The Federal Investigation Agency (FIA) on Sunday arrested Mumtaz Hasan, founder of the Hascol Petroleum Limited (HPL), in a Rs54 billion scam.
Director of the agency’s Sindh Zone Amir Farooqi said a total of 30 suspects — including present and former top officials of the National Bank of Pakistan (NBP), HPL and other organisations — had been booked in the case and that efforts were under way to arrest the remaining suspects.
The FIA Sindh’s chief described the scam as the “country’s biggest financial fraud” that was committed by the HPC in connivance with the NBP’s top management and those of other commercial banks, who would be investigated separately.
“During the period (from) 2015 to 2020 in the shape of bank loans, funded and non-funded financial facilities were granted to the HPL by the NBP in violation of prudent banking laws, practices, which amount to criminal breach of trust causing wrongful loss to the NBP/national exchequer and wrongful gain to HPL,” said documents seen by Dawn.Mr Farooqi said the total amount of default stood at Rs54bn, of which Rs18bn pertained to the NBP alone.
Sharing details of the FIA inquiry, he said Hascol’s credit line was increased by NBP presidents and credit group officials from Rs2bn to Rs18bn against ‘weak securities’.
The NBP’s credit heads, namely Reema Athar and Irtiza Kazmi, were the ‘key players’ in the episode.
Ms Athar was a director at the Clover Pvt Ltd, a company owned by Saleem Butt, a co-accused, and also served as a director on the board of the Fossils Energy, a subsidiary of Saleem Butt’s company.
The NBP opened fake letters of credit (LCs) to the tune of Rs95bn for Hascol in favour of Byco petroleum. The official said Byco’s part (now named Cnergyico) will be investigated as a separate criminal inquiry.
“No fuel was underlying for this quantum of LC and these were opened only to increase the liquidity in Hascol,” said the FIA director.
Apart from the NBP, several other banks opened non-product LCs to the tune of Rs54bn for Hascol.
“Hascol and another company Vitol (exclusive supplier of POL products to HPL) through over-invoicing transferred $42 million illegally outside Pakistan,” said Mr Farooqi.
He alleged that “Hascol siphoned off funds through fake contractors to the tune of Rs117 million”.
In addition to possible money laundering, the FIA is also looking into possibility of tax evasion by Hascol of up to Rs5bn.
According to the FIA documents, HPL was incorporated by Mumtaz Hasan as a private limited company in 2001 for procurement, storage and marketing of local/imported petroleum products, chemicals and LPG. It was converted into a public utilised company in 2007 and listed on the Pakistan Stock Exchange in 2014.
The HPL’s first significant borrowing started with Summit Bank in 2009, but the NBP entered the scene in 2014 when it gave Rs2bn to it “in response to HPL’s request addressed to accused Ms Reema Athar who had moved from Pak-Iran Investment Company (PIIC) to the NBP as its SVP (senior vice president)”.