ISLAMABAD, June 17: The Peshawar High Court has appointed a liquidator to formally cease the operations of the Islamic Investment Bank Limited (IIBL) that had gone bankrupt recently, an official source told Dawn.

PHC’s Company Judge Justice Shahjehan Khan appointed Nazeer Chaudhry as liquidator on a winding up petition of the Securities and Exchange Commission of Pakistan (SECP), the source said.

On June 2, 2005, the Supreme Court had directed the SECP to take action against the non-scheduled bank because of involvement of IIBL’s senior management in a Rs634 million financial scam. “The SECP is proceeding in compliance with SC orders and a series of actions are under way against the company,” the source said.

The SECP had moved the petition before the PHC under Section 309 of the Companies Ordinance 1984 — a law which authorizes the commission to institute liquidation process against a company at fault.

Under the law, the commission can file a winding up petition but after holding an investigation into the affairs of the company recommend such an action. In the instant case, the inquiry was conducted by the apex court itself.

The investigators should probe whether the company is involved in any fraud or a business not authorized by its memorandum, or its management has been guilty of fraud or misconduct or its business is being conducted in a manner oppressive to any of its members or persons concerned in the formation of the company.

Meanwhile, the SECP has also set up a complaint cell on IIBL under the Non- Banking Finance Companies regulations, overseeing affairs of non-scheduled banks, modarbas or different leasing companies. The complaint cell has been established for the facilitation of depositors and other stakeholders of the IIBL.

After failing to recover a bank guarantee of Rs493 million, which added up to Rs634 million after mark-up, deposited in the IIBL, the Supreme Court had held a week-long inquiry and later directed the National Accountability Bureau (NAB) to register a corruption reference against 14 accused including the head of IIBL and ex-registrar apex court for their involvement in the financial scam.

In its order, the Supreme Court had also expressed disapproval over SECP’s working by observing: “Had the commission taken timely notice of the gravity of the situation and acted promptly under Part VIIIA of the Companies Ordinance 1984 relating to Non-Banking Finance Companies, the interest of the public could have been safeguarded.” Except for a show cause notice served on IIBL on April 23, 2004 regarding appointment of administrator, no meaningful action was initiated though IIBL affairs called for immediate action in public interest, the apex court had observed.

Meanwhile a Rawalpindi Accountability Court on Tuesday last remanded former Supreme Court Registrar and Javed Iqbal Qureshi, Chief Operating Officer (CEO) and Muhammad Nadeem Anwar, former Director IIBL for another ten days.