ISLAMABAD, July 24: The ad hoc Public Accounts Committee (PAC) on Wednesday expressed concern over the loss of Rs51.27 million to the Agriculture Development Bank of Pakistan (ADBP) due to excess payment to Allied Bank on mark-up.
Presiding over a meeting held at the Parliament House, the PAC chairman, H.U.Beg, described the financial transactions as an imprudent decision of the ex-chairman of ADBP, Fazle Mabood.
The PAC was briefed that the ADBP got credit line of Rs2 billion from Allied Bank at a mark up rate of 10.33 per cent per annum. The ex-chairman, however, not only raised the mark up rate to 11.33 per cent within one month of the agreement, but also repaid the loan on quarterly basis instead of the agreed annual basis.
The PAC was told that Fazle Mabood even reduced the mark up to seven per cent from 11 per cent payable on deposits of the ADBP with Allied Bank. These decisions were beyond his authority and had no approval of the ADBP’s board of directors.
Mr Beg also directed the principal accounting officer (PAO) to hold an inquiry into the incident and furnish a report to the PAC within 30 days.
The participants informed the meeting that despite the refusal of the finance ministry, the ADBP management invested Rs70 million from the provident fund of the employees with the Bankers Equity Limited (BEL) in October 1998. These investments were, however, withdrawn after protests by the staff union, and BEL refused to make payment of interest accrued on the deposits amounting to Rs4.7 million as on June 30, 2001.
The director-general Audit apprised the PAC that the ADBP had invested Rs191.7 million out of GP Fund Trust account in BEL in five years growth certificates in January 1992. After the maturity in January 1997, BEL failed to make the payments with interest.
Despite the orders of the State Bank of Pakistan and Lahore High Court in 1999 to pay all the investments to the ADBP with interest at the agreed rate amounting to Rs358.228 million within one month, the amount in question has yet to be recovered from BEL.
Mr Beg also asked the PAO to hold another inquiry into the accusations and furnish the report within 30 days after fixing the responsibility.
He issued guidelines to the finance ministry that in future, loans be given to those entities who have on their roll experienced and qualified executive directors. The skill and integrity of the directors may also be looked into before sanction of loans, he said.