The Public Accounts Committee (PAC), led by Junaid Akbar, on Wednesday fiercely criticized the National Bank of Pakistan (NBP) and M/s Hascol Petroleum Limited (HPL) over a staggering Rs. 23.8 billion financial loss tied to fraudulent credit facilities. The PAC deferred its decision on the audit para, exposing a web of alleged corruption, procedural violations, and unchecked greed.
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A Federal Investigation Agency (FIA) official revealed to the committee that the probe was sparked by a media exposé, not an official referral, highlighting NBP’s reckless extension of credit lines to HPL without collateral or hypothecation. The FIA alleges that bank officials, seduced by kickbacks, approved inflated credit facilities, flouting all prudential norms.
Damning Audit Findings: According to the audit report, NBP’s Karachi Head Office greenlit multiple financing facilities for HPL in 2022, ignoring the company’s shaky financials. Shockingly, personal and corporate guarantees were scrapped without loan clearance during the 613th Credit Committee meeting on November 21, 2017. The Senior Executive Vice President of the Corporate Banking Group brazenly bypassed the Investment Banking Group, routing the credit proposal through his own unit in a clear violation of protocol.
In a move reeking of incompetence or complicity, the Chief of the Corporate and Investment Banking Group approved an additional Rs. 1 billion running finance facility, secured by already-encumbered stocks and receivables. Despite the oil industry’s nosedive in 2018, with HPL and other firms bleeding profits, NBP inexplicably raised HPL’s LC facility from Rs. 12 billion to Rs. 18 billion in October 2018. The bank also permitted deferrals for charge upgrades, opened new LCs despite overdue FATR/FPADs, and restructured short-term loans into long-term ones to mask the growing mess.
In a further display of negligence, NBP converted defaulted LCs worth Rs. 8 billion into a long-term loan while slashing the LC line to Rs. 10 billion—only to reopen LCs to max out the Rs. 18 billion limit again. The mandatory Rs. 8 billion FPAD requirement for restructuring was also conveniently waived.
Fallout and Legal Action: As of August 31, 2022, HPL’s Rs. 23 billion exposure was written off as a total loss, with 100% provisioning. NBP has clawed back a mere Rs. 197.27 million from a settled Diminishing Musharaka facility by October 31, 2023. The bank has filed a lawsuit against HPL, while the FIA has charged 11 officers in court. Several implicated officers reportedly resigned with full end-of-service benefits before the scandal broke, dodging accountability.
PAC’s Stance: The PAC’s blistering scrutiny signals zero tolerance for such flagrant financial misconduct. With the FIA investigation ongoing and NBP pursuing legal action, the committee is poised to demand answers and justice for this colossal betrayal of public trust.
