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ISLAMABAD: It was April 20, 1994, and the ninth session of the-then National Assembly was under way.
As the interior minister of the second government of Benazir Bhutto, Maj-Gen (retd) Nasirullah Khan Babar gave a detailed briefing to the house about Younas Habib of the Mehran bank fame.
Still present in the National Assembly library, the record of the day’s proceedings sheds light on how Mr Habib single-handedly managed first to create a new bank and then defraud it.
If one goes by the late general’s account in the house, the only objective behind creating the Mehran Bank was to embezzle money. Otherwise, why would a person known for committing financial embezzlements on a regular basis be awarded a no-objection certificate by the State Bank to open a new bank.
About Mr Habib’s career, the house was informed that he joined the Habib Bank Limited as a clerk and rose to the position of its provincial head in 1990.
In 1990, he was arrested in the case relating to the sanctioning of Rs300 million as loan for the duty free shop project, but later on was acquitted by the court. In 1991, he was suspended for adopting unethical banking practices and ultimately thrown out of the bank.
Gen Babar told the National Assembly that initially the HBL high-ups decided to dismiss him from service, but because of intervention by certain individuals, they decided to send him into retirement.
At the time of his retirement, Mr Habib was facing as many as 123 cases.
In Nov 1991, with the help of former Sindh Chief Minister Jam Sadiq Ali, he obtained permission to set up Mehran Bank Limited and became its chief operating officer.
Gen Babar told the house that in total Mr Habib had committed fraud of Rs2.1 billion. As mastermind of the scandal, Mr Habib opened 30 fake accounts in the name of companies which actually existed nowhere and operated them under his direct instructions and control.
The-then interior minister said major portion of the misappropriated amount was channelled through these accounts.
Gen Babar in his report which he shared with the-then members of the National Assembly said Mr Habib sanctioned running finance of Rs930 million to his fake companies.
Other modes included obtaining Rs280 million from the development financial institutions against the Mehran Bank Limited repayment guarantees.
This amount was obtained by him from the National Development Financial Corporation, National Investment Trust and Saudi-Pak Investment Bank by accepting defective and insufficient security.
Misuse of export finance limit worth Rs470 million available from the State Bank was another modus operandi used by Mr Habib to make money.
The procedures adopted were to obtain funds from the State Bank in connivance with the banks export clients in access of their requirements.
These funds were later deposited in the bank to improve its liquidity.
The bank instead of investing funds in readily realizable assets yielding better returns, used the entire amount through intermediary of asset investment bank to credit companies belonging to Mr Habib, thus creating a facility of Rs500 million and reducing the liabilities in the companies under his control. He committed fraud by issuing $63.7 million bearer certificate.
As per authorisation of the State Bank, all scheduled banks were empowered to issue certificates against receipts of dollars. In return, the banks were required to deposit sale proceeds in the state bank within 72 hours on the sale. The delay subjected to a charge or penalty.
The record of the Mehran Bank shared with the National Assembly by Gen Babar revealed the most of the time the bank didn’t deposit these proceeds within the stipulated period of time. By resorting to this practice, the bank generated liquidity on revolving basis.
The entire exercise clearly shows mala fide intentions on the part of Mr Habib as the funds so generated were either mainly utilised to reduce the obligations of his companies or to increase advances in the his companies accounts for meeting other forced commitments which otherwise could never been met resulting in closure of the bank long ago. He also committed irregularities through inter branch accounts. The report said he raised a large amount of credits in his companies without following credit procedures.
