DAWN - Cowasjee Corner; 27 June, 1998
Fraud!
By Ardeshir Cowasjee
From a column in this space on January 28, 1994:
"On the afternoon of January 26, Benazir Bhutto completed her 100th day in office as the 16th prime minister of Pakistan and as the leader of the second of her governments and the third of the PPP. There has been much widespread criticism that in this period she has achieved nothing. Wrong. At our cost, she has been extremely busy. She and her husband are partners not only in matrimony but qualified to be partners of a partnership in the legal sense as well. Carrying on business with a view to profit is the key to the definition of 'parternership' - profit, of course, being a word of wide open meaning. And this partnership operates from the Secretariat of the prime minister."
"......... In the time of [caretaker PM] Moin Qureshi, the Pipians wanted to move one of their men, M. W. Abbasi, from PICIC to head the NDFC, the former DFI's funds having dried up and it being left with a lot of money to recover. Caretaker finance minister Babar Ali, knowing what was happening in the financial world, resisted this move. 'Over my dead body,' said he. But whilst he was abroad attending a World Bank meeting, Moin ordered the transfer, honouring the commitment he had made to the Pipians."
Moin Qureshi, honest as he pretended to be, gave in for two bad reasons. One was to oblige Benazir Bhutto, for his own good at our expense, and the other was for familial advantage. His brother, Bilal, of Johnson and Philips, had a deal going with Abbasi, who as head of the NDFC sanctioned and gave him a large loan which he otherwise could not have obtained.
M B Abbasi finished off what was left of the NDFC and was moved by Benazir Bhutto to a richer pasture, the National Bank of Pakistan. He was also made a co-trustee of NIT, the largest open-ended government-managed mutual fund of the country, a certified depository of pension funds, which holds in trust billions of rupees belonging to the people.
Now, five years down the line, we all know what Abbasi achieved. When Benazir Bhutto was booted out for the second time, he spent over a year in jail, and still has many cases pending against him. We must now await the announcement that, as with Salman Faruqui, he has been allowed to 'abscond' abroad for health reasons.
From the same 1994 column: "Come the PPP government, anxious to appoint their own chief executive officers to head BEL and NIT, and a message is transmitted from the prime minister's secretariat to the finance ministry to include the names of Amjad Aziz Khan and Asadullah Shaikh in the list of candidates that the ministry was asked to propose to the PM. The PM chooses Amjad to head BEL and Asadullah to head NIT. Amjad, an SEVP of UBL, who was reportedly shot out by Nawaz, is [almost] 59 years old, close to retirement and will have to oblige to gain an extension. Asadullah Shaikh, a Sindhi officer of the DMG, holding the office of home secretary in the Sindh government, has never worked in a bank or DFI, has no experience at all of handling finance, shares, investments, etc. ... NIT holds in trust and handles the funds of over 100,000 shareholders; it holds 17-18 per cent of the total equity quoted on the stockmarket and the present worth of its triple A share portfolio is estimated to be around Rs.37 billion. In the last six months, the institution encashed in the buying and selling of shares capital gains of ... Rs.10 million per day........ Inexperienced Asadullah will be controlled by either Mr A or Mr Z. By accident or by design, he can cause the NIT unit holders to be relieved of perhaps Rs.10 million a day to the advantage of his controller without any irregularity being detected."
From a column printed on October 25, 1996: "When [Asadullah Shaikh] was relieved of his position early this month, he had more than completed his mission. Copies of Yaqub's State Bank reports on NIT prepared in July 1996 were distributed to the NIT trustees at the Board meeting on October 1 as a part of the last item on the agenda - 'Any other matter.' According to this report, Asadullah and his Board of government-nominated trustees [which included Hussain Lawai of MCB] oversaw the blatant robbing of close to Rs.1 billion of unit holders' money held in trust by them.... The public perception is that, among others, those culpable for this loss which the unit holders (pension funds, pensioners, widows, housewives, small savers, the poor) have been deliberately made to suffer are the government of Pakistan, the State Bank, the Corporate Law Authority, and the government-nominated Chairman and Managing Director Asadullah Shaikh (now reportedly enoying his R&R leave in England), and the trustees of NIT. The honourable Governor [of the State Bank] will doubtless remain silent."
There was no error involved; it was premeditated straightforward robbing. The robber did not force entry in the middle of the night; he was honourably enthroned by none other than our 'elected' prime minister. Though warned, did the people protest? No.The run on NIT was avoided by the government. Without declaring the Net Asset Value (NAV) of the Trust, it appeased the people by unequivocally guaranteeing that it would repurchase any and all Rs.10 NIT units at the minimum repurchase price of Rs 13.70 per unit.
Nawaz Sharif, who followed Benazir Bhutto, continued to mislead the people. By a 'Public Notice' inserted in the press on November 3, 1997 they were misinformed: "In view of the strong performance of NIT, the government has withdrawn its guarantee as to the minimum repurchase price of the Unit."
When the books reopened on November 10, 1997, the repurchase price was announced to be Rs 10.25 per unit, supposedly on the basis of the NAV. Since then it has continuously fallen. Yesterday, June 27, 1998, it was at Rs. 7.00, or half the guaranteed price. "Strong performance?"
No lessons have been learnt. There is no improvement in the governance of this country. Right now, I have before me a debt instrument, a bond, issued by the government of Pakistan which reads:
"Government of Pakistan; Five Years US Dollar Bearer Certificate; US $xxx,xxx No.DF0000XX. The bearer of this certificate is entitled to receive payment of US Dollars xxx,xxx only five years after the date of issue and the profit at x.xx % per annum payable half-yearly in accordance with the Five Years Foreign Currency Bearer Certificate Rules 1992 on presentation at the office of issue. The certificate has been issued by order of the President of Pakistan, has been signed by the Governor of the State Bank of Pakistan, and has been issued by the State Bank's authorized office of issue, the Standard Chartered Bank at Karachi..." on the date noted thereon.
"Cash it," I said to Zahid Rahim, the chief executive officer in Pakistan of the Bank with which our family and firms have had a most pleasant relationship over the past 120 years, during which neither side has ever (repeat, ever) even dreamt of not honouring each other's signature appended in any capacity.
He can not do so. He sent me a note : "Under F.E. Circular No.12, Para 6, of 29th May 1998, issued by the State Bank of Pakistan, the encashment of FCBC including payment of profit in foreign exchange is temporarily suspended. The holders can however encash the instruments and obtain the profits in Pakistan Rupees. The encashment of US Dollar denomination instruments will be made @ U.S. 1 = Rs.46.00. These are the rules received by us from the State Bank of Pakistan, Central Directorate, under whose direction the FCBC has been issued. The underlying funds of FCBC are deposited with the State Bank of Pakistan, and do not remain with the Bank."
But this is not in accordance with '..the Five Years FCBC rules, 1992' in terms of which the bond was issued," I tell him. Zahid is embarrassed, but helpless.
Not surprisingly, Pakistani citizens, living here and abroad, are not opening fresh foreign currency accounts or subscribing to the prime minister's National Self-Reliance Fund. They would like to know what has happened to all the money the government collected as 'Iqra Surcharge' specifically for the purpose of the education of the illiterate masses. They also want to know what has happened to the money collected for the prime minister's 'Qarz Utaro..' fund launched early last year when he took over for his second round. As can be read again and again each day in the press, the people are disillusioned, and more so by the fact that their prime minister and those who sit with him are incapable of realizing that credibility lost within minutes cannot be regained for years to come.