Irregularities in banks: Senate panel meeting put off for third time in a row

Committee members suspect that postponement a move to protect the corrupt.

ISLAMABAD:

For the third time in a row, the government has postponed a crucial meeting of the Senate Standing Committee on Finance, convened to take up ‘sensitive’ agenda of alleged irregularities in the National Bank of Pakistan (NBP) and the Bank of Punjab (BOP).

The committee, headed by MQM’s Senator Ahmed Ali, was scheduled to meet in Islamabad on Tuesday for two days to discuss accounting irregularities in NBP and BOP.

“The government is making lame excuses and does not want to face the committee to explain its position on important issues,” said Ahmed Ali. He said even the State Bank of Pakistan (SBP) does not want to tell how and where taxpayers’ money is being spent.

A draft report on investigation into the accounts of BOP, prepared by SBP, as well as review of loan portfolio of NBP, which was suspected to be hiding troubled assets in its balance sheet, were on top of the meeting’s agenda.

“The meeting has been postponed for the third time in a row and I hope this time it is not done under any political pressure,” said Senator Haroon Akhtar Khan, a member of the committee from PML’s like-minded faction.

Other members suspected that postponement of an important meeting indicated that the higher authorities have teamed up to save those who are responsible for financial irregularities in NBP and BOP.

BOP and NBP are majority-owned by the Punjab government and the federal government respectively and both are publicly listed entities that trade on the Karachi Stock Exchange. Both banks are required under the Companies Ordinance 1984 to disclose their accounts to the public every quarter. BOP, however, has failed to do so since September 2008.

According to sources familiar with the matter, gap between assets and liabilities of BOP may be between Rs50 billion and Rs80 billion.

Senator Haroon Akhtar Khan had earlier expressed fear that there were some serious problems at NBP, with some reports suggesting that it was heading towards a crisis similar to the one at BOP. He indicated that NBP may be extending loans while accepting substandard collateral, compromising its own financial integrity.

FBR summoned

In the meeting, the committee had also summoned Federal Board of Revenue representatives to explain as to why it fudged last year’s revenue figures. On June 30, the FBR claimed that it had surpassed the tax collection target and bagged Rs1,590 billion.

However, later the FBR’s claim proved wrong and it was found that the authorities took Rs42 billion in advance to cover the mess. The government has already transferred top 30 officials involved in the scandal but FBR Chairman Salman Siddique and Large Taxpayer Unit Islamabad chief Syed Ijaz Hussain Shah were not touched.

‘Favouritism’ in CCP

Senator Haroon Akhtar said the Competition Commission of Pakistan (CCP) was also on the
committee’s agenda. He said the CCP was called to explain allegations of favouritism and nepotism as there were allegations against CCP chairperson Rahat Kaunain Hasan that the anti-trust watchdog was taking legal services from the law firm of the chairperson’s husband.

“The committee wanted to know how she has disassociated herself from her husband’s firm.”

“Any insinuation in this regard is baseless and comes from ignorance of law and facts. My partnership stood terminated when I joined the CCP in November 2007, which was also disclosed and recorded in the first commission meeting. No case has been given to my firm for any fee,” said Rahat Kaunain Hasan, the CCP chairperson.

Published in The Express Tribune, October 4^th, 2011.