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Peshawar

May 3, 2011

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SBP asked to pay for compensating affectees

SBP asked to pay for compensating affectees
PESHAWAR: The Peshawar High Court (PHC) on Monday directed the State Bank of Pakistan (SBP) to deposit the shortfall in principal amount of depositors of Islamic Investment Bank (IIB), which will be used to return the deposited money to the IIB scam affectees.
On May 18, 2009, the PHC intra-court on the request of the Securities and Exchange Commission of Pakistan (SECP) liquidated the IIB and directed selling of all the assets of the bank through an open auction. The PHC then appointed Barrister Muddasir for collecting the remaining assets of the bank and allowed him to sell the assets to return some money to the affected people.
Recently, Barrister Muddasir told the court that remaining assets of the bank were too small and the court would not be in a position to return even the principal amount to the affectees. “I had sold some assets of the bank and trying to sell the remaining on reasonable prices,” he informed the court.
After hearing this, a PHC single bench headed by Justice Dost Muhammad observed that the SBP incorporated the IIB and now it was responsible to save the lives of thousands of families, who had invested in the bank.
The bench directed the State Bank of Pakistan (SBP) to fulfill the shortfall in the principal amount deposited by the affectees as the court would be able to compensate the affectees. When the single bench started hearing the case, SBP lawyer Hidayatullah informed the court that the SBP had challenged the high court decision to fulfill the shortfall in the principal amount of the affectees.
The bench observed that the court had given two chances to the SBP to deposit the money. Giving a last chance to the SBP, the bench asked it to deposit money before next hearing of the case, scheduled for June 6.
The IIB, registered in Peshawar in 1992, has its branches in Peshawar, Mingora, Mardan, Hangu, Islamabad, Lahore and Karachi with its Central Support Office in Karachi.
The scandal surfaced in May 2005. On June 2006, PHC company judge Jehan Zeb Rahim dismissed the SECP’s petition, seeking liquidation of the IIB and asked the federal government to pay Rs2 billion to about 4,335 depositors, who had invested in the bank.
The SECP challenged the decision and filed a writ petition at the PHC intra-court for liquidation of the IIB. The SECP had issued a notification to the IIB, asking the bank to liquidate its business.
Defending the liquidation notification in the first petition, the SECP said the IIB’s liquidation notification was suitable and legal. The SECP in its latest report said the IIB was dead and that the entire system of accounts and file management was destroyed and dysfunctional due to huge embezzlement by bank officials.
The police on the PHC directives had also lodged criminal cases against 11 Board of Directors of the IIB and they were facing trial in the cases.
The PHC, for the past four years, had tried to revive the IIB. A few investment companies showed their interest to revive the bank on their own conditions, but they too escaped from their commitment with the court.
In the scandal, retired government servants, widows and even vendors lost over Rs2 billion that they had deposited in the bank to receive the benefits of Islamic banking as propagated time and again, said the victims.
About 3,000 depositors, out of 4,335, belonged to the Khyber Pakhtunkhwa, and after the PHC verdict they began visiting the IIB’s Cantonment branch on a daily basis to pressure the staff in o returning their money, but to no avail.
Pari, a female victim from Qambar area in Swat, told The News that she had sold her house for Rs300,000 and deposited the money at the IIB to arrange for her daughters’ dowries.
“My daughters’ lives will be ruined if we are deprived of the money as none of my daughters’ fiancÈs are ready to marry them without the dowry,” she added.
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