CDNS unearths largest-ever ‘scam’ of Rs200 million

Internal control weaknesses, lack of reconciliation of data held in manual and computerized database led to the discovery of this fraud

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ISLAMABAD: The Central Directorate National Savings (CDS), a state-owned organization has been dented by a major heist of Rs200 million, having assets over Rs3.6 trillion.

It has been said insiders within the CDNS funnelled around Rs200 million and the scam came into the mainstream on the maturity of ten-year saving certificates of individuals at a Lahore branch, reports Dawn.

According to the details available, officials working at a Lahore branch of CDNS had transferred over Rs110 million to their own bank accounts and their family associates were in the midst of withdrawing another Rs100 million.

But CDNS Director-General Dr Arshad Mehmood corroborated that a group of individuals which included an official of the CDNS were allegedly involved in this scam and were found operating accounts in a methodical way to transfer the funds.

Director Human Resources, CDNS Nadeem Iqbal said, “This is perhaps the biggest-ever fraud in the institution, adding not more than three cases of fraud had been reported in the organisation over the past 15-16 years.”

Mr Mehmood added that the majority of the money withdrawn had been retrieved and the case was being handled by the Federal Investigation Agency (FIA).

Also, a special audit of the entire record revealed no extent of contagious fraud.

The official stated corrective steps like bolstering of systems and automation were in process to avoid a repeat of such a fraud in the future because the National Savings wasn’t generally vulnerable to either crime or corruption since customers majorly belonging to the lower middle class and poor could be impacted by the scam.

Insiders revealed, that at the start it was reported around 1,200 SC-1 forms (utilized for acquiring of saving certificates) of Special Saving Certificates and Regulator Income Certificates were absent.

While checking, few major inconsistencies were discovered in the computerized working. Whilst reconciling the manual record of blab certificates (NS-8) with those being kept by the system, discrepancies were discovered in the data being kept by the system compared to the manual statements.

The reconciliation can be explained that a manual NS-8 being maintained by the CDNS showed consumption of 71 pieces of Regular Income Certificates of Rs1 million amount, compared to the computerized system which was showing 74 pieces of the above in July 2017.

And when the discrepancy was investigated, it was noted in the system three pieces of the same denomination were showed being issued to a different registration number and their status was manipulated via data manipulation to “encashed.”

However, this anomaly wasn’t discovered in the manual copy of the record.

Also, a discrepancy was discovered on SC-1 forms and in the system. Those serial numbers on the Regular Income certificates recorded in the system were noted to be duplicate because when the software was accessed, it was seen the only way to modify this kind of a record was possible only if an individual had direct access to the database.

As per insiders, an unauthorized official grade-14 had been given the responsibility of a grade-17 post at the Defence branch of the National Savings and the seniors there took advantage of his weak position.

The insiders shared no proper handover of responsibility had occurred for almost a year and some backdated entries had been done.

But Mr Iqbal rejected this stating the accused was qualified to manage the branch and those remotely linked to the scam had been sidelined and were being investigated, he shared.

And a branch officer and his wife, also a government servant was originally said to have taken out Rs20 million against maturity of some accounts of unknowing people but corroborated to have gotten away with Rs50 million by evening when countered with some evidence.

As the retrieval was in process, an internal investigation discovered a far bigger fraud and Rs50 billion was in the process of withdrawal against various schemes and instruments were closed.

A FIR was filed on the orders of the CDNS leadership and the FIA was informed about the scam and the official stated the suspect group admitted having funneled out more than Rs104 million and the FIA retrieved Rs90.43 million of it during the investigation.

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