LAHORE, Oct 21: The new management of Crescent Standard Investment Bank Limited (CSIBL) is all set to convene the company’s annual general meeting (AGM) some time next month for seeking approval from the shareholders of bank’s audited accounts for the year ending December 31, 2005.

It will be the first AGM after the suspension of its previous management and board of directors by the Security Exchange Commission of Pakistan (SECP) on allegation of massive financial irregularities and deliberate violation of legal requirements.

“The company’s accounts for 2005 have been finalised and audited, and we intend to hold the AGM some time in November,” CSIBL administrator Badr-Ud-Din Khan told Dawn on Saturday.

He said the AGM was being convened to get the audited accounts of the bank approved and new auditors appointed. “That is all about its agenda. However, if any shareholder raises any question, I may or may not respond to it,” he added when asked if he planned to brief the shareholders about the prospects of bank’s sale.

In reply to another question about the possibility of the conclusion of a deal to sell the troubled bank to some prospective buyer before the year is out, Mr Khan said it might and might not happen. “I can’t give you any definitive answer to this question. Some parties that showed interest in acquiring the bank have already backed out, and some new have come in,” he said.

A report in the newspapers early this week suggested that the bank’s management was about to close a deal selling the bank to one of the three local and overseas parties interested in the acquisition of the company.

Though a report gave the impression that the majority shareholders of the bank, the Crescent Group of Companies owned by its former CEO Anjum Salim and ERRA chairman Altaf Salim, had agreed on the intervention of the prime minister’s office on a reasonable settlement and pay back to the bank what belonged to it, Mr Khan said he was unaware of any such development. “If there’s any such development, it should be in the knowledge of the Security Exchange Commission of Pakistan alone,” he said. No SECP official looking after the affairs of non-banking institutions could be reached despite best efforts.

The SECP on August 30 appointed an administrator for CSIBL, suspending its board of directors and restraining Anjum Saleem from officiating as its CEO under Sections 282E and 282F of the Companies Ordinance, 1984 after months of exhaustive investigations into the bank’s affairs, which revealed severe and deliberate violation of the legal requirements and serious financial irregularities, including illegal maintenance of parallel accounts, concealment of the bank’s assets, unauthorised massive funding of group owned companies, unlawful investments in real estate and stock market, etc. The regulators had detected irregularities in the running of the bank’s financial affairs in October last year.

The regulators have also issued show-cause notices to the suspended board of directors, including a nominee of the state-owned NIT, the CEO and other relevant functionaries to take cognisance of irregularities committed at the bank. However, no action has so far been initiated against the former management of the bank or any director.

The SECP had discovered during the investigations that the previous management of the bank had borrowed from other institutions to the tune of Rs5.5 billion, but it was nowhere reflected in the bank’s official accounts.

These loans, obtained on as high interests rates as 25-55 per cent, were invested in violation of the rules and regulations governing the NBFIs in the stock market and real estate through the majority shareholders’ group owned companies. Thus bank’s resources were misused by the sponsors for the benefit of the group owned companies, and at one point in time its exposure to the group companies equalled Rs3.703 billion or 240 per cent of the bank’s equity.