CG ASSIGNMENT

Name : Shafat Ahsan

SAP ID : 26149

MS ENGINEERING MANAGEMENT

RIPHAH INTERNATIONAL UNIVERSITY

Spring 2021
Cresent bank:
The Securities and Exchange Commission of Pakistan (SECP) has issued a show-cause notice to
the Crescent Standard Investment Bank Ltd (CSIBL) its chairman and directors why the bank''s
licence should not be cancelled on the basis of SECP''s inspection reports about "fraud,
misfeasance and misconduct".The details of the CSIBL affair are contained in the 29-page SECP
show-cause notice sent to the chairman and directors of the CSIBL, a non-banking finance
company, on August 29, 2006. The notice has been signed by the SECP chairman, Raziur
Rehman Khan.

The SECP notice highlights the use of bank assets to illegally benefit Anjum Saleem and Altaf
Saleem. The details run as under: "It has come to the knowledge of the commission that the bank
has paid Rs 50 million each on behalf of Altaf Saleem, sponsor of Crescent Group and Anjum
Saleem, sponsor and chief executive of the bank.This matter was taken up with the bank. The
commission had undertaken a targeted inspection from June 27 to June 30, 2006 in this regard.
This inspection resulted in a report (the third inspection report), wherein it was found as
follows:"CSIBL by pledging its own equity portfolio, assisted Altaf Saleem and Anjum Saleem
to obtain running finance facilities of Rs 100 million in February 2005. The amount was received
by the CSIBL in April 2005.

However, till December 31, 2005, the said funds received from Altaf Saleem and Anjum Saleem
were not appearing in their names and to camouflage the factual position the amount of Rs 100
million was recorded as receipts from the Crescent group companies, namely, Safe Way Fund
Ltd, and Asian Capital Management Ltd."The examination of relevant records/books of accounts
pertaining to the payment of Rs 100 million by the CSIBL to Habib Bank Ltd, KSE branch,
Karachi on April 27, 2006 revealed that during the month of February 2005, two running finance
facilities of Rs 50 million each were offered by Habib Bank Ltd, KSE branch, Karachi to Altaf
Saleem and Anjum Saleem.

The said facilities were granted for the period of one year expiring on January 31, 2006 and the
purpose of the facilities was trading in stocks. The offer letters to this effect were issued by the
chief manager, Habib Bank Ltd, KSE branch, Karachi to Altaf Saleem and Anjum Saleem on
February 9, 2005 and February 28, 2005, respectively.The facility of Rs 50 million each was
granted by the Habib Bank Ltd, to Altaf Saleem and Anjum Saleem against a pledge of
following equity portfolio of the CSIBL. PICIC, SNGPL, PIA, Pakistan PTA, General Tyres,
and SSGC. Anjum Saleem availed the running facility of Rs 50 million from Habib Bank Ltd,
KSE branch, Karachi by drawing cheque dated April 8, 2005 for payment to the CSIBL.
The payment was, however, recorded as amount received from the Asian Stock Fund Ltd, by the
CSIBL. As the maturity date of the running finance facility in the name of Anjum Saleem was
falling on January 31, 2006, Anjum Saleem requested the Habib Bank Ltd, to roll over the
running finance facility for a period of another one-year. His request was acceded to and facility
of Rs 50 million was renewed up to January 31, 2007 in the name of Anjum Saleem.

During the months of May and June 2005, out of the above stated Rs 100 million received from
Altaf Saleem and Anjum Saleem, major chunk of Rs 55.13 million was transferred to Crescent
Jute Products Ltd, and recorded as adjustment of the outstanding liabilities of Rs 100 million of
the Safe Way Fund Ltd, and the Asian Capital Management Ltd.

Up till December 31, 2005, the books of accounts of the CSIBL never depicted the factual
position in respect of Rs 100 million funds received from Altaf Saleem and Anjum Saleem.
However, on December 31, 2005, six-months COIs aggregating Rs 44 million, representing the
remaining amount out of Rs 100 million as reduced by the payments made to the Crescent Jute
Products Ltd, and other payments/credit of mark-up/profit etc, during the period April 2005 to
December 2005 were issued in the name of Altaf Saleem and Anjum Saleem having maturity
date as of June 30, 2006.""The notice states that based upon the facts highlighted in the First
Inspection Report, the Second Inspection Report, the Third Inspection Report, the A.F. Ferguson
& Co, Chartered Accountants'' (AFF) reports and the Auditor''s Report, "the commission is prima
facie satisfied (subject to such explanation as may be provided later to the contrary) that:

"The bank has committed serious contravention of the provisions of the Ordinance, the Non-
Banking Finance Company (NBFC) Rules, Prudential Regulations and various directions given
to the bank by the commission."The bank is carrying on unauthorised business. "The business of
the bank is being conducted in a manner oppressive to its members and depositors, and, "That
the management of the bank has been guilty of fraud, misfeasance and misconduct towards the
bank and its members and depositors.

The commission has also received complaints that the bank has not released shares of Pakistan
Services Ltd, pledged with it by Associated Builders (Pvt) Ltd, Zaver Pharmaceuticals (Pvt) Ltd,
Brillux (Pvt) Ltd, Hashoo Holdings (Pvt) Ltd, and Gelcaps (Pakistan) Ltd, but has unauthorisedly
re-pledged/transferred those shares to other financial institutions.The SECP chairman has called
upon the bank to show-cause, in writing, to him, being duly empowered by the commission in
this regard, within 14 days of the issuance of this notice and explain as to why the licences may
not be cancelled, and why the commission may not move the court for the winding up of the
bank.In order to afford an opportunity of being heard, a hearing shall be conducted by the SECP
chairman, on September 28, 2006 at 10:30am at the head office of the commission situated on
the 12th Floor, NIC building, Blue Area, Jinnah Avenue, Islamabad.

The bank, its chairman and directors have been directed to appear at the hearing either in person
or through a duly authorised representative. They have also been asked to bring any documents
they wish to rely upon or furnish to the commission.It is the understanding of the commission
that all material referred to herein is already in their possession. However, to the extent that they
wish to obtain copies of or inspect the documents referred to or relied upon herein, they may
contact the SECP chairman.The show-cause notice has been issued without prejudice to any
other action that may be taken or warranted on the basis of the facts and grounds noted in the
order.

Islamic investment bank:

PHC’s Company Judge Justice Shahjehan Khan appointed Nazeer Chaudhry as liquidator on a
winding up petition of the Securities and Exchange Commission of Pakistan (SECP), the source
said.

On June 2, 2005, the Supreme Court had directed the SECP to take action against the non-
scheduled bank because of involvement of IIBL’s senior management in a Rs634 million
financial scam. “The SECP is proceeding in compliance with SC orders and a series of actions
are under way against the company,” the source said.The SECP had moved the petition before
the PHC under Section 309 of the Companies Ordinance 1984 — a law which authorizes the
commission to institute liquidation process against a company at fault.

Under the law, the commission can file a winding up petition but after holding an investigation
into the affairs of the company recommend such an action. In the instant case, the inquiry was
conducted by the apex court itself.The investigators should probe whether the company is
involved in any fraud or a business not authorized by its memorandum, or its management has
been guilty of fraud or misconduct or its business is being conducted in a manner oppressive to
any of its members or persons concerned in the formation of the company.

Meanwhile, the SECP has also set up a complaint cell on IIBL under the Non- Banking Finance
Companies regulations, overseeing affairs of non-scheduled banks, modarbas or different leasing
companies. The complaint cell has been established for the facilitation of depositors and other
stakeholders of the IIBL.After failing to recover a bank guarantee of Rs493 million, which added
up to Rs634 million after mark-up, deposited in the IIBL, the Supreme Court had held a week-
long inquiry and later directed the National Accountability Bureau (NAB) to register a
corruption reference against 14 accused including the head of IIBL and ex-registrar apex court
for their involvement in the financial scam.

In its order, the Supreme Court had also expressed disapproval over SECP’s working by
observing: “Had the commission taken timely notice of the gravity of the situation and acted
promptly under Part VIIIA of the Companies Ordinance 1984 relating to Non-Banking Finance
Companies, the interest of the public could have been safeguarded.” Except for a show cause
notice served on IIBL on April 23, 2004 regarding appointment of administrator, no meaningful
action was initiated though IIBL affairs called for immediate action in public interest, the apex
court had observed.Meanwhile a Rawalpindi Accountability Court on Tuesday last remanded
former Supreme Court Registrar and Javed Iqbal Qureshi, Chief Operating Officer (CEO) and
Muhammad Nadeem Anwar, former Director IIBL for another ten days.

Bankers Equity:
Judge Dr. Qamaruddin Bohra of AC-1 also imposed a fine of Rs1 million on the former banker,
who would have to undergo an additional one-year term in case of default on the payment.The
same court had earlier ordered the release of co-accused Ashfaq Y. Tola, former president of the
BEL, after he voluntarily returned Rs1 million.The case against the two was lodged in 1999 by
the Commercial Banking Circle (CBC) of the Federal Investigation Agency (FIA) on a
complaint filed by Majeeduddin Khan, chief executive of the BEL

It was alleged that the BEL had approved a lease finance facility to the tune of Rs14.336 million
to the Qaulity Knits (Pvt) Ltd for leasing of machinery for five years, repayable in 20 quaterly
installments.The lease finance facility was extended in violation of company’s policy and rules.
However, subsequently the request of Qaulity Knits was approved on Jan 4, 1999, by accused
Rauf B. Qadri, who was the chairman of the BEL.Later, final settlement of Rs11.765 million was
effected on the instruction Qadri and the borrower returned the amount through two cheques of
Rs9.756 million and Rs2 million.However, only an amount of Rs9.765 million was adjusted
against the termination of the facility, thereby casuing a loss of Rs2 million to the BEL.

The cheque of Rs2 million, delivered for the termination of lease facility, was recorded in the
account of ‘Miscellaneous Payable Project’. The cheque was deposited in he BEL’s account at
Muslim Commercial Bank, FTC branch, and the money was used as payment account instead of
depositing it in the collection account.The amount was later withdrawn in cash through a crossed
cheque No. 19191266 on Jan 8, 1999. The case was withdrawn on behalf of accused Raub B.
Qadri by Ashfaque Tola and they converted the same for their own use.

“In view of my findings, I am of irresistible view that the accused persons were entrusted with
bank afairs and having dominion over financial matters have committed criminal breach of trust
and accused Ashfaque Tola is soley resposnsible for falsification of the account books of the
bank, thus they are liable to be punished”, the judge observed.The judge also disqualified for 10
years for seeking or from being elected, chosen, apponted or nominated as a member or
representative of any public body or any statutory or local authority or in service of Pakistan or
of any provice under section 15 of the NAB Ordinance, 1999.

CONVICTED:

The Anti-terrorism court, headed by Judge Khan Pervaiz Chang, sentenced two brothers,
belonging to the Muttahida Qaumi Movement, to a 10-year term for bike snatching.Accused
Rehan and Qamar, sons of Mumtaz, were arrested red-handed on April 24, this year by the police
in New Karachi while fleeing after snatching the bike (RNC-3423) from Naeem Badar at
gunpoint.The judge also imposed a fine of Rs5,000 each on the two brothers and ordered that the
defaulter on the payment would have to undergo an additional six-month term.

According to prosecution, the two brothers, riding a stolen bike (KCK-6478), intercepted the
victim and his friend, Ishfaq Ahmed, near Power House and deprived them of the motorcycle. As
they were fleeing, head constable Sharafat Ali and constable Nadir Raza, who were patrolling the
vicinity on their bike, appeared there and arrested the fleeing bike snatchers. An unlicensed TT
pistol was recovered from accused Rehan.The judge also sentenced Rehan to suffer a seven-year
term for possessing the unlicensed pistol.

The accused brothers took the plea that they were on their way on their bike when they had an
altercation with the complainant. They said they were still exchanging hot words when the
policemen came and arrested them.Meanwhile, the additional district and sessions judge,
Central, Ghulam Qadir Leghari, sentenced a man to a three-year term for possessing an illicit
pistol.

Accused Shahid Rasool was arrested on Dec 14, last year by the New Karachi police.Besides, the
judicial magistrate, West, S. M. Naqvi, sentenced a man to two-year term for having an
unlicensed pistol. Accused Muhammed Saleem, arrested on January 28, 1998, by the Shershah
police, was also fined Rs5,000.

Pakistan Steel Mil:

Minister for Production Anwar Ali Cheema informed the Senate that the largest number of cases
of corruption and irregularities were registered against Mueen Aftab Shaikh, the former PSM
chairman, who faces six cases, and former PSM director, Sameen Asghar, who faces more than
eight cases. However, Mr Shaikh and Mr Asghar were charged together in most of the cases.

According to the Forensic Accountancy of PSM 2008-09 and 2010-11, both Mr Shaikh and Mr
Asghar had been involved in irregular purchase and procurement of 40,000 to 50,000 mega tons
of coal and metallurgical coke, along with other raw materials, at ‘highly’ inflated prices from
various suppliers.They are also implicated in the irregular award of sale contracts and
mismanagement of products. Separate charges have been registered against the two concerning
sale arrangements for PSM products and various finished items.

Mr Shaikh is already under trial for the charges against him, Mr Cheema explained.Because Mr
Asghar is a federal official, the FIRs registered against him are referred to the government’s
Establishment Division for disciplinary action.The PSM general manager, Mohammad Masood,
was charged in 2009 with three cases of mismanagement of production items, and found guilty in
all the three.

Investigation into the irregularities at PSM revealed that nine other officials were not guilty of
the acts they had been charged with.In 2010, however, FIRs were registered against eight trading
companies, alleging that the companies were favoured in violation of the industry’s rules and
regulations, and those cases are still pending.In response to a question from Senator Mohammad
Talha Mehmood, of the JUI, Mr Cheema clarified that the PSM's accounts were regularly
audited.

“The auditors have given us reports between 2007-08 and 2010-11, detailing irregularities and
corruption,” he said.Holding a file containing names of the senior officials facing the charges, he
said that “necessary actions” had been taken against the personnel involved.Despite the auditing,
however, the senators were told that several questions remain unanswered.“No one has been held
responsible for the loss of Rs7.15 billion from the sale of steel products below their price,” said
the minister for production.

Similarly, the extension of a free credit facility to selective dealers caused the PSM a loss of
Rs664.6 million, and the company lost a further Rs4.025 million in awarding a contract for the
sale of waste material.In fiscal 2008-09, material losses at the PSM cost the company Rs158.8
million, and there were separate financial losses totalling over three million rupees.All these
cases remain unresolved. In some of these cases, the personnel involved had retired before
investigations began, while some had died.

Indus bank:
However, the division bench, comprising Justice Sabihuddin Ahmed and Justice Zia Parvaiz, did
not go further and restricted itself without commenting on the issue of winding up of the Bank.

The IBL, incorporated under the Companies Ordinance, was wound up by the Peshawar High
Court on the sole ground that the licence granted to the IBL on January 13, 1992 had been
cancelled under section 27 of the Banking Companies Ordinance of 1962 and without informing
the IBL an application was filed before the Peshawar High Court for winding it up.In the
meantime, 75 per cent of the shareholders filed a petition with the Sindh High Court, being CP
No D-1506 of 2000, challenging the cancellation of the licence on the ground that it was
cancelled due to malice and that there was no occasion or default in any manner whatsoever to
occasion the cancellation of the licence of the Bank.

It was also urged in the petition that where other remedies were available with the State Bank of
Pakistan such an extreme step was uncalled for.Counsel for the petitioners Anwar Mansoor
Khan, advocate, argued, by giving details, why the order for cancellation of licence was not
attracted by the provisions of section 27 (4) of the Banking Companies Ordinance of 1962.

The allegations in the order for cancellation of licence were that Khurshid Sohail acted as
chairman and chief executive, when he had not obtained permission from the State Bank of
Pakistan. The State Bank also alleged that the IBL had failed to give complete information to the
inspectors appointed by it.It was also alleged that the paid-up capital was not increased up to
Rs500 million up to the date which was fixed for such purpose, but subsequently it was increased
to the required level. It was also alleged that the IBL placed funds with Franklin Credit and
Investment Corporation which amounted to mismanagement.

The order of the Governor of the State Bank also had in it that the IBL was given sufficient
opportunities to comply with the conditions of the licence, but they did not do so, and that the
IBL management made personal allegations of mala fide against Rasheed Akhtar Chughtai,
Deputy Governor of the State Bank, which were found to be unwarranted and unjustified.All
these allegations were met by the counsel for the petitioners who went through the record and
showed that none of the allegations made in the order passed by the SBP Governor could be
substantiated.

In fact, it was said before the passing of the order, under section 27 (4) of the Banking
Companies Ordinance of 1962, five appeals were pending decision for refund of unlawfully
imposed penalties, but the SBP Governor had not bothered to listen and decide the said appeals.It
was also urged that there was no refusal by the IBL management to give information. In fact the
reply filed by the State Bank to the suit filed earlier by the IBL against the State Bank there was
no allegation by the SBP that any information was withheld by the IBL.

Barrister Chaudhry Mohammed Jamil, in his arguments, tried to meet the points raised in the
petition, and contended that the petition was not maintainable because the shareholders and
petitioners were not Pakistani companies and were registered abroad, wherefore under the
provisions of section 456 of the Banking Companies Ordinance, they were barred from filing the
petition.He also stated that the attorney of the petitioners, Yousuf Hasan, was not a duly
constituted attorney, so the petition should fail. He further stated that the SBP Governor had
absolute authority and that the review provided under section 27 of the Banking Companies
Ordinance of 1962 not having been filed, the petition was misconceived.

He also argued that, in fact, show-cause notices and time were given and to the IBL, but it did
not rectify the issue or it did not care to do so.After hearing the parties, the court allowed the
petition, restored the licence given to the IBL by setting aside the order of the SBP Governor
dated September 21, 2000 by which the SBP Governor had cancelled the Bank’s licence.