
The Senate Standing Committee on Finance that met on Friday gave another chance to the three banks to turn up in the meeting or else their warrants would be issued, said a committee member after in-camera deliberations.
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The panel is investigating whether Pakistani nationals bought the Eurobonds floated in September last year.
In its previous meeting, the committee had summoned representatives of Citibank, Deutsche Bank and Standard Chartered Bank through the Ministry of Finance in the next huddle.
Finance Minister Ishaq Dar was not present. Of the 36 meetings held so far, the minister did not participate in 24 and the committee decided to raise the issue in the Senate, said Senator Saleem Mandviwalla, Chairman of the panel, after the meeting.
The panel decided to give a last chance to the three banks. “We did not want to be harsh but will proceed firmly as per rules and procedures,” said a member.
The standing committee suspects that the money invested by foreigners had actually flown from Pakistan.
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“There is a lot of pressure from the government to stop the inquiry but we will take it to conclusion,” said Mandviwalla.
After the finance ministry, the State Bank of Pakistan (SBP) on Friday also opposed the move to summon representatives of the banks, said panel members on condition of anonymity.
Senator Mohsin Aziz read out relevant rules that authorised the standing committee to issue warrants of those who failed to appear before it.
In the previous huddle, Secretary Finance Dr Waqar Masood said the SBP had regulated the foreign currency regime and only it could tell whether Pakistanis invested in the bonds. However, he pointed out that an official circular had barred locals from making the investment.
Committee members were of the view that financial advisers had account details of the people who invested in the bonds. Citibank and Deutsche Bank were also financial advisers for the previous two bond offers when Pakistan raised $3 billion.
A committee member said the biggest question mark was over Deutsche Bank and members also raised questions over the terms of reference for hiring the advisers.
In September last year, the government had issued the bonds with a 10-year maturity in the international market at an interest rate of 8.25%, which was 6.12% above the rate for the US Treasury bond.
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The decision to go ahead with the bond float despite unfavourable conditions fuelled speculations that some dignitaries had injected the funds.
A committee member stressed that it could be established that the money flew from Pakistan but it would be very difficult to point out who bought the bonds.
Since coming to power, the PML-N government has raised $3.5 billion by issuing bonds in international debt markets. The Debt Management Strategy shows that there are plans to raise another $3.5 billion over the next three years.
Published in The Express Tribune, March 12th, 2016.
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