|Friday, October 30, 2009
By Rauf Klasra
ISLAMABAD: Two former lieutenant generals and one major general of the Pakistan Army calling shots at the National Logistic Cell for five years, stood exposed before the Public Accounts Committee (PAC) on Thursday, when an inquiry report revealed that after defying the orders of the then prime minister Shaukat Aziz, these generals had quietly borrowed Rs2billion from four banks on commercial rates to make investments in the volatile stock markets and in the process lost Rs1.8billion in the stocks.
A total of Rs4billion of the NLC including the pension fund of its employees, were invested in the stock markets, out of which, according to the report, Rs1.8billion were already lost during this adventure.
The PAC was informed through its inquiry report that OIC/NLC Lt General Azfal Muzaffar evn continued to make investments in the stock market till the last day of his retirement in 2008 even though the rest of the government departments and organizations had stopped this exercise in 2006.
The PAC was informed that after causing a loss of Rs1.8billion in cash to the NLC which would continue to pay the loan installments of the banks in the years to come, these three army generals were never questioned about their acts of omission and commission which had caused a loss of billions to the organisation.
The PAC members suspecting some foul play in the multi billion investment spree sought the names of the brokers and directors of those firms through whom these billions were invested despite the orders of PM Aziz in 2003 to stop investing in stocks.
The interesting part of this scam is that this was Shaukat Aziz who as a finance minister had devised a policy to make the public sector departments, organizations, corporation etc to invest their pension funds into stock markets to show fake recovery and financial health of the country.
Earlier, the secretary planning division Ashraf Hayat placed the names of five top guns of NLC who according to inquiry repot were responsible for this massive financial loss. Secretary said he did not have any doubt in his mind that following five were responsible—-Lt General Khalid Munir Khan who served in OIC NLC during 15.1.2004 to 14.6.2005, Lt General Afzal Muzaffar ( 15.6.2005 to 17.10.2008), DG NLC Major General Khalid Zahir Akhar ( 25.7.2002 to 27.2.2008), DFA Najeebullah Khan ( 25.10.2002 to 10.4.2007) and Chief Finance Officer ( 20.6.2004 to 22.10.2008).
These top guns were holding the positions of OIC DG AND DFA/CFO when these amounts were borrowed from the four commercial banks and invested in the markets.
According to official inquiry report placed before the PAC, a total loan of Rs2billion was borrowed— Bank Al Falah (Rs650million), National Bank of Pakistan(Rs90million), UBL (Rs800m) and ABL (Rs500m) and out of this loan, Rs 1.8billion has already been lost in the stock markets because of the decision of these three top army generals who had contracted with some brokers to make these heavy investments in stock markets.
The shocked PAC members however stopped short of ordering the recovery of these huge financial losses from these top military generals even after it was established that not only these generals had defied the orders of the then prime minister Shaukat Aziz not to make investment in the markets, but Staff Retirement Benefit Fund of employees was also thrown and lost in the stock markets. The PAC decided to wait for two more weeks to get another review of the inquiry report before ordering the recovery of these losses from those top military men who made such silly investments in the stocks.
Earlier, the PAC met here with Yasmeen Rehman in the chair. Sardar Bhadur Khan Sihar, Riyaz Fatinya, Hamid Hiraj, Sardar Ayaz Sadiq, Nadeem Afzal Chann and others.
The secretary Planning Ashraf Hayat laid the inquiry report before the PAC and he did not have any doubt in his mind that these three generals were responsible for this huge financial losses to the NLC by making faulty decision of investing in the volatile markets of the country. Despite the repeated questions of the PAC members the secretary did not budge from his stance that three generals were responsible for this loss. MNA Riyaz Fatina was wondering that why PAC was ordering the fixing of responsibility when it was clear from documents that these generals had defied the orders of the PM Aziz and this single violation was enough to establish a case against them.
The PAC was informed that three generals even devised a new strategy to make the money invested when after consuming the pension funds NLC employees, they even decided to borrow from four commercial banks and then threw it in the stocks. The PAC was informed that the sorry part of this sordid affair was that even the pension fund of the employees of the NLC was not spared in the heat of investment with the help of some powerful brokers.
According to the inquiry report, as a part of its official policy, NLC should invest 20 percent of the total fund under the management in non government securities/TFCs and shares. The report said in its 37th meeting of NBL held on September 8, 2003 the chairman NLB approved the investment policy of NLC advising not to invest in the stocks and carry over transactions. In its next Board meeting held on Jan 7, 2005, while viewing the status and results of NLC investments, the prime minister/chairman of NLB pointed out that public sector companies should not trade in stocks. The DG NLC clarified that investment policy was made as per the guidelines by the ministry of finance. The PM Aziz asked the secretary finance for an approval and issuance of fresh guidelines, he further directed that a strategy should be worked out by NLC in consultation with secretary finance to disinvest from the stock market. The DG NLC reiterated that irrespective of the policy, PM Directive to withhold trading in stock till fresh guidelines from the finance division will be followed.
The inquiry report said it analysed the investment record and reached the conclusion that massive financial irregularities were detected. The report said, “ besides noticing the acts of blatant violations of instructions, procedures and other guidelines”. The PAC would now decided whether to summon these generals in meeting and put recovery on them in its next meeting after receiving another report within two weeks.