$500m Eurobond: Parliamentary body calls reps of international banks

We have information that some Pakistanis invested in the Eurobonds and the money flew from here, says Mandviwalla


Shahbaz Rana February 24, 2016
The government had paid 6.12% over and above the US treasury rate for ten-year bond. PHOTO: REUTERS

ISLAMABAD:


A parliamentary body has decided to summon representatives of three international banks, which the government hired for the purpose of issuing $500 million Eurobonds late last year, after it suspected that money invested by ‘foreigners’ had actually been flown in from Pakistan.


The Senate Standing Committee on Finance and Revenue decided to call the representatives after the government could not satisfy the parliamentarians about the nationality of those who invested in the dollar-denominated Eurobonds. The government on Wednesday gave the briefing during an in-camera meeting but did not give any material information, said a senator while speaking on condition of anonymity.

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In September last year, the government had issued a $500 million Eurobond with a maturity period of ten years in the international market at an interest rate of 8.25%. The government had paid 6.12% over and above the US treasury rate for ten-year bond - a cost that highlighted investors’ sentiments about the health of the country’s economy.

However, the government’s decision to go ahead with the issue despite unfavourable circumstances fuelled speculations that some dignitaries had availed the opportunity.

“We have information that some Pakistanis actually invested in the Eurobonds and the money flew from here,” said Senator Saleem Mandviwalla, chairman of the standing committee after the meeting.

He said that despite the information, Secretary Finance Dr Waqar Masood insisted that Pakistanis did not invest in the Eurobonds.

Mandviwalla said that in order to dig out the truth the committee decided to call the financial advisers that had been hired to carry out the transaction. He said the representatives of the Citibank, Deutsche Bank and Standard Chartered Bank were called to appear in the next meeting.

The chairman said that the financial advisers had the account details of those who invested in the Eurobonds. The Citibank and Deutsche Bank were also financial advisers for the last two bond offers when Pakistan raised $3 billion.

Mandviwalla said that the finance secretary told the committee that three Pakistani banks including Bank Alfalah and United Bank Limited also invested in the Eurobonds. However, Masood said that the off-shore branches of these banks invested in the bonds and money did not go from Pakistan. Roughly 14% of the $500 million were invested by Pakistani banks.

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Masood said that State Bank of Pakistan regulates the foreign currency regime and only the central bank can tell whether some Pakistanis invested in the Eurobonds. The SBP representative was not present in the in-camera meeting.

The finance secretary said that the official circular for the transaction barred locals from investing in the bonds.

The committee members also expressed reservations over the source of remittances, arguing that a significant portion of it was actually black money that was being routed through remittances back into Pakistan.

NBP Bangladesh scam

The Director Operations of National Accountability Bureau (NAB) gave an update on Rs18 billion Bangladesh branch fraud in National Bank of Pakistan (NBP), giving hopes that the culprits may be brought to justice.

The NAB has gotten hold of evidence regarding Rs18 billion fraud and would soon file a reference in an accountability court, the director of the anti-corruption watchdog told the committee. He said that within one month, the on-going inquiry will be converted into an investigation. After that, a reference will be sent to the accountability court.

Some former and incumbent top officials of the bank are responsible for the huge losses and one of the top present officials is trying to influence the investigation through the government of Punjab, said an official privy to the investigations.

The $170 million loans were sanctioned without proper scrutiny and the collaterals were released before payment of the loan, said the director. The management has not fired even a single officer while recoveries stand at a meagre Rs1.7 billion.

Published in The Express Tribune, February 25th,  2016.

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COMMENTS (4)

Abu Norr | 8 years ago | Reply That's the difference between PPP and PML(N) government style. PPP's corruption is usually so evident that even a commoner can see misappropriation in power rental agreements, Benazir scheme etc. whereas PML(N) grabs its corruption share through freezing accounts, money laundering (HH Ishaq Daar can vouch for that), making money by lending dearly to the government through Eurobonds or short term bank lending from dubious Dubai based banks.
Muhammad Furqan | 8 years ago | Reply What a shame!!! ....... Loot sale!
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