Islamabad: The Federal Investigation Agency (FIA) has dropped the names of six people from the massive Rs 54 billion Hascol scam. The agency claimed that reinvestigation of the case revealed no involvement of these six personnels. Consequently, they were given a clean chit by the FIA. The names dropped include former NBP President Saeed Ahmed, Sir James Carter Alan Duncan, Abdul Aziz Khalid, Arshad Mahmood, Usman Shahid and Aqeel Ahmed. One of the personnels in the list is believed to have close links to finance minister Ishaq Dar.
The grand scam:
In 2001, Mumtaz Hasan laid the foundation of Hascol Petroleum Limited (HPL), a private limited company that procured, stored, and marketed local and imported petroleum products, chemicals, and LPG. The company underwent significant changes over the years, transforming into a public limited company in 2007 and eventually being listed on the Pakistan Stock Exchange (PSX) in 2014.
HPL’s borrowing history began with Summit Bank in 2009, but it wasn’t until 2014 that the National Bank of Pakistan (NBP) entered the scene. The NBP’s involvement in HPL’s financial dealings would soon prove to be disastrous in the coming years.
In January of 2022, FIA arrested HPL founder Mumtaz Hasan in connection to a massive Rs 54 billion scam. Along with him, 30 other suspects, including current and former top officials of the NBP, HPL, and other organizations, were also implicated in the case.
The FIA Sindh chief described the scam as “the country’s biggest financial fraud,” initially alleging that it was committed by HPL in collusion with Byco (now renamed as Cnergyico), NBP’s senior management and other commercial banks. The investigation found that from 2015 to 2020, NBP and other commercial banks granted funded and non-funded financial facilities to HPL without following proper risk controls and allegedly in violation of prudent banking laws and practices. This it claimed caused a criminal breach of trust and wrongful loss to the national exchequer. The total amount of default stood at Rs 54 billion, of which Rs 18 billion pertained to the NBP alone.
The NBP had increased Hascol’s credit line from Rs 2 billion to Rs 18 billion against weak securities, and opened letters of credit (LCs) for Hascol in favour of Byco Petroleum for local supply of fuel, even though there was no fuel underlying this quantum of LC. Furthermore, following NBP, several other banks had also opened non-product (fake) LCs which amounted to Rs 54 billion for Hascol.
In a plot twist, Vitol, an exclusive supplier of petroleum, oil and lubricants to Hascol, requested reinvestigation of the case in which several accused persons associated with Hascol, including former chairman Sir James Cartel Alan Duncan, non-executive director Abdul Aziz Khalid, Arshad Mahmood, and CEO Aqeel Ahmed were implicated. It claimed that FIA did not give a fair chance to present their side of the story. It further argued that their nominee directors in the board of Hascol, namely the accused persons mentioned above, were out of the country when the investigation began. They were unable to appear before the investigation officer or have their statements recorded.
Undeterred, the FIA Karachi, under the instruction of FIA Headquarter Islamabad, decided to reinvestigate the case based on the available facts and the allegations mentioned in the final challan. FIA sent a detailed questionnaire to Hascol, asking for documentary evidence to support their claims.
Hascol responded that Sir James Cartel, Alan Duncan, Abdul Aziz Khalid, and Arshad Mahmood are independent and non-executive directors of the company, and as such, are protected under section 181 of the Companies Act 2017. Similarly, no approval or role of CEO Aqeel Ahmed could be proved as none of the fake Purchase Orders (POs) used for LCs had his signature or approvals.
Upon reinvestigation, it was discovered that Saeed Ahmed, former Chairman Credit Committee of NBP, had no prior connection with any office holders, directors, or staff of Hascol before or after leaving NBP. Although he was instrumental in giving loans to Hascol, they were given with the condition that it would be used for the intended purpose. There was no evidence of any suspicious transaction or illegal gratification on his part.
Likewise Usman Shahid, former Group Chief CMG and Credit Control of NBP, while present in the loan approving credit committee meeting, did not sign the credit proposal. He had duly raised critical issues of deteriorating financial position of Hascol but his recommendations were thrown out of the window. There was no evidence of any suspicious transaction or illegal gratification on his part either.
Consequently, names of these six alleged scammers were cleared.
Hascol has proposed a comprehensive restructuring plan to all banks, including NBP. The plan has been filed with the High Court of Sindh as a creditors’ scheme of arrangement. NBP has expressed support for the debt restructuring and issued a term sheet for the same. Hascol is hopeful that it will achieve a successful restructuring in the coming months.