Fraud in youth loan scheme to be referred to NAB

First-of-a-kind fraud in the govt’s flagship loan initiative

ISLAMABAD: The National Bank of Pakistan (NBP) has decided to refer the case of fraud in the Prime Minister’s Youth Business Loan (PMYBL) scheme to the National Accountability Bureau (NAB) amid the bank’s dilly-dallying in registering criminal cases against eleven accused persons.

Nausherwan Adil, the acting president of the NBP, on Wednesday briefed the Senate Standing Committee on Finance about the fraud. The panel had taken notice of the embezzlement in the PM’s flagship loan scheme after a story published in The Express Tribune last month, revealing that the bank staff have usurped beneficiaries’ funds.



The fresh details that the NBP shared with a parliamentary committee revealed that the bank staff of the Mardan region siphoned off money from 126 accounts out of the total 161 accounts.

Eleven people -- including manager (operations and human resource) have been suspended and their cases will be handed over to NAB, said Adil.

It will be yet another test case for NAB because it is already investigating Rs18.5 billion fraud in the NBP’s Bangladesh operations -- also reported by The Express Tribune in January 2014.

From April 2015 to July 2016, operational fraud was committed through unauthorised flying entries in the PM Youth Business Loan Scheme accounts, said Adil, while giving details of the case.

Adil said Shah Nawaz transferred money into an account that he opened in his brother’s name. The fraud occurred because the compliance department was sleeping, he added.

“Nawaz withdrew Rs77.87 million from these accounts out of which so far Rs53.54 million have been recovered,” he added. Adil vowed that the remaining amount of Rs24.33 million will also be recovered soon. “It is a serious thing, which shows that the bank’s internal controls were not working,” observed Senator Saleem Mandviwalla, chairman of the standing committee. However, Adil maintained that it becomes difficult to catch such cases immediately when four to five people collude with each other.

Responding to a question, Adil said so far the NBP has not registered an FIR against the accused persons because the matter came to the bank’s notice on September 19.

However, the factual position, as noted down in the inquiry report available with The Express Tribune, is that on August 4, the NBP regional head had authorised the investigation.

He sent the initial probe report to the headquarters on August 15 -- four days before the PM visited the NBP headquarters in Karachi -- for a briefing on the loan scheme.

This is the first of its kind fraud in the government’s flagship loan programme and the members of the standing committee expresses apprehensions that similar cases may also occur in other branches as well.



According to the NBP brief, which it submitted to the committee, one person was criminally involved, four have been charge-sheeted and suspended on allegations of gross negligence and six have been suspended due to showing sheer negligence.

A NBP inquiry report had established that Shah Nawaz Khan was running a ‘parallel bank’ and withdrawing money without the authorisation from bank accounts. Moreover, “large-scale pocketing was also observed through unauthorised debt and credit to the PM youth loan scheme bank accounts”.

Published in The Express Tribune, October 21^st, 2016.