Prime Minister Yousaf Raza Gilani has appointed Ihsanul Haq as president of the government-owned SME Bank, despite the fact that Haq had been forced to go into early retirement in 2000 after he was found guilty of involvement in an illegal transaction worth Rs386 million.
The issue was raised on Thursday at a hearing of the parliamentary Public Accounts Committee (PAC), when a committee member pointed to a comment by government auditors which highlighted the fact that eight officials at the SME Bank had been reinstated to their previous positions, despite having been found to have been involved in financial irregularities.
The eight men had been reinstated by former Finance Secretary Naveed Ahsan, but it was reported during the hearing that the appointments had the approval of the prime minister himself.
To the surprise of many, one of them, SME Bank president Ihsanul Haq, who was in the room, addressed the issue directly and said: “we had been exonerated by the former finance secretary.”
Auditor-General Tanvir Ali Agha, however, was not satisfied with the explanation. “If the officials were not guilty, as claimed by the SME Bank president, then why did the question of exoneration arise?”
Ahsan, who was finance secretary in 2005, reinstated the officials despite reports from both the SME Bank board of directors and the State Bank of Pakistan, outlining the embezzlement of funds by the eight men in question. Ahsan went on to become chairman of the National Accountability Bureau (NAB).
The eight were accused of helping another official, Tahir Abbas, then the managing director of the Regional Development Finance Corporation – another government-owned lender – with using Rs368 million in public funds for personal use. Abbas eventually admitted his guilt, implicating his eight accomplices, and entered into a plea bargain with NAB, returning Rs76 million.
“What is the logic of appointing persons with dubious backgrounds as the president of a public institution,” asked Chaudhry Nisar Ali Khan, PAC chairman and member of the PML-N.
“Prime Minister Gilani appointed him as the President of the SME Bank”, said Finance Secretary Waqar Masood. The PAC has ordered to present the details of the case within three days with an aim to determine the future of the Haq, who was appointed in March 2011.
Haq’s appointment also raises questions over the financial stability of an already struggling bank. SME Bank’s paid up capital is Rs2.4 billion, far less than the Rs7 billion required by the State Bank of Pakistan. The bank’s bad loan book is at Rs712 million as of September 30, 2010, a 45.3 per cent increase compared to the same period in the previous year.
Published in The Express Tribune, May 6th, 2011.
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