satisfied with investigations conducted by the National Accountability Bureau (NAB). During the course of investigations, 61 persons were examined as witnesses under Section 161 of the Code of Criminal Procedure.
During the hearing of the BoP loan scam, a three-member Supreme Court bench comprising Chief Justice Iftikhar Muhammad Chaudhry, Justice Muhammad Sair Ali and Justice Ghulam Rabbani asked Advocate General Punjab, Khawaja Haris Ahmed, to read out important findings of the report.
Haris said former Punjab CM secured a huge loan of Rs 5.4 billion from the bank on the name of Phalia Sugar Mills while the amount was later spent on a new project, ‘Colony Sugar Mills’. He said then Chief Secretary Punjab, Kamran Rasool, took a long leave and during the leave period worked in Pervaiz Elahi’s mills while remaining Chairman of the Board of Directors at BoP. During this period, he also interacted with then president of the BoP, Hamesh Khan.
According to report, FBR Chairman, then one of the two directors of the bank, approved, on behalf of the board of directors of BoP, unlawful credit proposals amounting to Rs1.1 billion in July 2006. The report states that actual corruption at the BoP amounts to Rs76.178 billion. While the bank shows profits from 2005 to 2008 on paper, it is actually running in loss.
It said the bank’s liabilities had been increasing everyday but both the State Bank and the Punjab government had no clue what was going on. It said Hamesh Khan, with the help of board members, had issued loans to bank defaulters.
Terming the BoP scam one of the largest swindles in the country’s history, the report said the bank was deprived of over Rs11 billion in advances and mark up by one Haris Group alone. The report said when media scrutiny of the bank started on June 21, 2007, its very continuity came into question when its equity’s market capitalisation declined by a whopping amount of around Rs64 billion within a short time period.
The report regretted that millions of rupees had been doled out from the BoP, against negligible securities and without any collateral, to non-existent clients like Haris Group, the main beneficiary of the scam and one of the petitioners. Despite having no businesses, Haris Group opened accounts in the BoP by using fake identities and documents and funds were sanctioned to them at their discretion. In more than 95 percent cases the sanctioned funds were withdrawn within a day after approval.
It has now been conclusively established, the report said, that properties placed as security with the bank were heavily over-valued. Such over-valuations were the result of manipulation with the active connivance of the valuators, it said.
The court directed Khawaja Haris to make the report public and accessible to all citizens interested in seeing a copy, subject to rules and regulation.
The court also directed NAB authorities to obtain a copy of the report and consider it in respect of the cases and references already pending. NAB has also been asked to read the report and collect evidences in its light. The court also appreciated Aftab Sultan for his efforts in preparing the report. Advocate General Punjab Khawaja Haris told the court a new reference regarding the scandal could not be filed in the absence of NAB chairman. NAB authorities told the court a reference could be filed. In response, the CJ asked NAB officials how the reference could be filed in the absence of chairman NAB and Prosecutor General. The hearing was adjourned for three weeks.
In its submission for court consideration, the report said none of the accused be allowed to enter into a plea bargain and that the principal amount, along with full markup at penal rates, be recovered from the main accused, Sheikh Muhammad Afzal, and his accomplices.
The report said the references and complaints pending with NAB are testimony to the criminal and negligent behaviour of the bank’s management while Hamesh Khan was at the helm of affairs. It said the bank’s survival was vital for more than 5,000 families who depended on the bank for incomes. More than any body else, the depositors would be the greatest losers if the bank goes bankrupt, the report added.
The report suggested that NAB may be directed to move for the cancellation of bails of the accused so that the money and valuables illegally obtained by them could be recovered. It also said NAB may be directed to file a separate reference against four directors, including Farid Mughis Sheikh, Khurram Iftikhar, Ijaz Gohar and Mian Latif, who obtained credit facilities for their industrial groups in contravention of the Bank of Punjab Act. The report submitted that NAB may be directed to submit a final reference of the subject case to the concerned court after completion of all formalities.
It said the Punjab government may also be directed to amend the bank’s by-laws and allow the Punjab Assembly’s public accounts committee to review all appointments to the Board of Directors. The 19 accused who inflicted huge losses to the bank have been pointed out in the report.
The report suggested that the Punjab government be directed to consider the privatisation of the bank so that it could be rebuild. It further suggested that State Bank may be directed to strictly regulate the Asset Valuators and Surveyors.
Online adds: Shockingly, board of directors of the Bank of Punjab formed fake companies and obtained loans of over Rs6 billion. Expressing alarm over this, the CJ asked: “How is it possible that bank directors allowed loans to themselves? Massive corruption has been committed in the Bank of Punjab”.
The court was informed that the bank’s board of directors comprised persons nominated by then president Hamesh Khan. This board provided loans to one Haris Steel Mills and also extended loans to other fake companies. A loan amounting to Rs5.4 billion was disbursed to Phalia Sugar Mills through which property was purchased. The court was told that a sum of Rs90 million was swallowed in the name of bonuses.

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