Bank of Punjab Scandal

Topics: Operational risk, Financial audit, Credit rating Pages: 2 (582 words) Published: July 6, 2011

The Bank of Punjab (BOP) hit by a massive scandal, a unique fraud that involves billions of rupees.

The State Bank of Pakistan expressed its great concern over the Bank’s “system and controls”, terming them “quite weak” while the internal audit of the Bank has repeatedly cautioned the management on the huge facilities offered to certain companies.

The recipients of the huge loans include owners of some companies that do not exist at all. In other cases, fake identity cards were used and over-evaluated properties were pledged as collateral.

A report submitted by the General Manager Audit to the bank president on May 25th 2010 revealed that the bank, instead of listening to earlier warnings, released more money to such companies with which it was supposed to be careful in its future deals.

The GM Audit Muhammad Hanif says he gave three consecutive reports in the series of Audits conducted for the business deals with this group and its allied names (i.e. Haris Steel, etc).

Bank sources said that irregularities worth Rs 6-8 billion were committed at Tufail road, lahore branch of the bank and the main corporate branch, Lahore.

The bank management is, however, reluctant to talk on the issue. Despite repeated efforts, no one was ready to offer the bank’s version on the story. The bank president was said to be abroad. The presidents mobile and residence numbers were dialed but there was no response.

The MD of the Bank, Haroon Aziz, was also contacted at his office number but he did not return the call. The same was the case with Bank’s country head corporate credit Khalid Qayyum.

The GM Audit, Muhammad Hanif, when contacted, confirmed the report. When this correspondent read out selected contents of his report, he said that irregularities were a routine in the banking sector.

In his report, Hanif said that facilities being availed by Harris Steel and its Allied Accounts...
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