The Chairman
National Accountability Bureau
Islamabad 

Pakistan Peoples Party -----------------COMPLAINANT

 

1. Mr. Altaf M. Saleem, Chairman, Earthquake Rehabilitation & Reconstruction Authority (ERRA), Islamabad.

2. Mr. Memood Ahmad,  Ex Chief Executive Officer, Head Office, Crescent Standard Investment Bank Ltd, Lahore.

3. Mr. Anjem M. Saleem, Chief Executive, Crescent Standard Investment Bank Ltd, Lahore. 

4. Mr. Manzoor Ahmad, Chairman, Board of Directors, Crescent Standard Investment Bank Ltd, Lahore.-------- - - - - - - ACCUSED / RESPONDENTS

 

Subject:            COMPLAINT UNDER SECTION 5 AND 18 (B) SUB SECTION-II OF THE NATIONAL ACCOUNTABILITY BUREAU (NAB) ORDINANCE 1999, AGAINST THE RESPONDENTS FOR PUNISHMENT UNDER SECTION 10 OF NAB ORDINANCE FOR CAUSING HUGE FINANCIAL LOSS TO THE NATIONAL EXCHEQUER BY CORRUPTION AND CORRUPT PRACTICES

 

FACTS:

 

1.      That the Respondent No. 1 who is the Chairman of the ERRA was associated with Crescent Standard Investment Bank Ltd (CSIBL) and the rest of the respondents No. 2 to 4 were also in the capacity of Chief executive and Chairman Board of Directors were running the affairs of the aforementioned Bank. The irregularities and financial mismanagement were surfaced and the issue was raised in the National Assembly. The Minister for Parliamentary Affairs in his reply on the floor of the House admitted that the irregularities and financial mismanagement have taken place. The money of depositors was misappropriated. The Security Exchange Commission of Pakistan (SECP) in its report had pointed out that the Bank authorities had committed gross financial irregularities which included maintenance parallel Books of account and concealment of the bank assets, the bank management's unauthorised and illegal funding of the companies owned by the group running their affairs of the Bank. The respondents and their associates had also made investment in real estates and stock market and which caused huge financial loss to the Bank resultantly that was the loss of the depositors whose money had been plundered.  

 

2.      The Security Exchange Commission of Pakistan had issued a Show Cause Notice to the Board of Directors and CSIBL and why the Bank licences may not be cancelled on the basis of Inspection Report of SECP which revealed the misfeasors and misconduct as a result of which respondent No. 1 and 2 had benefited themselves through assets of the Bank. 

 

3.      That the Bank management had caused a huge financial loss by investing in Stock Exchange and in the real estate which ultimately was the loss of the depositors’ money. The Bank management also had violated the NBSC rules.  

 

4.      That the Respondents and their associates who were running the affairs of the Bank had through cheating and forgery caused a huge financial loss by plundering the depositor's amount who are in great mental agony for the loss of their money deposited by the Bank.

 

5.      The Respondents are guilty of corruption and corrupt practice by abusing their authority and are liable to punishment under Section 10 of the NAB Ordinance on the aforementioned facts.

 

6.      The above information was printed in the enclosed Press clippings.

 

CONCLUSION

 

The Respondents had unlawfully, illegally and arbitrarily used the assets of the Bank for the personal benefits and thus violated the banking laws and are liable for the prosecution under the provision of NAB Ordinance 1999. It is therefore necessary that the investigation be initiated and the matter be referred to the court of competent jurisdiction for trial. 

 

Complainant 

 

Pakistan Peoples Party 

Through: 

 

Moharam Ali Abbasi
Advocate Supreme Court 

Dated : 3^rd February 2007

 

Press Clippings

 

Crescent Standard Investment Bank Limited (CSIBL) is owned and operated by a front man for I.S.I, Altaf Saleem. He was made a Federal Minister for Privatization and Industries after the Military Coup of 12^th October 1999. After the Jamali took charge in 2002, he was made the Chairman for Sui Northern Gas Company by Musharraf. After the 2005 Earthquake he took charge as the Chairman of Earthquake Rehabilitation and Reconstruction Authority. During his time as the Minister for Privatization he was accused of wrongdoing in the first bidding for the United Bank Limited to Mian Mansha Group which was later awarded to the Bestway group after much hue and cry by the State Bank and the General Public. It is estimated that the Government injected Rs. 30 billion just before the bank was privatized in order to favour the party buying it.  It is common knowledge in the business circles that Altaf Saleem operates slush funds of the ISI and invests it in the real estate market and the stock exchanges of Pakistan and abroad.

 

Now his Crescent Standard Investment Bank Limited has been found involved in serious financial crimes, including maintaining six fake accounts, hiding Rs6 billion liabilities and making transaction with a dubious offshore company.

A detailed report of auditors of the company and charges leveled by the Security Exchange Commission of Pakistan revealed that Crescent Bank was involved in hiding its liabilities and a number of transactions. However, the bank was preparing a detail reply to the allegations and at the same time trying to manage liquidity up to Rs2bn from National Bank.
 
The SECP reported that CSIBL was maintaining six accounts in the name of Jhang Electric Supply Corporation, depicting an aggregate activity of Rs5.918 billion. “These accounts were not reported in the printed general ledger of Lahore branch of the bank,”

The SECP discovered that out of Rs1.941 billion recorded in the parallel books as ‘placements’, an amount of Rs1.817 billion was in fact an investment made by the bank in 20.896 million shares of PICIC of which Mr Altaf Saleem is again the Chairman (DFI).

This investment along with investment in shares of Rs1.323 billion, Musharaka ventures of Rs1.344 billion and investment in PIBs of Rs0.549 billion were not reported in the published statements of the bank.

“Therefore, total assets of Rs5.252 billion were hidden in parallel books,” said the SECP.

Auditor Ferguson and Company also endorsed the discoveries about financial mismanagement of the bank. The executive summery prepared for the bank said that the assets and liabilities of Rs6 billion were off-balance sheet and had not been reflected in the published financial statements of the bank. Liabilities were mainly borrowed from financial institutions.

The SECP said the bank paid Rs324.62 million to Dossalani Securities Limited (DSL) and an amount of Rs67.64m was recovered from DSL. The outstanding balance from DSL should have been Rs256.98 million whereas it was shown as Rs299 million.

“The scrutiny showed that the actual amount of Rs42.104 million was made to M. Idrees H. Adam, member of the Karachi and Islamabad stock exchanges, against the purchase of two million shares of Crescent Leasing and the amount was never paid or disbursed to DSL,” said the SECP report, adding that the account of DSL was being used to make payments to other parties.

The SECP said Crescent Bank had entered into Musharaka transactions with Maghreb Developers Corporation (MDCL) of Rs1.540 billion for investment in real estate. The bank does not have a housing finance license, thus violating the banking regulations.

The executive summary showed that as on October 31, 2005, total outstanding balance due against MDCL was Rs2.676 billion. Of the balance, overdue mark-up receivable in this account amounted to Rs718 million which has been credited to income. Under the NBFI regulations, such income should be reversed from income and taken to suspense.

The Crescent participated in 50 per cent equity of Creek Marina (owned by DHA Karachi) by purchasing 442,510 shares from Meinhardt Singapore for Rs255 million, while the auditors were informed that Rs335 million was paid to one Mr Ahmed Shah for arranging the deal. Payments were made by the company from the funds received from various group companies. An amount of Rs540 million was received by the company from Shakarganj Mills, Crescent Steel and Allied Products, Crescent Leasing Corporation and Waivera Inc. Panama, while Rs50 million was paid by the company.

The SECP reports that on an aggregate basis, the bank’s exposure to these group companies equals to Rs3.703 billion — 240 per cent of the bank’s equity of Rs1.537bn — which is a violation against the NBFI regulations.

During the last week meeting of stakeholders of Crescent Bank, the participants raised queries about the reports of consultants and M/s A. Ferguson and the unlawful acts as mentioned in the reports. The participants were requested by the group not to press for payment of inter-bank treasury transactions. The amount of inter-bank treasury was mentioned as Rs1.4 billion. The participants were not provided with the auditors reports. 

The major creditors of the company are: The Bank of Punjab, Escorts Investment Bank Limited, Saudi Pak Commercial Bank Limited, Pakistan Kuwait Investment Co (Pvt) Ltd, Network Leasing Corporation Limited, Atlas (Dawood) Bank Limited, Mybank Limited, Sigma Leasing Corporation Limited, The Bank of Khyber, Faysal Bank Limited, Orix Investment Bank Pakistan Limited, First International Investment Bank Ltd, Soneri Bank Limited, Union Bank Limited, Pak Libya Holding Co (Pvt) Limited, Allied Bank of Pakistan Limited, Saudi Pak Industrial & Agri Investment Co (Pvt) Limited, Khushhali Bank, and Security Leasing Corporation Limited.