New scam: FIA launches probe into forex scandal

Western Union, SBP under the microscope.

LAHORE:

The Federal Investigation Agency (FIA) has launched an investigation into the country’s biggest foreign currency exchange scandal which has reportedly caused massive losses to the national exchequer.

FIA is looking into alleged ‘dubious deals’ between Western Union (WU), Zarco Exchange Company Pvt Limited (ZECPL) and the State Bank of Pakistan (SBP) in account of misappropriation in remittances, The Express Tribune has learnt.

A case has been registered at the agency’s Corporate Crime Circle Lahore police station, while non-bailable arrest warrants have been issued for Senior Joint Director Export Policy Department (EPD) of SBP Najumul Saqib.

The agency has also summoned Senior Executive Director EPD Asad Qureshi, Director EPD Muhammad Mansoor Ali, Additional Director EPD Moinuddin, WU’s Country Manager Abdul Hameed Fareed, former country head Sobia Rehman and Senior Vice President Middle East and Africa (Western Union Financial Services, Inc.) Jean Claude Farah.

Evidence has emerged regarding the payment of school fees of Saqib’s son from the account of ZECPL on the instructions of Mubashir Hayat Mirza, former chief executive officer of Zarco. Under the law, Saqib and the other mentioned officials of the Export Policy Department are required to restrict ZECPL from illegal transfers of foreign exchange outside the country.

As per the rules of SBP, a foreign exchange company can transfer only 20% outside the country against the foreign remittances received in the country from abroad. The investigation has revealed that ZECPL transferred 35% foreign exchange currency in connivance of some officials of WU and SBP.

As a result, the value of the dollar against the rupee has increased sharply, which caused heavy losses to the exchequer.

FIA’s investigations also shed light on WU not paying a single penny in taxes despite it earning an approximate profit of Rs1.5 billion per year.

The question of tax officials’ involvement in the evasion is also being scrutinised by the agency’s investigation team.

FIA officials familiar with the investigations claimed that if the accused are arrested and the requisite records are provided to the FIA, it would help cease the illegal transfer of foreign exchange abroad in the future.

However, the task has been made difficult for FIA as officials of EPD have refused to provide the required records, while the Ministry of Finance and the state bank have also barred representatives of WU from joining the investigation.


Published in The Express Tribune, April 12^th, 2013.