Modaraba scandal: NAB flooded with Rs6.5b recovery claims

Stung by the scam, about 8,000 more victims have approached bureau.

LAHORE:

The National Accountability Bureau (NAB) has received further claims to the tune of Rs6.5 billion from about 8,000 victims of a modaraba scandal involving fake companies and a parallel banking system, reveals a NAB report.

A group of scholars established seven bogus companies as well as a parallel banking system and deprived 8,807 people of their savings running into billions of rupees, says the two-page report.

Now, NAB has received further claims from 7,969 victims, who have lost about Rs6.5 billion of their savings.

Initially, a probe team of NAB estimated that the amount would not be more than Rs552.439 million, but after some time the bureau was flooded with claims seeking recovery of Rs6.5 billion.

Mostly, students of seminaries and members of their families, widows, retired government employees, retired personnel of armed forces and even 13 officials of an intelligence agency saw their savings disappear. They got cheated by some scholars and about three dozen prayer leaders.

Scam unearthed

The NAB report said Muhammad Khan, resident of Adhowal, Chakwal district, complained that a group of people including Ehsanul Haq, Chief Executive of Fayyazi Gujranwala Industries (Spadix Group of Companies) and others were involved in a business of receiving funds from the general public on a profit and loss basis. They got money in the name of modaraba business – an Islamic mode of financing – but without any authority or approval and registration as a modaraba company with the Securities and Exchange Commission of Pakistan (SECP).



According to the complaint, they deceived the public, concealed the fact that no modaraba company had been registered, collected huge amounts and issued receipts. The receipts were given in the name of Fayyazi Gujranwala Industries, which is registered as a private limited company having no authority to act as a modaraba firm.

On April 16 last year, NAB Rawalpindi director general initiated a probe into the allegations of corruption and corrupt practices. On the same day, warrants were issued and accused Ehsanul Haq was arrested.

The accused admitted to his guilt and applied for voluntary return of money under Section 25(a) of the National Accountability Ordinance (NAO) 1999.

Following publication of advertisements in daily newspapers, 838 victims came forward and submitted claims amounting to Rs552.439 million until June 13, 2013. NAB is matching the claims with the available record provided by the accused and is also calling the claimants.

Talking to The Express Tribune, NAB officials, who are familiar with the developments, said seven companies were found to be involved in the scam.

The SECP had informed the bureau that seven companies were involved in the illegal business. None of them was registered with the SECP and their accounts were not verified by any certified auditor.

The accused including Ehsanul Haq and Qazi Obaid of Fayyazi Industries, Shabir Ahmed Usmani of Alwasay Group, Ghulam Rasool Ayubi of Meezban Group and Ibrahim and Osama of a joint venture of Elixir and Mega Group had been arrested, they said.

During the course of investigation, it was found that Haq had deposited the looted money in different firms in Thailand and Hong Kong. As many as 40 prayer leaders were also involved in the scandal as they facilitated investment of people in fake investment schemes.

Published in The Express Tribune, January 8^th, 2014.

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