ISLAMABAD: The Federal Investigation Agency has recently arrested a senior female officer of the National Bank of Pakistan along with four officers of another organisation on charges of irregularly withdrawing billions of rupees from bank accounts.

An assistant vice president of the NBP was arrested this week after the bank lodged a complaint that the officer had irregularly withdrawn Rs1.5 billion from the accounts of the Abandoned Properties Organisation (APO), an FIA official told The Banker Pakistan on Friday while speaking on the condition of anonymity.

Explaining the nature of crime, he said initial investigations showed that the amount might go up to Rs6 billion. The officer had prepared fake Pakistan Investment Bonds and then encashed them against the investments made by the APO.

The fraud has been committed in connivance with officials of the APO – an entity that Pakistan had created after the 1971 Debacle to manage assets of former citizens from East Pakistan. Now, the government of Pakistan through a board of trustees manages these assets. An additional secretary of the cabinet division is the chairman of the board of trustees.

The female officer is accused of prematurely withdrawing funds which had been invested in the government securities by the APO through the NBP. Under the law, the APO can only invest in the government approved securities.

The FIA official said the NBP had lodged the complaint of irregular withdrawal of Rs1.5 billion from bank accounts. The FIR has been registered under the Anti-Money Laundering Act, Anti-Corruption Act and Pakistan Penal Code Act of 1876. She has also been accused of criminal breach of trust.

The FIA has also arrested four APO officials, including two deputy administrators of the organisation. The challan in the APO fraud case would be submitted during the next couple of weeks. The FIA official said the NBP official had used fake signatures of the APO officers to withdraw the money.

“Fraud has been committed but I cannot comment on it,” said the APO Administrator Allahyar Khan in a terse response when he was asked about the scandal.

Sources in the APO said the quantum of the amount is expected to increase further, as the APO had invested around Rs25 billion in various government securities. Most of this money has been invested through the NBP. The assistant vice president of the NBP was handling the APO investments.

The NBP officials have also confirmed the fraud. “It has come to the notice of NBP that a number of allegedly irregular transactions may have been initiated by the authorised signatures of one of our clients and where accounts at the other bank/banks may have been used,” said NBP’s Corporate Communication Division head Nausherwan Adil.

“The matter is under active investigation and the NBP has already registered an FIR with the FIA which has already started conducting an inquiry into the matter,” he added.

To a question about the exact amount of the fraud, Adil said that as per the regulatory requirements the bank could not divulge information about any party’s financials including their names.

After the 1971 war which had led to the formation of Bangladesh, the government had set up the APO to manage the movable and immovable properties belonging to former East Pakistani citizens. The APO’s affairs are run under the Abandoned Properties (Taking over and Management) Act, 1975.

An APO official said the organisation was managing over Rs50 billion assets and half of the amount was in cash. “The APO was investing the funds through NBP and the said assistant vice president of the bank was directly dealing with these investments,” he said.

The FIA official apprehended that similar irregular activity might also have taken place in case of those other organisations that have invested in the government securities through the NBP.

It is the third scandal to emerge in recent months. Earlier, Shah Nawaz Khan, a Mardan region officer of the bank committed a fraud in the PM Youth Business Loan Scheme. Similarly, in Muzaffargarh branch, the NBP officials swindled pension funds.

So far, the biggest fraud in the NBP took place in its Bangladesh operations. The National Accountability Bureau (NAB) is already investigating Rs18.5 billion fraud in the NBP’s branches located in Bangladesh. The Rs18.5 billion fraud took place during 2003 to 2013.

Increasing instances of frauds suggest that the bank’s internal controls have weakened. It also shows gross negligence of the compliance, audit and operations departments of the NBP that are unable to detect these cases at the initial stages.

The contractual appointments at the key posts are said to be one of the reasons behind weakening internal controls, said sources in the NBP. Out of 20 key posts as many as 13 are occupied by contractual employees. The heads of retail banking, human resource management, financial control division, treasury & capital market group, audit and inspection group are serving on contracts.

APO Board of the Trustees Chairman Syed Sohail Altaf was not available for comment. His staff promised to return the call but till the filing of the story, Altaf did not call back.


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