Summary

The Crescent Standard Investment Bank Limited (CSIBL) was the greatest investment bank
reported on all the stock marketplaces in Pakistan when it declared a massive insufficient Rs 2.1
billion (US$35.5 million) for your year December 31 2005 industry was surprised. The
investment banking regulator Opportunities and Exchange Commission of Pakistan (SECP) had
sent an organization to check out the matters in the bank. Since the primary traders were people
or companies in the well known business group known to as Crescent Group there s enormous
fascination with the CSIBL matters by financial and political circles. The case describes the
different organizations that have been merged to produce the CSIBL mainly to guard the
stakeholders by creating a company getting a sizable capital. The bank had reported within the
annual reviews the interior control systems permanently governance stipulated with the SECP
were in place as well as the auditors (internal and exterior) had reported they were acceptable.
Yet when uncovered to have an analysis it absolutely was states the inside management was
involved in many functions of misrepresentation and concealment. The case focuses on the flaws
inside the structure in the corporate governance regime in Pakistan.

Company introduction
Crescent Standard Investment Bank Limited, an investment bank, provides corporate finance and
advisory services in Pakistan. It provides various deposit products, including certificates of
deposits, such as term, income, payment, and savings certificates; Islamic certificates; and senior
citizen certificates. The bank offers various loans and advances comprising car/vehicle financing,
machinery and equipment financing, working capital financing, project financing, and letter of
guarantee. It also involves in term finance certificate floatation and underwriting of shares; debt
restructuring and rescheduling; business sale and liquidation; and mergers and acquisitions; as
well as provides feasibility studies and research reports. The bank was founded in 1990 and is
headquartered in Lahore, Pakistan. As of June 28, 2007, Crescent Standard Investment Bank
Limited operates as a subsidiary of Innovative Investment Bank Limited.

CSIBL case points

Main sponsors Anjum M Saleem (Anjum Saleem was appointed as director on March 9, 2006
and banks chief executive on April 1, 2006) and Altaf M Saleem--used the banks assets illegally
for personal benefits. The bank paid Rs50 million each on behalf of Altaf Saleem, sponsor of
Crescent Group and Anjum Saleem, sponsor and chief executive of the bank

 Facility of Rs50 million each was granted by Habib Bank Ltd to Altaf Saleem and Anjum
Saleem against a pledging of equity portfolio of CSIBL. Shares of PICIC valued at Rs124.88
million, SNGPL Rs1.55 million, PIA Rs15.26 million and SSGC Rs3.29 million were pledged.
By April 10, 2006 the facility of CSIBL of Rs100 million towards Altaf Saleem and Anjum
Saleem had been settled by way of premature encashment of Certificates of Investment (COIs) to
the tune of Rs95.04 million except outstanding COIs of nominal amount of Rs4.62 million to be
matured in September and October 2006
Due to the payment of Rs100 million, CSIBL got its equity portfolio released from the HBL
that was initially pledged by CSIBL to enable Altaf Saleem and Anjum Saleem to obtain running
finance facilities
As CSIBL had already paid to Altaf Saleem and Anjum Saleem their principal amount of
Rs95.04 million as well as mark-up (on April 10, 2006), therefore, payment against personal
running finance facilities of Rs100 million tantamount to embezzlement of funds of CSIBL
The directors of the bank were made irrelevant transactions and the actual transactions and
reports were not approved by the board.
Show cause notices issued by the SECP to the directors, it was admitted that the management
of the bank had been guilty of unlawful and fraudulent conduct. It was also pleaded that the
board of directors was not aware of such conduct. Chairman and director of the bank Manzur ul
Haq said in a letter to the commission that recent events like the unearthing of the J.O. Vohra
transaction and the sale of assets of the bank without the boards prior approval or knowledge
bring me to the sad conclusion that the board at best is irrelevant at the bank
Directors of the bank were also quoted in the third inspection report of the SECP commission
that they were not aware of the illegal working of the management
The bank had been maintaining double books to hide its transactions and was found involved in
investment in its own subsidiary companies
The equity of the bank had been eroded to the tune of Rs2.082 billion (in negative) as of August
26, 2006. So it does not have the minimum regulatory equity of Rs300 million as required for
the business of investment finance services, and Rs200 million as required for the business of
leasing. The bank is, therefore, in violation of the stipulated conditions for holding the licenses in
terms of the NBFC Rule.

 The banks total deposits showed a figure of Rs6.049 billion, including Rs1.929 billion deposits
of individuals and Rs4.120 billion of corporate and institutional clients. The deposits of Sialkot
International Airport Limited are Rs555.57 million, National Telecommunication Corporation
Rs309.50 million, Wapda Rs300 million, FPCCI Rs29.50 million and Barrett Hodgson Pakistan
Rs28 million.
The commission received numerous complaints from individuals as well as institutional
depositors of the bank regarding inability of the bank to meet its liabilities towards them.
The SECP commission issued order for suppression of board of directors and appointed Badarud-Din Khan to exercise all powers and duties of the board with effect from August 30, 2006.
CSIBL fails to pay Rs 68.547 million of TFCs to fund holders
SECP suspends trading in CSIBL shares The Securities and Exchange Commission of Pakistan
(SECP) has directed all the three stock exchanges to suspend trading in the shares of Crescent
Standard Investment Bank Limited (CSIBL) for a period of 60 days from April 3, 2007
The Crescent Standard Investment Bank Limited (CSIBL) will go down in record books as the
bank has circulated un-approved and un-audited annual accounts for the year ended December
31, 2005 to its shareholders and that too after eight and a half months. The accounts show a loss
of Rs 2,118,546,000 or loss per share (Rs 16.85) which means the entire equity stands eroded
and the share value is a negative Rs 6.85 per share.

Conclusion
Top directors and CEO of the company were the main culprits and responsible for loss to all
stakeholders. Point of concern is that the Credit Rating Agency could not know about their
dealings. The stock markets did not have a clue about their doings. The External Auditors gave a
clean chit. All these things take company to the point where it was unable to meet its liabilities.

https://www.scribd.com/doc/30524941/Corporate-Governance-in-Pakistan
http://bohatala.com/crescent-standard-investment-bank-failure-case-study-review/
http://www.termpaperwarehouse.com/essay-on/Cresent/306061