NBP Bangladesh branch: NAB takes Rs18b bank scam into decisive phase

National Accountability Bureau authorises investigation into huge loss, will send case to accountability court

ISLAMABAD:

The National Accountability Bureau’s (NAB) decision to authorise an investigation into the Rs18-billion loss in the Bangladesh branch of National Bank of Pakistan (NBP) has brought a new turn in the two-year-old case, which may result in a shakeup at the top hierarchy in the bank.

The decision of NAB’s executive board to take the case into a decisive phase has come amid intense efforts, allegedly by some top guns of the financial sector to save their names. NAB has four months to complete the investigation before sending the case to an accountability court.



From 2003 to 2012, the Bangladesh branch of NBP lent money without securing collaterals to dubious companies. Many people who are currently sitting at key positions in the financial sector had remained at the helm of affairs in NBP during that time.

The heads of credit and overseas operations were particularly under scrutiny, sources said.

On Tuesday, NAB authorised investigations into the conduct of some officers of NBP who were accused of abusing their powers in the processing and sanctioning of credit limits, willfully avoiding proper valuation of securities offered by borrowers and causing losses of $185 million to the national exchequer, according to a handout issued by NAB.

The investigation was authorised only after a thorough inquiry that continued for months in which NAB got ‘incriminating evidence’, the sources said.

However, so far the anti-corruption watchdog has limited the number of accused to less than 10 people. It has powers to add other names at any stage of investigation.

The executive board’s decision came just two days before a parliamentary panel would seek an updated report on the scam. The National Assembly standing committee on finance has asked the NAB chairman to give a briefing on the inquiry on Thursday.

Initially, NAB will try to file charges against six Bangladeshi nationals who were employees of the government of Pakistan. Their cases will be taken up with the Bangladeshi government through the Foreign Office.



Case timeline

In January 2014, The Express Tribune had first reported the scam. At that time, the misappropriation was estimated at around Rs11 billion, which later swelled to Rs18.5 billion.

Before January 2014 and even after that, the top management of NBP tried to hush up the matter, as few high officials were directly involved in the scam.

In February 2015, the NA standing committee, headed by Omar Ayub Khan of the PML-N, referred the matter to NAB for further probe. The current chairman of the committee, Qaiser Ahmed Sheikh, also kept the issue alive.

The NAB investigation will be the sixth such probe, as NBP has completed four inquiries while one was conducted by the chartered accountant firm KPMG. In its forensic audit, KPMG found that “61 delinquent employees” were prima facie involved in the scam. Many of them were directly responsible and some were responsible due to their administrative positions.

These people were posted in Bangladesh branches, the regional office in Bahrain and the head office in Karachi.

“The Bangladesh operation appears to have started facing problems from 2007, when branches initially reported non-performing loans/advances, although the initial trigger was seen in 2003,” said the KPMG report.

A total of 19 triggers were sent to the head office from 2003 to 2012 but no action was taken, it added.

Out of over Rs18-billion loss, only $17 million or Rs1.7 billion could be recovered from the parties so far, NBP President Syed Iqbal Ashraf had told the NA standing committee in December last year. The response of NBP’s top management to NAB’s latest move could not be received until the filing of this report.

Published in The Express Tribune, March 24^th, 2016.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.