KASB Bank merger case: PM gives directive to remove names of accused from ECL

NAB called for putting the accused on ECL due to loss caused by merger of two banks

ISLAMABAD: Prime Minister Imran Khan has directed the officials concerned to consider the possibility of striking off names of four accused in the KASB Bank merger case, including a former governor of the central bank and head of a commercial bank, from a no-fly list amid questions of conflict of interest.

The National Accountability Bureau (NAB) had recommended that their names should be placed on the Exit Control List (ECL) due to their alleged role in a “non-transparent” amalgamation of KASB Bank into BankIslami. The amalgamation had allegedly caused a loss of billions of rupees to the national kitty, besides causing losses to sponsors of KASB Bank.

The anti-corruption watchdog had recommended that names of Ashraf Wathra, former governor of the State Bank of Pakistan (SBP), Hassan Aziz Bilgrami, president of BankIslami Pakistan Limited, Shabbar Zaidi, senior partner of AF Ferguson chartered accountancy firm, Hasan Nazir, also partner of AF Ferguson and Asim Salim, former senior manager at the tax consultancy firm, should be placed on ECL, according to NAB documents.

While chairing a federal cabinet meeting, the PM directed on Thursday to immediately remove the name of Shabbar Zaidi along with two sitting members of the National Assembly. The PM took up the issue as other item as it was not part of the cabinet’s agenda, said a participant who attended the meeting.

Secretary to the PM and interior secretary did not take the PM, who is also Federal Minister for Interior, into confidence before placing their names on the ECL, said a government official.

AF Ferguson had advised Imran Khan in a case filed by Pakistan Muslim League-Nawaz (PML-N)’s Hanif Abbasi in the Supreme Court for disqualification of the PTI chief on allegations of misconduct, financial irregularity and violation of income tax and public representative laws. The apex court struck down Abbasi’s petition. The firm has also been advising a senior PTI leader.

This has raised the question of conflict of interest as the premier has only removed Shabbar Zaidi from the ECL out of the five accused.

AF Ferguson was Pakistan’s top chartered accountancy firm and it had also been a tax consultant to Asif Ali Zardari and Mian Nawaz Sharif, therefore, there was no question of conflict of interest, insisted Federal Minister for Information Fawad Chaudhry while talking to The Express Tribune. Responding to a question why only Zaidi’s name was removed from the list, the minister said other names were not discussed in the cabinet meeting but the PM directed the minister of state for interior to review other names as well.

“It seems that names of these persons have been erroneously included in the ECL,” said Chaudhry.

The information minister said the premier wanted to review all the names on the ECL and remove the people who should not be on the list. There are over 3,000 people on the ECL. NAB had recommended placing the names of these people a week after it received the response on allegations leveled against AF Ferguson in the KASB Bank merger case. On the basis of AF Ferguson’s evaluation, the SBP had amalgamated KASB Bank into BankIslami for just Rs1,000.

NAB had launched probe into the KASB Bank deal on the basis of a story published in The Express Tribune. The irregular amalgamation caused a loss of roughly Rs3.5 billion to the exchequer in addition to the loss of Rs6.6 billion to sponsors of the defunct bank, according to two separate reports of the Auditor General of Pakistan’s (AGP) office.

The SBP, AF Ferguson and KASB Bank had signed a tripartite agreement in December 2014. But it seems that AF Ferguson was lately distancing itself from the amalgamation.

In its response to the NAB questionnaire on November 5, 2018, AF Ferguson maintained that “there was no definitive indication of the intended use of professional work required to be undertaken by AFF, resulting in the eventual amalgamation with another bank”.

It added that it was an evaluation for the use of the SBP in its capacity as the regulator of banking sector for evaluation of various options available on the matter.

“It should be noted that AFF’s scope of work was related to due diligence and valuation of KASB on a standalone basis and the work was not undertaken for amalgamation,” according to AF Ferguson. BankIslami got the SBP’s permission to conduct due diligence one month after the agreement, it added.

One of the accused told The Express Tribune on Friday that the allegations contained in NAB’s memo for placement of names on the ECL had been challenged in superior courts. He said the Sindh High Court and the Islamabad High Court had dismissed the petitions. An appeal was also dismissed by the Supreme Court, he added.

Published in The Express Tribune, December 23^rd, 2018.

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