In recent years, the general public has grown used to blaming banks for sharp practices. They commonly forget that where money is involved unscrupulous people will adopt unscrupulous means and try to steal. That is why bank carry insurance cover and have various risk measures are in place to minimise any such activities.
In case of APO - an individual was involved in taking only the profit (coupon) from the principal amount. According to investigation carried out by this newspaper - a friend of her husband opened a fictitious account in the name of APO Builders & Developers, in another bank for the profit to be credited. In Pakistan, NBP has become a favourite target of the press and other sections of society, and so to many news-readers and watchers, (because it is government owned), this event does not come as a surprise.
According to our sources, APO had been investing in government securities - PIBs and Treasury Bills - for a number of years. NBP-as the main banker-facilitated this business and kept the securities in its custody, in what is referred to as an IPS (Investor Portfolio Scheme).
In 2014, 2015 and 2016, the authorised officials of APO made profit on some of its holdings of securities, and instructed NBP to remit the proceeds to its account in another bank. Normal banking practice entails that the remitting bank should carry out its due diligence - including verifying the signatures of the client's authorised officials - before effecting the payment. According to our sources, this was carried out by the bank, and the remittance instructions were sent through the RTGS (Real-Time Gross Settlement system), a secure electronic system operated by the State Bank of Pakistan and used for settling such payments within the banking system.
The recipient named byNational Bank of Pakistan in the RTGS transfers was "Abandoned Properties Organisation", along with the account number as provided by the APO's authorised officials. According to the operating instructions of the RTGS and its underlying PRISM system, issued by the SBP:
"Arrangements for routing payment messages .... (are) ....based on a so-called V-shaped message flow structure. In this structure the full message with all the information about the payment (including, for example, the details of the beneficiary) is initially passed to the State Bank and is sent to the receiving bank only after the transfer has been settled by the central bank".
As the instructions clearly state, the receiving bank is required to ensure that all details match the instructions provided by the sending bank. However, in the case of the APO payments, this appears to have been ignored. The account to which the receiving bank credited the funds to, was not Abandoned Properties Organisation", but an entity called "APO Builders & Developers", a fictitious company which was opened by the gang for the purpose of defrauding the actual APO.
Therefore, there appear to have been multiple actors in this fraudulent gang. Two sets of parties were involved in the gang:
-- The APO Authorised officials, who knowingly remitted funds to a bogus company, with the plan to embezzle millions of rupees from the Abandoned Properties Organisation. Four officials of APO have been interrogated by the FIA.
-- The officials of the recipient bank, who opened the account of a fictitious company; and then when the misdirected payments arrived, circumvented the State Bank of Pakistan instructions and allowed the credit to this company, which were then siphoned off by the perpetrators.
And what of Ms Sadaf? The cycle of payments indicates that she had no role to play in this gang's plan. However, there was in fact an important role that she performed. Our investigation shows that she aided the syndicate by submitting spurious and unauthorised confirmations by fax to the APO office. These confirmations did not match the actual terms of the transactions that took place between Abandoned Properties Organisation and National Bank of Pakistan. The suspected APO officials then played their part by removing the original documents from the APO's files and inserted the spurious confirmations instead used these spurious confirmations to misrepresent the value of securities held by APO. This allowed the gang to slip through the payments to another bank without detection.
The actions were carried out over several years and in over 20 transactions. Approximately Rs 1.5 billion were siphoned off by the gang in this way. The fraud was only uncovered by the intervention of Mr Allah Yar, Administrator of APO (not one of the APO officials under suspicion), who queried one of the spurious transactions and called senior executives at National Bank to confirm the authenticity of the transactions. The NBP officials then carried out an investigation that uncovered the fraud, and promptly registered an FIR with the FIA.
The FIA investigation is ongoing; the 4 APO officials have been queried, along with several officials of another bank, and Ms Sadaf has been arrested. It is hoped that the gang has now been well and truly destroyed. It is reliably learnt that Sadaf and her husband were planning to migrate to the west. The gang had bought properties in Phase 8 and 9 of DHA whose value has risen substantially. Thus no loss is expected. It remind us of a similar transactions perpetuated under the previous government.
Copyright Business Recorder, 2017