November 2, 2023

Victimization under the garb of Accountability

Case in point: Hascol Petroleum Ltd.

Ever since PTI seized power in Pakistan after 2018 general (s)election, their focus was on so-
called accountability. It was a popular slogan during PTI’s election campaign, and their cult-
like supporters were expecting across-the-board accountability to be implemented with an
iron fist. Moreover, it was envisaged that process gaps in the system countrywide will be
plugged-in to curtail any sort of corruption in future.

However, what ensued (as expected) was victimization of PTI’s political opponents or
whomsoever who was not a PTI sympathizer. There are numerous examples of such acts
undertaken by the then new government. Several publicly known and alleged corrupt
parliamentarians and businessmen had already joined PTI to save themselves from this
premeditated victimization.

Interestingly, a clear definition of ‘Corruption’ was also given by their Cult-leader, Imran Khan,
which is, ‘whomsoever doesn’t agree with anything that suits PTI’s narrative is corrupt’. Many,
who are otherwise corrupt, financially, morally, and intellectually themselves were delighted
with this narrative and rode the wave for their own vendettas against their opponents, under
PTI’s patronage. Furthermore, Imran Khan’s inflated ego, narcissism, lack of business
knowledge and no experience of managing government, worked in their favor.

Resultantly, the whole nation witnessed the pathetic quality and caliber of the people
appointed on various key positions, including ministers, provincial chief ministers, governors,
special advisors, chief executives, heads of law enforcement agencies etc. On a related note,
for Law Enforcement Agencies it was the start of hunting season. They had a field day and
minted money by falsely alleging anyone whom they felt was vulnerable, of course minus
anyone who is somehow connected with PTI or their puppet masters.

A few famous cases taken up by NAB, FIA, several JITs etc. did not lead to any conviction,
rather some of the alleged persons were exonerated after being tortured for years. During
this process, several bureaucrats and commoners were also persecuted by PTI’s hounds and
their facilitating Law Enforcement Agencies, the sole purpose of which was to embarrass and
insult them publicly with flimsy trumped up charges. All of this was done under the façade of
accountability as promised by Imran Khan in his numerous rants before and after the
(s)election.

While this witch-hunt was proceeding on full throttle, the Government made various
economic blunders leading to several business segments being adversely affected. This was
further exacerbated by external factors leading to businesses sustaining heavy financial losses
and, in some cases, defaulting on their financial obligations to their lenders.

Speaking of lenders, the leadership of the largest Government owned bank, National Bank of
Pakistan (NBP) was also entrusted upon a typical PTI loyalist in 2019. This person, appointed
as President of NBP by Asad Umar (the then Finance Minister), had been away from Pakistan
for several years and clearly lacked competence to lead a large sensitive financial institution.
Soon after assuming office, he started developing his team of like-minded executives through
fresh hiring. Most of these new hires had also not worked in any financial institution in
Pakistan (if at all) for decades. However, they all followed the same narrative that whatever
and everything that has been done at NBP for over seven decades is based on inefficiency
and/or corruption. Such general sweeping remarks obviously proved to be disheartening for
thousand of honest workers at NBP. However, most chose not to stand up against this new
tyrannical culture to save their jobs. Inversely, many employees and executive chose the path
of apple polishing, realizing that this person, like his cult-leader, craves such shallow
validation. And they were right, the bank President not only liked it, but he also started
surrounding himself with people who would agree with his mental spasms unconditionally.
Amongst these, Shehzad Karimi, nephew of Naeemul Haq was retained as PSO to the
President and was given unheard of power and clout to weed out anti PTI executives.

While the main thrust of the new management, led by the President, was (supposedly) to
improve the overall service and asset quality of NBP, but it soon transpired into the same
victimization, as was being done elsewhere in the country, following the PTI’s narrative. Many
employees, including senior executives, who disagreed with the unreasonable and illegal
demands and instructions of the President were outcasted, targeted, publicly humiliated and
threatened to be implicated under false charges. Consequently, they were either sidelined or
pressurized to leave the bank.

Double standards became rampant in decisions and PTI sympathizers were blatantly
facilitated, even when they were clearly against the bank’s interests. From releasing of
personal guarantee (as security) of an influential businessman (Razzak Dawood of Descon)
associated with PTI, to pushing for lending to various technology related (Systems Ltd. owned
by Asif Peer, Advisor to PM on IT) and pushing for taking over other bank’s defaulted loans in
real estate projects (One Constitution Avenue, Islamabad, where the ex PM owned an
apartment) of persons affiliated with PTI, there are numerous favors that have been extended
by the incumbent President to please Imran Khan’s regime. One of the Ex-executives of NBP,
S. H. Irtiza Kazmi (then EVP and Head of Investment Banking) refused to consider taking over
BoP and other banks’ loans defaulted on by the sponsors of One Constitution Avenue. He also
refused to consider unsecured lending to Zameen.com and Graana.com. Arif Usmani, the then
President got infuriated and warned him of dire consequences. This later transpired into
emphasizing on implicating him in Hascol’s matter.

On the other hand, lack of experience and knowledge of how the system works in the local
banking industry and the petty corruption which is rampant at the branch and regional level
was overlooked by the management. In fact, the management was, by design, distracted by
some of the old mid-level executives, who were now in cahoots with the President, to focus
on witch-hunting.

The objective of the President, furthered by his newly appointed Chief Risk Officer (CRO)
Adnan Ali Agha, working remotely from another country for most of his tenure at NBP, was
to make NBP’s lending portfolio look bad and book maximum provisions against potential
future losses, so that the bank’s profitability could be suppressed. CRO’s working remotely
from Manila, Philippines and discussing sensitive financial information dealt by NBP via zoom
is a serious breach, which was allowed by Arif Usmani, President NBP. The CRO, being an
egotistical sadist, coupled with God syndrome was the perfect fit for this task. Also, his
younger brother (Farhan Ali Agha) had joined PTI, hence blanket immunity to wreak havoc
over NBP’s lending portfolio.

Hascol Petroleum Limited (HPL)

One such banking relationship at NBP, that was unfortunately going through a bad patch since
start of 2019, mainly due to external factors, was instantly pointed towards by the President’s
cronies and picked up by him, which he blew out of proportion. The newly appointed and
opportunist executives behind this wanted to clear the way for their own elevation by fueling
the unfounded narrative of accountability in this matter. This banking relationship was that
of Hascol Petroleum Limited (HPL).

Hascol Petroleum Limited (“HPL”) is an Oil Marketing Company incorporated in March 2001
under the Companies Ordinance, 1984 and is licensed to market, distribute and export
petroleum products namely High-Speed Diesel (HSD), Motor Gasoline (MS), High Sulphur
Furnace Oil (HSFO), Light Diesel Oil (LDO), Superior Kerosene Oil (SKO), Lubricating Oil and
Greases etc. HPL was granted an Oil Marketing license in February 2005 by the Government
of Pakistan. Since then, HPL has been engaged in developing a retail network under “Hascol”
brand and have commissioned over 600+ retail outlets across Pakistan and Azad Jammu and
Kashmir. The company got listed on Pakistan Stock Exchange (PSX) in May 2014. The
registered office of the company is situated at Karachi.

In 2015, HPL was a new entrant in the OMC market, and they presented their business to NBP.
Their plans were aggressive, and the management had strong and relevant OMC experience.
Other convincing factors included trading and storage model in a growing fuel market, stable
to positive general economic conditions leading to satisfactory demand growth indicators. In
2016, Vitol Dubai Limited, one of the leading fuel suppliers of the world, invested in the
company by acquiring a 15% shareholding. Vitol shareholding increased to 25% in year 2017
and subsequently increased to 40% in 2019. HPL had a visible growth during 2015 to 2018
which was evident from the fact that HPL became 2nd largest OMC after PSO in terms of
market share.
By 2018, HPL had the largest storage depot facilities (including HPL’s exclusive storage buyout
of Karachi Hydrocarbon Terminals Limited) in the country after PSO. Investment in storage
facilities further improved the supply chain management and positively impacted volumes
and profitability of HPL as disclosed by audited accounts published at that point in time. The
growth was reflected in the financial results of the Company During 2013–2018 and its effect
could be seen in improving share price of HPL that had reached over PKR 300/share from
around PKR 13/share in 2014.

Due to significant market disruption and shocks in late 2018 (sharp PKR devaluation against
USD, abrupt increase in KIBOR, inventory losses due to declining oil prices etc.), HPL started
to struggle in settling its LC maturities at the start of 2019. It was later revealed that the
financial numbers presented to the shareholders and lenders of the Company by the previous
management (led by Saleem Butt) were misreported and consequently materially restated at
later dates. March 2019 quarterly account were restated in June 2019 with PKR 6 billion
expense that was previously not recorded. December 2020 financials released in late 2021
shows the Company again restated its 2018 accounts and posted a loss of PKR 5 billion, 2019
accounts again restated, and PKR 25 billion loss earlier reported in 2019 accounts increased
to 35 billion, hence, accumulated losses now stood at PKR 65 billion.

It is noteworthy that the Government of Pakistan banned import of oil in early 2019 when the
global oil prices were at the lowest level ever. Many countries throughout the world took
advantage of low oil prices and built their reserves (including strategic), while Government of
Pakistan banned import of oil. This step by the GoP disallowed Oil Marketing Companies
(OMCs) to average out their expensive inventories.

Due to the mismanagement revealed at the year end of 2019, Saleem Butt was replaced, and
entire new management took control of the company. Since then, several CEOs and CFOs
have been changed. The frequency of change in management is evidence that, problems lay
within the Company which were never revealed to the Company’s lenders (including NBP and
18 other banks) and shareholders up until 2019. Financial Accounts which were restated at
later dates reveals serious malpractices, however, these came to light well after the Company
had defaulted with the Banks. As a result, frequent Forced Payment Against Documents
(FPADs) for retirement of Letters of Credits (LCs) started from June 2019 with most of the
lenders of Hascol. Initially, the problem was thought to be temporary, and the company kept
assuring its lenders that they will gradually start recovering.

NBP could have either stopped all new LCs after piling up of overdue amounts and asked
the company for complete settlement of all credit facilities OR to allow fresh LCs up to the
extent of cash settlement of overdue liabilities of the company. The current President and
the Credit Committee chose the latter option. The reason for allowing establishment of
fresh LCs despite overdue amounts was based on the view that it is imperative for the
Company to be operational to remain a going concern. Hence until such time that cashflows
reverted to normalcy, NBP as well as a few other banks allowed the company to use LC lines
to the extent of cash settlement of its FPAD Liabilities. NBP while recognizing the gravity of
situation, initiated the remedial process by way of restructuring and reprofiling of
Company’s balance sheet soon after it was revealed that major restatement took place for
March 2019 accounts in June quarterly accounts. Also, HPL’s management asked its
shareholders to inject fresh equity through a rights issue. Simultaneously HPL requested its
lenders to re-profile its balance sheet by way of converting a portion of its mounting FPAD
liability to a Long-Term Loan. In late 2020, NBP endeavoured to recover as much exposure
as possible and was successful in recovering PKR 817 Mn through liquidation of PRL
(Pakistan Refinery Limited) shares held by HPL which were pledged with NBP. Furthermore,
NBP was able to recover Bilateral Term Loan instalments as well which helped in the
reduction of overall exposure. By the above measures, NBP was able to reduce its exposure
from PKR 21.5 billion as at December 2018 to PKR 19.2 billion as at December 2020 whereas
during this period, all banks kept their exposure constant by and large.

Hence, NBP’s wallet share reduced in terms of percentage share with other lenders. In late
2020, the relationship team at NBP raised a proposal to continue LC limit to the extent of
cash adjustment of overdue FPAD by HPL. However, owing to mismanagement at NBP’s
Credit/Risk Group as well as that of the President, the approval got delayed till January 2021
and HPL’s FPADs of more than PKR 3 billion were objectively classified which resulted in
nullifying the approval. The idea behind moving this approval was to keep the lines rolling
by adjusting NBP’s FPADs with cash and issue new LCs, but NBP’s new management did not
want Hascol’s business to continue, thereby allowing them to take make provisions against
this account.

Sometime in Jun-Jul 2021, owing to casual and highly irresponsible remarks by NBP
President, fuelled by some opportunist miscreants at NBP who had the President’s ears, the
matter of Hascol’s default was taken up by the FIA vide Enquiry NO.127/2021 dated July 7,
2021. The matter subsequently gained significance when it came to the knowledge of PM’s
chief hound for accountability, Shehzad Akbar. Since PTI’s government was miserably failing
in its so-called accountability drive, they twisted the story of Hascol’s bank default as a
financial scam and highlighted it to distract the public from the flaws in Government policies
which led to this sector incurring huge losses in the first place. It is said that in one of the
meetings on ‘so called’ accountability drive, the then DG FIA, Sanaullah Abbassi, to show his
performance to the PM, mentioned that we have unearthed a huge bank loan scandal
during Nawaz Sharif’s Government’s tenor, i.e., Hascol Petroleum. PM was ecstatic about it
and ordered Shahzad Akbar to oversee it and immediately take action against anyone
related, especially anyone who was directly or remotely associated with the Sharif regime.

Hence, out of over 19 banks who had lent to Hascol, only NBP was selected for prosecution
by FIA. The enquiry, later converted into an investigation, was immediately followed by
lodgement of an FIR, interim challan submitted etc., is being handled by a junior officer at
FIA, Commercial Banking Circle, overseen by Director in Karachi (Amir Farooqui, appointed
on the persuasion of Imran Ismail, the then Governor Sindh) and the DG at Islamabad
Headquarters. The way this case has been initiated and processed reeks of favouritism by
FIA and this agency being used by the then ruling party for protecting its supporters and
torturing its opponents.
While hastily and very willingly taking cognizance of this matter, FIA, Commercial Banking
Circle, Karachi registered an FIR No. 1 of 2022 on January 21, 2022, marred with blatant
malafide. Not only there was unnecessary haste in registering the FIR shown by FIA but adding
insult to injury for the innocent accused, the advisor/consultant appointed by PTI government
to oversee the investigation with the Enquiry Officer was Zubair Gillani. This person extracted
the period of Nawaz Sharif’s regime only for investigating NBP only for Hascol. Moreover, out
a long list of officers and executives who were in any way associated with working on Hascol’s
account at NBP, he specially pinpointed Presidents and senior executives who were either
hired during Sharif’s regime or were already there at NBP but were somehow not inclined
towards PTI.

Zubair Gilani is the same person who was hired by Imran Khan as Chairman Board of
Investigation (BOI) when he came into power. Zubair is a known close friend of Imran Khan
and is an ex-banker (including at Faysal Bank) and a wheeler-dealer, rising to high places
through hosting parties for his important close friends. Zubair had rented a house on
Khayaban-e-Badar, DHA Karachi (owned by Ashraf Wathra, who was working for HBL abroad
and later became SBP Governor). Zubair’s friends’ group in Karachi included Mehmood Maulvi
and Imran Ismail etc. This house was also used to host parties for Imran Khan where he was
introduced to girls and women by Zubair, and whomsoever Imran fancied was later arranged
for to meet him in Lahore and Islamabad etc. for a more personal meeting and so on.

Incidentally, Zubair Gilani owned Maxco (Pvt.) Ltd., a garment manufacturing unit at Karachi
which was manufacturing ‘Datch’ brand for export to Europe. Zubair had hired Massimo
Pedio, an Italian national as the CEO of the company to front him for dealing with Italy and
other countries in Europe. The company itself defaulted in loans against various banks to the
tune of approx. PKR 4+ Bn. but Zubair blamed his Italian CEO for everything and got himself
out of it. There was a fire incident at the factory at Korangi Karachi also, mainly to get
insurance claim and to show to the banks that their stocks had burned down, while there was
low or no stock available for which money had been borrowed from banks.

The appointment of such a person, reporting to Shehzad Akbar and Imran Khan, is evidence
enough of malpractice and maleficence to vindicate a select group of individuals.

Bank default treated as loss:

As per the above-mentioned enquiry/investigation, FIA was calling banks’ outstanding loans
a loss. Later, in one of their FI’s own supplemental challans, the IO/EO acknowledged that
there is no loss to the banks. In reality, this is a case of default that is non-payment as per
promise by the borrower, owing to uncontrollable business factors and banks blocking the
bank lines after FIA’s intervention. The borrower (Hascol) has always admitted its liabilities
and does not deny its financial obligations towards banks. This allegation of default has been
construed as a loss whereas as of now, no bank has written off/waived any financing amount
whatsoever. The borrower has categorically advised Pakistan Stock Exchange (PSX) they are
in negotiation with their lenders for restructuring of the loan (also submitted a scheme of
arrangement at the honorable Sindh High Court) so that it can be paid by the borrower. The
terms are under negotiation, however, most of the 19 lenders, and especially NBP, is reluctant
to even take any normal remedial action owing to verbal threats by FIA that anyone who
restructures this facility or settles this loan will be prosecuted and persecuted.

Unjust treatment of NBP as an institution out of 19 banks:

FIA in its own assessment has taken up this case and only pointed out wrongdoings on part of
NBP out of 19 banks. FIA has discriminated in choosing NBP for the wrongdoing and pointed
out that this incident has resulted in a loss to the national exchequer, whereas Bank of Punjab,
Sindh Bank, Bank of Khyber and First Women Bank (amongst other lenders) are also owned
by the government. If one compares the size of NBP, its exposure is approx. 34% as against
approx. 66% of other banks, inclusive of government banks. The value at risk that is the
percentage of equity of each bank defaulted by the company in NBP’s case is only 7% where
First Women Bank stands at 20%, Sindh Bank at 10%, Bank of Khyber at 10% and Bank of
Punjab at 5.5%. The question arises, why NBP has been pointed out amongst the 19 banks
and not the other banks, this shows blatant mala fide of FIA towards treatment of NBP in this
case. Furthermore, FIA singling out NBP, which is the premier government owned bank, will
cause irreparable loss to its reputation and credibility.

The interim challan presented by FIA to the concerned court reads more like a movie script
rather than a serious conventional challan. The stories given in the challan seem more like
mental creation and hypotheses of the Investigation Officer (IO) and FIA’s advisor/consultant
Zubair Gilani.

During this enquiry and owing to NBP’s current President’s willingness to throw a select group
of officers and executives under the bus, a list naming 22-24 junior officers to senior
executives, mainly belonging to just two departments i.e., client relationship and credit
management groups, was shared by the bank. These names belonged to individuals already
working at the bank before the current President joined in 2019.

Even more interesting in the selection of people nominated in the FIR and interim challan,
especially in case of NBP officers and executives. Only NBP officials from client relationship
and credit management were selected, and none of the people from other areas e.g.,
operations, credit administration etc. have been nominated. This clearly shows malicious
intent on the part of NBP’s present management, who had shared the list of names of its old
employees with FIA. The main focus of the investigation clearly shows that at NBP they want
to implicate Saeed Ahmed (Ex-President and personal friend of Ishaq Dar), Ahmed Iqbal
Ashraf (Ex-President, appointed by Shahbaz Sharif), Tariq Jamali (Ex-Acting President and
brother of Jan Jamali, Former Deputy Speaker of Baluchistan Assembly, associated with PML-
N), Syed Jamal Baquar, (EX-SEVP, appointed by Ahmed Iqbal Ashraf during Nawaz regime), S.
H. Irtiza Kazmi (EX-EVP, previously working as the point person at NBP for Prime Minister
Youth Business Loan Scheme, launched during Nawaz regime) etc.

On the other hand, while the investigation is continuing by FIA, they have gone to the extent
of blocking bank accounts (including deposits/lockers/investments etc.) of 9 out of the 32
accused. Even more shocking in the vendetta shown by FIA that out of these 9 persons, 4
belonged to NBP and are all ex-executives of the bank. Out of these, 2 are ex-Presidents of
NBP incidentally both appointed during the previous regime of Prime Minister Nawaz Sharif.
Another ex-executive of NBP is also being tagged with Mariam Nawaz, while this executive
was briefly associated with Prime Minister’s Youth Business Loans program. This is not only
blatantly malicious but also against any norm of civility and against basic human rights.
Financial strangulation of individuals without any proof is absurd and pathetic, however
typical of PTI’s negative mindset taken to a higher level by law enforcement agencies working
with this cult-leader’s blessings.

Hence, the above matter, which is a simple matter of bank default has been blown out of
proportion by FIA to shamelessly further PTI’s narrative of accountability, while essentially
victimizing and harassing scores of affected people in the process. However, at the same time
and in the same case, blatantly omitting and safeguarding individuals who are either
associated with PTI or the ones who brought them to power.

Lately, out of the initial 32 accused persons, initially 10 were taken out, and then later 6 more
have also been taken out only recently. This again reeks of nepotism. Most of the people
whose names have been taken out are not based on merit but pressure on FIA to clear their
names, and they have done exactly that. For example, Ex-President NBP, Saeed Ahmed’s
name has been taken out of the case on pressure by Ishaq Dar. Usman Shahid, Ex-SEVP has
been exonerated on pressure by Shahbaz Sharif through Rana Sanaullah. Similarly, Hascol’s
directors whose name have been taken out include Fareed Masood, who is brother of SC
Judge Ayesha Malik. Earlier, the name of an Ex-director of Hascol, Farooq Rehmatullah
(father-in-law of A.G. Majid) was taken out on persuasion by Asif Ali Zardari. Undoubtedly,
none of these gentlemen should have been implicated in the first place but at least they had
access to prominent people to take their case forward to the right quarters for exoneration.

In summary, various white-collared, highly educated, tax paying professionals have been and
are being victimized by FIA on their wild-goose chase started by PTI regime. Some of them
were even sent to jail when their pre-arrest bail was cancelled. Only these people and their
families can imagine the constant trauma and stress which they are going through with no
clear path in sight. Some of the younger ex-executives of NBP can’t even get any other job in
the market, while this case is pending.

Similarly, one of the largest oil trading companies in the world, VITOL who have substantial
investment in Hascol and supply petroleum products to PSO and other OMCs has been
harassed in the process. Placing the name of Sir Alan Duncan (EX-MP of United Kingdom),
representative of VITOL and then Chairman of Hascol, in the FIR. Placing him as an absconder
and placing his name on ECL reflects horribly on treatment of foreign investors by Pakistan.