NAB likely to cut out names of accused from ECL in KASB-BankIslami case

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LAHORE: Prime Minister Imran Khan has directed authorities to consider taking off names of four accused in the KASB Bank merger case, including a former governor of the central bank and head of a commercial bank, from the Exit Control List (ECL).

The National Accountability Bureau (NAB) had recommended that their names should be placed on the ECL due to their alleged role in the merger of KASB Bank into BankIslami, which had reportedly caused a loss of billions of rupees to the national exchequer.

Profit had earlier reported that in October last year, the NAB executive board had authorised an inquiry against the officials of State Bank of Pakistan (SBP) for the alleged misuse of authority with regard to the amalgamation of KASB Bank into BankIslami.

The inquiry was authorised after it had surfaced the amalgamation had cost the national exchequer Rs3.435 billion.

The Auditor General of Pakistan (AGP), in his Audit Report 2017-18, had framed allegations against the SBP in the case of “irregular” amalgamation of the defunct KASB Bank into BankIslami.

This merger was challenged in 2015 by the sponsors and certain shareholders of the Defunct KASB Bank through constitutional petitions, filed in the SHC in Karachi. These constitutional petitions were disposed of by the Sindh High Court on 17 April 2018, wherein the court rejected the request for setting aside the regulatory merger of the bank into BankIslami.

However, the SHC had issued directions whereby the valuation of KASB Bank to be looked into again by the SBP and if any material deviation is found, the shareholders of the defunct Bank would be compensated without any cost and liability to BankIslami.

The State Bank of Pakistan (SBP) through a circular in July, notified it had disposed of all the objections raised by the shareholders regarding the amalgamation of the defunct KASB Bank into BankIslami.

The notification from the central bank said a copy of the notice was also issued to the 3,999 members/shareholders of the bank on the given addresses, as per the list obtained from Banklslami, CDC and Pakistan Stock Exchange, however, 720 letters were returned as undelivered.

According to the notice, the members and shareholders of the bank, as on 27-04-2015, were invited to file their written objections to the valuation of the bank as set out in the scheme of amalgamation to the director, Banking Policy & Regulations Department, State Bank of Pakistan, within 15 days of the notice.

SBP said a total of 319 members/shareholders submitted their objections by the given date i.e. 29-5-2018. In addition, objections from 15 members/shareholders were received after the due date. Objections of all the 334 members/shareholders were considered.

There was no reason raised by the objecting member and shareholders, which could be considered to necessitate fresh evaluation, said the central bank. “Therefore, the objections, as analyzed above, have not raised any substantial ground for an increase in valuation justifying payment of any compensation to the members and shareholders of the bank,” said SBP.

Supreme Court’ verdict

The Supreme Court (SC) also disposed of a petition filed by former CEO of defunct KASB Bank Khadim Ali Shah Bukhari and other minority shareholders challenging its merger with BankIslami.

In a notification sent to the Pakistan Stock Exchange (PSX) in early September, BankIslami announced the dismissal of the petition filed by Bukhari and other minority shareholders in the apex court challenging the merger of the defunct KASB Bank with BankIslami.

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