Turning a blind eye: NBP hires ex-official named in BD losses

Zubair Ahmed, allegedly involved in the loss of Rs12 billion, is now appointed SEVP.

ISLAMABAD:

In what appears to be an attempt to give safe passage to an official under whose watch the National Bank of Pakistan’s (NBP) Bangladesh operations sustained over Rs12 billion in losses, the bank’s board of directors has hired Zubair Ahmed as senior executive vice president after his superannuation.

Ahmed, a former regional head who attained the age of superannuation early this month, was hired initially for six months, with sources in the bank’s management speculating that the time will be employed to clear him from alleged involvement. In a first step, in this case the bank’s top management also approved all post-retirement benefits amounting to over Rs33 million.

NBP President Syed Ahmed Iqbal Ashraf sanctioned benefits on account of commutation, general provident fund and vehicles, leaving no chance of recovery if Ahmed is found guilty during investigation, sources said.

The president allowed the benefits despite a report by the Institutional Disciplinary Wing of the NBP which cautioned the president about ‘serious charges’ against Ahmed. It is not the first time that the board of directors has given extensions to officials allegedly involved in causing losses to the bank. Earlier, the board gave extensions to two executive vice presidents Shaharyar Qaiserani and Shahjehan Khan.

Zubair Ahmed said that the head of Bangladesh operations concealed the reality from him for four years. Ahmed said he came to know about the non-performing loans (NPL) in 2008 when a borrower defaulted on a letter of credit. “I immediately sent a report to the head office, Karachi,” he said.

He alleged that the General Manager of the Bangladesh Operations Jehanzaib was hiding facts and that a powerful minister was protecting him in Pakistan. In order to conceal facts, the Bangladesh team used to sign a fresh credit line with the borrower to pay the previous NPL, said Ahmed.

“Although I was overall in-charge, my role was limited and it was the responsibility of the Credit Division, Audit and Human Resources Division,” said Ahmed, terming the Bangladesh episode a “systemic failure”.

He defended the decision of seeking an extension in his job and said that he neither sanctioned any loan nor usurped a penny. Ahmed said a significant amount of loans were sanctioned between 2011 and 2013 – the time he was not in-charge. He put the responsibility of this period on an official Rafiq Bengali who he said has fled to the United States.

The chairman of the NBP board, Muneer Kamal confirmed to The Express Tribune that Ahmed has been hired for six months. However, Kamal refused to speak on record regarding the allegations and justification for retaining an official who allegedly failed to perform his duties.

In January this year, in The Express Tribune report regarding the NBP’s Bangladesh operation having sustained losses, Kamal had said according to initial findings that it was a result of “lax management”.

The loans sanctioned by the Bangladesh operation in the second half of the last decade became non-performing. It was the period when Ahmed was regional in-charge of the Bahrain region. Bangladesh operations are controlled by the Bahrain regional office and under the NBP hierarchy it was the responsibility of the regional office to report to the head office.

In a recently held annual general meeting of NBP’s shareholders, the management admitted that the financial irregularities and ‘misreporting’ to head office led to losses in Bangladesh..

According to a director of the board who endorsed Ahmed’s hiring, there was lack of monitoring that led to losses but Ahmed could not be held responsible as the Bangladesh operation was not electronically linked with the regional office. The board firmly believes that Ahmed was not personally involved, said officials.

According to sources, about 70 per cent of the bank’s branches are not electronically linked. The concerned officials are supposed to submit three manual statements on loan sanctioning, recovery, and disbursements. In three years only 12 statements were filed with head office, out of which three were incorrect.

Board officials insist that Ahmed has been hired to cooperate in the investigations. Another BoD official said that an inquiry has been outsourced to KPMG – an audit and tax advisory firm, to ensure impartiality.

It is learnt that in the ongoing inquiries, Ahmed is being held responsible for ‘closing his eyes’ to the irregularities.

Published in The Express Tribune, May 3^rd, 2014.