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January 25, 2020

Rs1b depositors’ money siphoned off through organised bank fraud


January 25, 2020

ISLAMABAD: An alleged financial scam of organised racket with nexus of public and private sector banks has surfaced where two fake/dummy companies were established to siphon off over Rs1 billion depositors’ money.

Omni Group has allegedly been involved as its employees having monthly salary of Rs20,000 used to get loans and mark-up amounting to over Rs1 billion and the bank loans defaulted and now siphoned off.

Official documents and background interviews of State Bank of Pakistan and National Accountability Bureau (NAB) high-ups confirmed that they received details about alleged financial scam which exposed vulnerability of whole regulatory regime including oversight role of SBP, Securities and Exchange Commission of Pakistan (SECP) and especially NAB as all kind of oversight, rules and regulations of financial sector were breached and simply nexus established among public and private sector banks and then private firm siphoned off loan fraudulently.

Everyone remained silent till the FBR Benami Zone-III Karachi filed Benami reference against alleged firms and Adjudicating Authority has now shared details with the SBP and NAB high-ups so that they could proceed if any violation was committed in this mega scam under their jurisdiction of respective laws.

First loan was obtained with the claim to provide to Summit Bank for meeting CARs requirements. Then again another Rs810 million loan was obtained on the basis of collateral in shape of land and its valuation was allegedly shown wrongly to the tune of Rs1.4 billion but its actual value was ridiculously low.

The documents shared with the SBP and NAB showed that the official record of Sindh Bank showed in 2016 that the Summit Bank was in dire need of injecting equity to meet Capital Adequacy Ratio (CARs) and other requirements of the State Bank.

In May 2, 2016, a meeting of the top management of Sindh Bank and Summit Bank was held at the headquarters of Sindh Bank and in this meeting Sindh Bank consented to extend credit facilities to two customers recommended by Summit Bank to the tune of Rs140 million and with inclusion of mark-up the total outstanding amount stood at Rs178 million. The credit proceeds were to be utilised for the aforesaid equity injection. This meeting and decisions taken there at however led to an organised bank fraud whereby depositors’ money at Sindh Bank was siphoned off through two Benami/dummy companies. This bank fraud can be judged from the simple fact that mutually agreed two creditor concerns were non-existent by 2nd May, 2016 and both were actually incorporated subsequently on 4th July, 2016.

This alleged organised bank fraud kick-started when M/S Parkview Stock & Capital (PVT) Ltd and M/S Seracom Stock & Capital Pvt Ltd, both dummy companies, were incorporated on July 4, 2016. Both these companies’ paid-up capital was Rs10,000, divided into 1,000 shares of Rs10 each. The registered office of Park View is situated at Office No.614, 6th Floor, Trade Tower, Abdullah Haroon Road, Karachi, whereas the registered office of M/S Seracom is situated at Office No. 514, 5th Floor, Trade Tower, Abdullah Haroon Road, Karachi. Both offices stand closed for last two years. The number of shareholders/directors is 02 with 500 shares in each of these two companies. The Parkview company was registered with the FBR on 9-11-2016 and M/S Seracom was registered on 2-9-2016. As per tax profile both directors lack creditworthiness and claimed to be employees of said companies. No investment/shares in both these dummy companies have been shown by alleged directors in their declarations filed with FBR.

All the directors admitted during the proceedings that Younas Kodwai and Aslam Masood made them directors in Park View Stock & Capital Pvt Ltd. When investigated it was found that Muhammad Ishtiaq, one of the directors is a low paid employee of M/s Rubicon builders Pvt Ltd (Another suspected Benami Company under investigation) and is earning a salary of Rs20,000 per month. Similarly, Muhammad Arif, another director is also employee of M/s Rubicon builders Pvt Ltd (Another suspected Benami Company under investigation).

Tariq Pervez Razi, projected as director, has confirmed that he was working as a receptionist in Tameer Mashriq (PVT) Limited, earning only salary income. Likewise Muhammad Hanif is actually employee of M/s Parthenon Pvt Ltd (Another suspected Benami company under investigation) and is earning only salary income.

Under the agreed arrangement, one entity i.e. M/S Parkview acquired Rs140 demand finance facility from Sindh Bank Ltd against shares of Summit Bank. A property measuring four acres at Deh Jam Chakro, Tappo Mango Pir, Gadap Town, Karachi was offered as additional collateral while negotiating rescheduling of credit facility in 2018. Owner of property has been shown as Zulfiqar Ali (CNIC # 5150359437393), (The record of Seracom shows the owner of same property as Arshad Iqbal).

The other dummy company i.e. M/S SERACOM acquired Rs700 million as demand finance facility from Sindh Bank Ltd against property measuring four acres located at Deh Jam Chakro, Tappo Mango Pir, Karachi West. Owner of property is Arshad Iqbal having CNIC 42000-0208150-5. (The record of Park View shows the owner of same property as Zulfiqar Ali).

Farah Zubair, CEO of M/s Pearl Securities Ltd; in her statement to the Joint Investigative Team confirmed that initially the management of Summit Bank, had bought 30 million preference shares of Summit Bank Ltd whose payment was made through a bank account with title: Iqbal Metal (yet another suspected business concern) and then on his instructions the shares were transferred to Seracom Stock & Capital Pvt Ltd. Subsequently 20 million shares were transferred to Park View Stock & Capital Pvt Ltd.

Sindh Bank’s record shows that while the outstanding amount of Rs140 is outstanding, servicing of mark-up charges is discontinued from February, 2018. Recovery suit has been instituted on 25th July, 2019, only after the operationalisation of Anti-Benami Regime. In the second case while the principal amount of Rs700 is outstanding, servicing of mark-up charges is discontinued from September, 2017. Recovery suit has been instituted on 25th July, 2019, only after the operationalisation of Anti-Benami Regime.

Sindh Bank’s Memorandum for the Approval of Credit Committee reveals that this whole exercise was conducted on the request of the then management of Summit Bank and allegedly in pursuance of State Bank of Pakistan’s instructions. The whole plan was agreed in a meeting held on 2nd May 2016, much before even the incorporation of said dummy company in July, 2016. Thus in the guise of State Bank’s directions (whereby Summit Bank was reportedly asked to make up the shortfall in capital requirements) in the pre-planned manner dummy companies with Benami directors were incorporated, fake financial projections were accepted, excessively over valued assets were mortgaged and heavy loans obtained from Sindh Bank were siphoned off. In short it is an organised Bank robbery and fraud.

The bank’s record is completely silent about any assessment of directors’ financial worth. Mere personal identification i.e. CNICs and residential addresses were obtained and placed on record. Directors’ business profiles prepared by Credit Committee amply confirm their lack of professional exposure and unrelated background. None of the directors had any previous experience/exposure of stock market. Moreover the said profile is completely silent about the most important aspect i.e. their creditworthiness.

No corporate/business KYC was conducted. Shallowness of bank check can be gauged from the simple fact that tax profile of one of the companies, as made available by the bank reflects the “import/export” as the business of company, whereas all financial projections portray the company as an entity dealing in stocks and shares.

While accepting collateral, no check has been conducted by Sindh Bank because the bank’s record confirms that while rescheduling the payments under Demand Finance a property owned by a third party was accepted by the bank as additional collateral, knowingly that the same property was already mortgaged with Sindh Bank while granting same facilities to yet another dummy concern i.e. M/S Seracom Stock & Capital (PVT) Ltd.

The aforesaid third party owned land which has been accepted as the collateral treating as commercial land valuing Rs1.4 billion in 2016 (with forced sale value at Rs1.121 billion) is located at Deh Jam Chakro, Karachi rural which happens to be one of the two landfill sites/garbage dumping in Karachi.

Internet surfing confirms that the per acre price at Deh Jam Chakro was around Rs5.5 million in 2018, whereas valuation of four acres was made and accepted at Rs1.4 billion in 2016. The said four acre plot was purchased by Arshad Iqbal on 28th June, 2016 for Rs13,552,000 from three ladies (Mariam, Sohaila and Kulsoom) and in August 2016 this property was mortgaged to obtain demand finance of Rs700 million by M/S Seracom and the same was accepted as additional collateral in the case of Park View.

TThis correspondent made efforts to get version of Sindh Bank but no one was available for speaking on record.

However, sources close to Sindh Bank management said everything will be clear once investigations are completed.

Sources close to Omni Group also said that the cases of the Group are in courts and the Group is being politically victimised. The sources said everything in Omni Group is being done on merit and according to law. The sources said Omni Group is hopeful of getting justice from courts.