January 24, 2022 (MLN): The Federal Investigation Agency (FIA) has arrested Mumtaz Hasan, founder of the Hascol Petroleum Limited (HPL), in Rs54 billion scam.
According to the Federal Investigation Authority (FIA)’s document available with MG, a total of 30 suspects including present and former top officials of the National Bank of Pakistan (NBP), HPL and other organizations have been involved in a scam and efforts are being made to arrest them.
As per the document, during 2015 to 2020, funded and non-funded financial facilities were granted in the shape of bank loans to HPL by the NBP in violation of prudent banking laws and practices, which amounts to criminal breach of trust causing wrongful loss to the NBP/National Exchequer and wrongful gain to HPL.
HPL's first significant borrowing relationship was initiated with Summit Bank in 2009, which remained its main Banker until the entry of NBP.
The Enquiry revealed that NBP granted its first facility of Rs2.0 billion to HPL on June 16, 2014, in response to HPL's request addressed to Ms Rima Ather, who had moved from Pak Iran Investment Company (PAIR Investment) to NBP as SVP Corporate Banking Group (CBG).
It is also noted that Syed Iqbal Ahmed Ashraf, a former Group Chief at NBP and President of Pak Iran Investment Company Limited (PAIR; an existing lender of HPL) was appointed by NBP as President in January 2014. Mr Ashraf had brought Ms Rima Athar with him.
This LC Facility could not be availed due to non-perfection of security arrangement (achieved on May 15, 2015, after which, NBP opened its first LC on behalf of July 03, 2015). During Mr Ashraf's tenure as President, HPL's facilities were initiated and peaked at Rs5 billion in a short span of 18 months.
Mr Saeed Ahmed joined NBP as President on Mar 24, 2017, and within 18 months (from May 2017 to November 2018), NBP increased its exposure by 313% to Rs15.65 billion plus another Rs4.0 billion to Hascol Terminal Limited (HTL) guaranteed by HPL.
During this tenure, Ms Rima Ather was replaced by Syed Irtizakazmi, SVP CIBG. As if these rapid enhancements were not enough, NBP somehow further enhanced its LC Facility on October 08, 2018, by another Rs6 billion to Rs18 billion increasing NBP's total Sanctioned Limits to Rs21.65 billion, well before joining Mr Arif Usmani as President NBP on February 12, 2019.
Both these Presidents, Syed Iqbal Ahmed Ashraf and Saeed Ahmed have prima facie abused their official position as public servants while sanctioning through their Credit Committees, the above huge financial facilities to HPL.
Moreover, the NBP opened fake letters of credit (LCs) to the tune of Rs95bn for Hascol in favour of Byco Petroleum (now named Cnergyico). This will be investigated as a separate criminal inquiry, the document said.
Apart from the NBP, several other banks opened non-product LCs to the tune of Rs54bn for Hascol. Hascol and another company Vitol (exclusive supplier of POL products to HPL) through over-invoicing transferred $42 million illegally outside Pakistan.
This investigation has determined that mere incompetence and institutional failure alone were not the sole cause of these reckless lending decisions. Evidence has been recovered which proves that HPL used to siphon off funds through middlemen for bribing their Bankers. In just one such instance, cheques for Rs117 million were issued by HPL to Mr Tahir Ali and his several companies without any underlying contract. These middlemen are yet to be investigated in detail and their roles will be defined in the Detailed Investigation Report, the document added.
In addition, to possible money laundering, the FIA is also looking into the possibility of tax evasion by Hascol of up to Rs5bn, the document said.
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