Telenor Bank fires employees over fraud, concedes involvement of many employees across various branches

KARACHI: Telenor Microfinance Bank has strongly disassociated itself from the allegations made by former employees that the bank wrongly terminated their employment. 

The bank claims the former employees are misleading the public through false statements. 

In a statement issued by the bank on June 9 titled, “Telenor Microfinance Bank Responds Strongly to Employee Collusion”, the banks stated that the management of Telenor Microfinance Bank ‘detected cases of collusion’ to commit fraud between employees and people outside the bank ‘in a few branches’. 

The statement did not go into detail about the nature of the collusion, or quantifiable details about how many employees were terminated, or which branches were affected. Instead, it said “credit irregularities with policy violations were found among a large number of employees across various branches.”

After this detection, the bank said it notified both the State Bank of Pakistan, and law enforcement agencies, and then launched an investigation across all branches nationwide. 

An independent committee was formed to investigate employee cases, and measures ranged form written warnings to terminations. “The process is ongoing”, according to the statement. 

The banks then said: “Some affected employees are spreading false information and rumours through different mediums. The terminations from the bank stem solely from the above mentioned process and are related to those who have seriously violated company policies”.

As a reassurance, the banks said it remains well capitalized, and that the incident has not affected the deposit customers of the bank and all their funds are safe. 

The first reports of this suspected fraud appeared in Norwegian newspapers in December 2019. At the time, the Norwegian article said that the alleged fraud was restricted to one branch in Lahore, and involved 14 people, 12 of whom are local bank employees. The fraud amount was close to Rs514 million, and was conducted through fake loan applications. 

According to sources, the State Bank of Pakistan had earlier sent a team to help investigate the fraud. 

Former employees say bank has no proof of corruption

The bank’s statement came on the heels of a somewhat organized online social media effort against the bank, on the platforms Twitter and Facebook.

A Facebook account by the name of ‘Faraz Hussain’, has consistently posted public posts about the bank since May 30, saying that Telenor Microfinance Bank has no proof of corruption against the employees it recently terminated. 

On Twitter, an account by the same name of ‘Faraz Hussain’, which joined the site in June 2020, has posted 28 tweets exclusively about Telenor Microfinance Bank, since June 3. Another Twitter account which also joined in June 2020, ‘Nida [email protected]’ has posted 16 tweets exclusively on the bank since June 4. A third account, ‘Muhammad Zeeshan Ullah’ has posted 55 tweets exclusively about the bank, also since June 4.

The account ‘Faraz Hussain’ issued a press release in a public post posted to Facebook on Wednesday. In it, the account dubbed the terminations as ‘forcible and illegal’. The press release claimed that 1200 workers had been terminated.

“The Telenor management has badly failed to prove corruption against employee and started terminating its staff with notice or without notice all over the Pakistan,” the post said. 

The post claimed that the investigation lasted seven months, and that the “team just forced employees to accept their crime but the result was zero, they found nothing suspicious.”

The post said that management had accused employees of financial loss, wrong credit guide line to customers, negligence of code of conduct and disciplinary negligence, “all without any proof.”

The press release also said that instead, the bank was attempting to downsize as they were closing branches, and moving towards digital banking, thereby terminating employees on false accusations. 

Various posts on the three different accounts from June 10 show pictures of protests against Telenor Microfinance Bank. The protestors numbered roughly between 15 and 20, and were present outside of Karachi Press Club. Protestors were carrying banners that call for an “End to Economical Massacres”, and “Down with Muddasir Aqil Corrupt Team”.

According to the post, employees had rejected the termination, and taken the matter up in labor courts. 

Profit contacted the Facebook account ‘Faraz Hussain’, which shared additional court documents. A survey of the court documents show that in some cases the Telenor Microfinance Bank had issued show cause notices to employees, accusing them of embezzlement. Several former employees had filed grievance petitions against Telenor Microfinance Bank to challenge the bank’s version of events in court. 

Telenor Microfinance Bank response

When contacted for comment by Profit, the bank’s spokesperson maintained that the matter was still under investigation, and therefore exact figures could not be given about how many employees were terminated, or how many branches were affected, or the size of the suspected fraud. 

The spokesperson said that the investigation is expected to close soon.

Telenor Microfinance Bank also sent an updated press statement on June 12 in response to a list of Profit queries, in which it said any further updates on the matter will be shared once the investigation concludes.

The press statement included similar language to the original statement issued on June 9, but had some additional information.  

For instance, the bank reiterated that it had taken measures ranging from written warnings to terminations. But the bank also said that in the most severe cases of fraud, the matter has been reported to the police. 

“The process is now ongoing. To ensure transparency and confidentiality, all suspected employees have been given a full opportunity and a fair chance to defend themselves. For those who appeal, they are allowed for a second hearing.” the bank said. 

“We reserve the right to take legal action against the elements spreading fake news and allegations against the Bank,” the statement read. 

 In terms of preventing incidents like this again, the bank said it initiated organization-wide exercise to improve internal controls, reinforce risk management mechanisms and revamp compliance policies, including trainings and awareness sessions. Employees are also being retrained to follow procedures. 

History of fraud at the bank

The first reports of this suspected fraud appeared in Norwegian newspapers in December 2019. 

In an article published on 7 December, Dagens Næringsliv (DN), a Norwegian business newspaper, reported that the Telenor Microfinance Bank says it has been scammed for around NOK 30 million, or around PKR 514 million. The bank had identified 14 people, 12 of whom were local bank employees, and two of whom were external loan agents. 

The DN managed to obtain access to a police report in Lahore, which said that the loan agents were recruited by the branch’s staff, who created 1638 false loan applications.

Telenor Microfinance Bank’s lawyer, Waheed Riaz said the accused constructed ‘ghost clients’ to create fake loan applications. The bank employees then approved the loans and transferred money. The accused denied the allegations.

The fraud has been alleged to have been ongoing since February 2017. The figure only referred to one branch, out of the bank’s 171 branches in Pakistan. 

As per the article, after issues with the branch’s loan portfolio arose, the bank set up an investigation team in August 2019 to investigate. The team concluded there had been a number of false loan applications, and that bank employees had granted loans to people without sufficient documentation.

According to the article, the bank’s management in Pakistan notified Telenor in Norway in September 2019 of the possible scam. Telenor’s board was also informed. Telenor ASA then decided to start an investigation in October 2019.