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Archive for category Corruption

Despite $100m investment offer, why was KASB Bank sold for Rs1,000? The Express Tribune, Pakistan

Despite $100m investment offer, why was KASB Bank sold for Rs1,000?

PHOTO:FILE

PHOTO:FILE

ISLAMABAD: Senior officials of the State Bank of Pakistan took harsh action and “misused their authority” in amalgamating KASB Bank into BankIslami for just Rs1,000, reveals an inquiry report of the National Accountability Bureau (NAB).

The report further disclosed that BankIslami was not capable of handling the now-defunct KASB Bank without the central bank’s financial support. Moreover, the central bank’s decision to award KASB Bank’s due-diligence contract to AF Ferguson, a chartered accountancy firm, was an “illegal act”.

“Officers of the SBP and others misused their authority to refuse foreign investment of $100 million in KASB Bank and favoured BankIslami Limited by amalgamating it at a token price of Rs1,000 only,” according to inquiry findings.

The Cybernaut Investment Group of China had offered up to $100 million investment to bridge the capital shortfall faced by KASB Bank, but the SBP rejected the offer.

The assets of the defunct KASB Bank were not valued at market rate, according to the inquiry. At Rs1,000, BankIslami got billions of rupees in assets, it added. Not only that, BankIslami also got Rs5.8 billion as deferred tax that benefitted its balance sheet.

Investigators have now recommended the NAB headquarters to order an investigation. The inquiry report had been submitted in December last year.

NAB spokesman Nawazish Ali Asim did not respond to questions regarding the next step in the case. The SBP spokesman’s response was also awaited, although in the past the central bank has defended its action of amalgamating the bank, saying it had the legal mandate.

On May 7, 2015, the SBP merged KASB Bank into BankIslami after the former could not meet the statutory paid-up capital requirement of Rs10 billion. The now-defunct bank was facing capital shortage since 2009, although it had a sound deposit base, which the NAB inquiry also confirmed.

There was no point in merging KASB with BankIslami, as other remedies were also available with the SBP, according to the inquiry report. It added the amalgamation was a harsh step on part of the SBP, which nullified billions of rupees investments of KASB shareholders.

The NAB inquiry further noted that the Rs20 billion as financial assistance could also have been provided to KASB Bank by appointing administrator and changing the board.

“The SBP has committed offence of misuse of authority as envisaged in Section 9(a) (iv) of NAO Ordinance, and investigation may be authorised against the accused persons,” the NAB investigators recommended to the headquarters.

“A holder of a public office, or any other person, is said to commit or to have committed the offence of corruption and corrupt practices – if he by corrupt dishonest, or illegal means, obtains or seeks to obtain for himself, or for his spouse and/or dependents or any other person, any property, valuable thing, or pecuniary advantage,” reads the relevant section of NAO.

Insider trading

The inquiry report observed that the decision to amalgamate the bank with BankIslami had taken a year before the amalgamation took place. Investigators said that the Al Karam Group, Ismail Industries, owned by Miftah Ismail family, and Ali Hussain, chairman of BankIslami, started increasing their shareholding in BankIslami from April 2014. They investigators said that this is “evident from the CDC record”.

Role of AF Ferguson

The NAB also launched an inquiry against a partner of AF Ferguson and one of its directors in the same case. The chartered accountancy firm had been accused of giving a favourable report.

“The selection of AF Ferguson and signing of tripartite agreement was an illegal act of the SBP,” according to the inquiry.

A minority shareholder of the KASB Bank, Shaheena Wajid Mirzan, had alleged that by paying Rs20.5 million as consultancy fees to AF Ferguson, the SBP got a totally fraudulent valuation report from the chartered accountancy firm. She further alleged that the Rs1,000 valuation wiped out 1.95 billion shares, held by 9,000 shareholders.

Nasir Bukhari, who had 43% stake in the defunct KASB Bank, at the time also highlighted the issue of conflict of interest, saying AF Ferguson was also the auditor of SBP and BankIslami, therefore, its Rs1,000 valuation report could not be considered impartial.

The then KASB president, Bilal Mustafa, gave a statement to NAB that the SBP summoned him and forced to sign a tripartite agreement at 12 midnight with AF Ferguson and SBP for conducting KASB’s due diligence at a hefty fee of Rs20.5 million. He told NAB that the market fee of this task was hardly Rs5 million

Mustafa further told NAB that selection of AF Ferguson at exorbitant fee that too without any tender was “not understandable”.

The inquiry report revealed that the SBP also forced the KASB Board Secretary Hameedullah to change the minutes of a meeting in which directors raised concerns about paying high fee to AF Ferguson.

  

Other players

While citing a statement given by the KASB Director, Muzzafar Bukhari, the NAB report noted that the KASB authorities were in sell-off negotiations with SAMBA Bank, which backed out and the SBP official asked it to stay away from entering into any deal, revealed the report.

SBP reply to NAB

At the inquiry stage, the SBP took the position that “interest of shareholders is not the mandate and responsibility of the SBP and they are only concerned about the interest of the depositors”, revealed the report. The SBP further stated that its actions were in line with powers available to it under the Banking Companies Ordinance.

However, NAB did not accept its response, saying the KASB Bank faced no liquidity issues and was, in fact, the most liquid bank in Pakistan due to Rs20 billion of Iranian deposits.

Reply contradiction

The SBP’s reply to NAB was contrary to what it wrote in its scheme of amalgamation. “In the case of amalgamation of banking companies, the rights of shareholders are fully protected by the Banking Companies Ordinance 1962 and the Companies Ordinance 1984”, according to the documents.

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Pakistan Corruption Free Or Free For Corruption – Cartoon The Nation

Panama decision will also be a verdict on Corruption in Pakistan

Either Pakistan will be Corruption Free Or Free For Corruption

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Think over it!

١: ایک پاکستانی سیاستدان دو یا دو سے زائد حلقوں سے بیک وقت الیکشن لڑ سکتا هے،
 
مگر ایک پاکستانی شهری دو حلقوں میں ووٹ نهیں ڈال سکتا.
 
٢: ایک شخص جو جیل میں هے ووٹ نهیں دے سکتا مگر ایک پاکستانی سیاستدان جیل 
 
میں هونے کے باوجود بھی الیکشن لڑ سکتا ھے
 
٣: ایک شخص جو کبھی جیل گیا هو کبھی سرکاری ملازمت نهیں حاصل کرسکتا مگر ایک 
 
پاکستانی سیاستدان کتنی بار بھی جیل جاچکا هو صدر، وزیراعظم، ایم پی اے، ایم این اے 
 
یا کوئی بھی عهده حاصل کرسکتا هے.
 
٤: بینک میں ایک معمولی ملازمت کیلیئے آپ کاگریجویٹ هونا لازمی هے مگر ایک 
 
پاکستانی سیاستدان فنانس منسٹر بن سکتاهے چاهے وه انگوٹھا چھاپ هی کیوں نه هو.
 
٥: فوج میں ایک عام سپاهی کی بھرتی کیلیئے دس کلو میٹر کی دوڑ لگانے کے ساتھ 
 
ساتھ جسمانی اور دماغی طور پر چست درست هونا بھی ضروری هے البته ایک پاکستانی 
 
سیاستدان اگرچه ان پڑھ، عقل سے پیدل، لاپرواه، پاگل، لنگڑا یا لولا هی کیوں نه هو وه 
 
زیراعظم یا وزیر دفاع بن کر آرمی، نیوی اورایئر فورس کے سربراهان کا باس بن 
 
سکتاهے.
 
٦: اگر کسی کسی سیاستدان کے پورے خاندان میں کوئی کبھی اسکول گیا هی نه هو تب 
 
بھی ایسا کوئی قانون نهیں جو اسے وزیر تعلیم بننے سے روک سکے اور…..
 
٧: ایک پاکستانی سیاستدان پر اگرچه هزاروں مقدمات عدالتوں می اس کے خلاف زیر 
 
التوا 
 
هوں وه تمام قانون نافذ کرنیوالے اداروں کا وزیر داخله بن کر سربراه بن سکتا هے.
 
گر آپ سمجھتے هیں که اس نظام کو بدلنا چاهیئے، ایسے نظام سے جس میں ایک عام 
آدمی اور ایک سیاستدان پر یکساں قانون لاگو هو تو پاکستان کی عوام میں زیاده سے 
زیاده آگاهی کیلیئے اس پیغام کو دوسروں تک پهنچانے میں تعاون کریں.همیں درحقیقت اس نظام کو بدلنے کی ضرورت هے.
 
THINK OVER IT.

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Dawn Editorial: State Bank Report

 Disastrous Nawaz Sharif Govt Spending Run Amok

State Bank Report

DAWN EDITORIAL 
— PUBLISHED 2 days ago

THE first quarterly report issued by the State Bank of Pakistan contains a few alarm bells. Thus far the SBP has been mostly optimistic of the country’s economic performance. In previous reports it has lauded the fiscal measures of the government, papered over the growing declines in exports, and celebrated the “record high reserves”. But the latest quarterly report, for the first time, sounds a few alarm bells that suggest that the government’s narrative of continuous strengthening of the economy may be running out of steam. The fiscal deficit during the first quarter reached “the highest first quarter level since FY12”. This happened “despite an exceptional growth in provincial surpluses”. Even on the expenditure side, current spending was restrained and an increase in development spending “was led by the provinces, as federal development spending posted a YoY decline of 7.6pc in Q1-FY17”. Taken together, these numbers show that the revenue effort of the government is unable to keep pace with its ambitious plans for the year, and increasingly the burden is being shifted onto the provinces. The SBP goes so far as to say that “achieving the annual fiscal deficit target of 3.8pc of GDP would be challenging. It will require additional fiscal consolidation efforts on the part of the government”.

On the external front, things are considerably less cheery. Exports continue their downward journey, but more worryingly, for the first time in four years, remittances have also registered a decline. Foreign direct investment too fell by 38pc. A more troubling sign is the overwhelming presence of China as the source of all FDI while other countries largely remained passive spectators. Taken together, these are signs that “the FX comfort available to finance a persistently high trade deficit, is now weakening”, says the SBP in the most direct words it has used to describe the external sector thus far. Even though the report tries to attribute much of this to external factors beyond the government’s control, such as fiscal tightening in GCC countries with persistently low oil prices and a “softening of demand” in traditional export destination countries, the fact of the matter is that many of our neighbouring countries saw a revival of their exports in the same months covered by the report. Given these deteriorating indicators, the SBP is right to warn that “underlying structural issues are still there”, even if the choice of words is somewhat stilted.

Published in Dawn, January 4th, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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The genesis of corruption by Tahir Kamran

The genesis of corruption
Tahir Kamran

 

June 19, 2016 

Is a corruption-free Pakistan possible?

 

 

 

A few days back, an old acquaintance asked me about the future pattern of Punjab politics in the wake of a scam as big as the Panama Leaks. I told him nothing is likely to effect any change in the existing pattern of Punjab politics. Not a single parliamentarian has raised a voice or threatened to depose the current rulers because ‘the first family’ has off-shore companies and the source of capital invested is shrouded in obscurity.
Of course it is corruption. But then isn’t that the way of life in the land of the pure? If it is an art, we have perfected it; if it is a science, we have excelled in it. More worryingly, we have accorded legitimacy to corrupt practices. In fact, we celebrate both corruption and the corrupt.
In the Victorian era, man was defined as a symbol of masculinity, white (read Caucasian) and rational with values derived from the Christian faith. If we try to define Pakistani ‘man’, corruption has to be an essential trait that he is bound to carry in order to qualify as ‘man’. He also has to be yaran da yar, (friend of friends) which means a real ‘man’ shows no respect for any law or regulation when it comes to his friends, cronies or sidekicks.
Thus in our case, violating the law or even constitution for that matter symbolises how powerful someone is. For the poor, corruption may be a means of climbing the social ladder but for the rich and affluent, corruption is the means to express power.
Another acquaintance jestingly said the other day that he has tried to make a payment of a few dollars to get his name included in the list that has emerged out of Panama Leaks. I asked him why he did that, knowing he wasn’t serious. He replied that it was a sign of ‘respectability’; it becomes damn easy to marry off a daughter to a boy from a good family if you can affirm your wealth.
Historians (particularly Edward Gibbon) have inferred from the past that when wealth becomes the principal determinant of the values that society respects, the fall of that society becomes inevitable. The same happened with the Romans and they fell, never to rise again. The generation of wealth and even more so its distribution should be carried out through mutually agreed regulations, which the Romans started flouting with impunity, and hence their fall.
For the poor, corruption may be a means of climbing the social ladder but for the rich and affluent, corruption is the means to express power.
Indeed, it needs no less than a miracle for any nation/civilization to rejuvenate itself. China can be put forth as one rare example. But it too will have to go a long way to match the sole super power, USA.
Another of my friends says, “corruption and Pakistan are like two peas in a pod”. His observation seems sweeping, yet it cannot be easily denied. The first and foremost cause of corruption was embedded in the cataclysmic event of Partition. This is depicted in the relevant chapters from the works of Ilyas Chattha, Urvashi Butalia, Yasmin Khan and Vazira Zamindar. Such events as the partition of India are no less than the upheavals of history bringing about the tectonic shift in the established norms of sociology and culture.
As a consequence of an event of such magnitude, usually a break from the past (though selective) is intended which causes rupture in the centuries-old tradition. The process of evolution which is usually gradual and steady is markedly disrupted. Such disruptions tear the affected people apart from the socio-cultural norms and practices which have hitherto defined their collective ethos. Every one, in such a scenario, is running for life. En masse relocation and genocide, such as were concomitant to partition, gave a big blow to the sensibility that binds people together.
Many living the life of relative deprivation in united India saw Pakistan as a land of opportunities, and came to the newly-founded country for economic gains. In the newly established state of Pakistan, regulatory structures were not in place to check any arbitrary practice aiming to amass wealth or to grab property. Thus the people who could, did all that was possible to secure wealth. Partition catapulted many from rags to riches. These sort of sudden changes contravene the smooth and gradual process of evolution, which people find really hard to come to terms with.
Another cataclysmic event was secession of East Pakistan, which gave a big jolt to the morale of the people. The trust in the future of the country was considerably undermined, a ripe situation in which corruption could proliferate.
Unfortunately Pakistan’s politics, right from the outset, was marred by inconsistent transitions. One political order was substituted by the other, with the two having hardly anything in common. Hence, the transition was abrupt and instantaneous. Political compromises of the oddest kind were made merely for personal gains. Characters like Ghulam Muhammad, Iskander Mirza and Ayub Khan did not allow institutions to germinate and blossom. The will of the people was not sought, in the first place; if and when elections were held, non-political actors wielded more power than the elected ones.
Therefore, institutions remained weak and their fate uncertain. Religious ideology was deployed for self-legitimisation with disastrous consequences. In such a scenario, when state institutions were weakened beyond measure, corruption flourished rampantly.
Such political choices made by the Pakistani elite conjured up a social fabric which was amenable to practices which were corrupt to the core. I do believe that a social movement spearheaded by the intelligentsia can stall that trend. But Pakistan’s history fails to register the existence of any social movement aimed at raising awareness among the people about such an issue of wider significance. So, thus far, there is no hope for a corruption-free Pakistan.

 

 

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