ISLAMABAD, Dec 20: The National Accountability Bureau (NAB) has recovered Rs1.6 billion in the famous Mehran Bank scandal case by selling Benami property of defunct bank’s chief Younus Habib in Islamabad, a spokesman for the NAB said on Wednesday.

The amount is stated to be the country’s biggest-ever single cash recovery in a wilful loan default case. In addition, the Younus Habib Group will also pay Rs420 million.

According to the NAB, Younus Habib, former chief operating officer of the defunct bank, had offered to settle his liability through the sale of his Benami property and accordingly entered into a settlement agreement of Rs1.6 billion with the National Bank of Pakistan.

The Benami property, a plot in Blue Area of Islamabad, was later sold to the National Logistic Cell (NLC) for Rs2.2 billion.

The recovery would resolve a major loan default of the Mehran Bank which was merged into the NBP because of the latter’s liquidity/solvency issues.

A ceremony was held at the NAB Headquarters where NAB acting chairman Maj-Gen Mohammad Siddique handed over sale proceeds of the property to NBP chairman Syed Ali Raza. NLC director-general Maj-Gen Khalid Zahir Akhtar and other senior officials were also present.

The arrest of Younus Habib in April 1994 lifted the curtain from one of the country’s biggest financial scandals in which Mr Habib had allegedly siphoned off a staggering Rs5 billion and doled out millions of rupees to politicians in order to cover up his crime.

He was arrested on a complaint by the State Bank of Pakistan for committing misappropriation in the sale proceeds of Dollar Bearer Certificates (DBCs) to the tune of $36.7 million.

On April 20, 1994, giving details about the payments made by Mr Habib to generals, politicians and political parties, the then Interior Minister, Nasirullah Babar, told the National Assembly that the main beneficiary of his largesse was former army chief General Mirza Aslam Beg who received Rs140 million.

Others who were named by the interior minister included Jam Sadiq Ali (Rs70 million from Habib Bank and Rs150 million from Mehran Bank), MQM chief Altaf Hussein (Rs20 million); Yousuf Memon for Ejaz-ul-Haq and Javed Hashmi (Rs50 million); Nawaz Sharif (Rs6 million); former Sindh chief minister Muzaffar Hussain Shah through his secretary (Rs13 million), MQM Haqiqi (Rs5 million), former Sports Minister Ajmal Khan (Rs1.4 million), Jam Mashooq Ali (Rs3.5 million), Liaquat Jatoi (Rs1 million), Dost Mohammad Faizi (Rs1 million), and Jam Haider (Rs 2 million).

The Mehran Bank had been doing badly since its very inception in January 1992, and banking experts attributed this poor performance to Younus Habib's penchant for `extra-curricular banking activities’. In fact, the only reason why the bank had managed to stay afloat was the protection and patronage enjoyed by Mr Habib whereby hefty government accounts were brought to Mehran Bank.

Mr Habib had admitted that out of $36.7 million generated through the sale of DBCs, a federal government paper that the State Bank sold through commercial banks, he used $20 million to pay back a portion of the amount owed to the ISI and used the rest to meet some other pressing obligations.

According to the SBP rules, proceeds from the DBCs (Mehran Bank was given $40 million worth) had to be deposited within 72 hours of the sale. However, Mr Habib did not meet this deadline -- in fact, never deposited the money at all.

On Dec 14, 1995, Younus Habib was awarded 10 years rigorous imprisonment and was fined Rs36.7 million in a fraud case by the Special Court for Offences in Banks in Sindh.