The investigators of the country’s prime anti-corruption watchdog have sought permission to arrest former finance minister Ishaq Dar and State Bank of Pakistan (SBP) former governor Ashraf Wathra along with six other officials in case of alleged non-transparent amalgamation of two banks.
On November 3, the National Accountability Bureau (NAB) Karachi Office sent warrants of arrests of eight persons to NAB headquarters with a request to give it permission to take them into custody in case of “non-transparent amalgamation of KASB Bank into BankIslami,” showed official documents
The permission has been sought to arrest Ishaq Dar, who is currently residing in London; Ashraf Wathra; a former senior official of the Ministry of Finance and five central bank officials who are currently serving at key positions.
“The accused persons of the SBP are not cooperating with CIT [combined investigation team] and hampering the process of investigation by not providing the requisite record, which is causing inordinate delay in finalization of investigation,” said the arrest warrants request made to the NAB headquarters.
The investigators stated that several provisions of information letters, reminders were sent to the SBP for procuring internal memos, minute sheets, note sheets and other relevant records in order to establish criminality on the part of responsible officers but the said information was never made available.
In April 2018, the Public Accounts Committee (PAC) of the National Assembly had requested the Supreme Court of Pakistan to take suo moto notice of KASB Bank’s merger deal while terming it the “biggest scandal in the central bank’s history”.
On May 7, 2015, the SBP allowed the merger of KASB Bank into BankIslami, after the former could not meet the statutory paid-up capital requirement of Rs10 billion. The SBP invoked the Banking Companies Ordinance of 1962 to hand over KASB Bank to BankIslami in May 2015 in return for Rs1,000.
However, the SBP gave Rs5 billion at 0.01% to BankIslami for 10 years and Rs15 billion in short-term financing. This caused a loss of Rs3.45 billion on account of extraordinary favour to BankIslami, according to the Auditor General of Pakistan’s report.
Rs1,000 valuation had also wiped out 1.95 billion shares, held by 9,000 shareholders, and major shareholders have filed a civil suit, claiming compensation from the SBP and the federal government.
NAB ordered the inquiry in September 2015 on the basis of a story published in The Express Tribune. The NAB Karachi office had long ago recommended the headquarters to file a reference against all the accused persons but no action was taken.
Few weeks ago, The Express Tribune had reported that the PTI government decided to look at whether the then PML-N government had any role in the alleged amalgamation.
NAB documents showed that the Karachi Office sought permission to arrest accused persons to “expedite the investigation proceedings”, as all the accused persons of the SBP are “deliberately avoiding to appear” before NAB.
NAB has so far sent five call-up notices to all the SBP officials. Questionnaires were also sent to them in March this year. The NAB officials also sought assets declarations of the SBP officials as they suspected some kickbacks in the deal, said the sources.
Assets of KASB Bank were not valued at the market rate to favour BankIslami and a concessionary loan to the latter, amounting to Rs20 billion, after amalgamation established that BankIslami was not in a position to bear the losses of KASB Bank, according to the NAB inquiry report.
Last Tuesday, the NAB headquarters advised the regional office that “due to sensitivity of the matter, there is still a requirement that the issue may be discussed with the present Governor SBP before taking any action”.
Subsequently, a meeting was held between SBP Chairman Dr Reza Baqir and NAB Chairman Javed Iqbal on Thursday. “Eradication of corruption and recovery of looted money is the top most priority of NAB,” a NAB press release quoted the chairman as saying after the meeting.
The Express Tribune had sent a question to the SBP governor, requesting him to comment whether the issue of arrest of five SBP officials was discussed during the meeting with NAB chairman and what decision was taken in this regard”.
“The SBP shares the views provided in the PR (press release) of NAB,” said SBP chief spokesman Abid Qamar, in response to the query. However, no details were shared in the NAB handout.
Questions were also sent to NAB spokesman on Wednesday, asking him to comment whether permission to arrest people was given or denied. The NAB spokesman had promised to give a version but no reply was received till filing of the story.
Former finance minister Ishaq Dar denied that he committed any wrongdoing.
“I have nothing to do with this case except whatever SBP decided under the law and due process and recommended by the Finance Division/Secretary for approval, was done,” Ishaq Dar said in a written response.
Dar said that the permission for amalgamation scheme was more legal formality than anything else in the Ministry of Finance. “[Prime Minister] Imran Niazi was behind all this, as they could find no irregularity in my work anywhere, so they have resorted to cheap politics like this,” Dar claimed.
He said NAB is doing illegal witch hunts and harassing people and the SBP staff and it was high time this politically motivated institution was taken to task and fixed. The SBP former governor Ashraf Wathra did not respond to the query.
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