‘NBP is a government’s audit-refusing bank’

Government audit department is refusing audit of its other subsidiaries as officials of the NBP link SHC’s order with it.

The country’s largest government bank, National Bank of Pakistan (NBP) is an audit refusing bank for the last eight-year, while private auditors who are conducting its audit claimed in its reports that everything is in order and there are no irregularities.

According to the Audit department in Karachi, “The NBP is an audit refusing company since 2012 as the Sindh High Court (SHC) has issued stay-order in a case no 3328/2012.” “Restraining order is still in place and the matter of its audit is sub-judice in SHC. So we are not in a position to entertain the subject complaint.” This case is pending before the SHC for last eight-year and we are bonds to obey SHC, said an official of Audit Department over a complaint lodged against its subsidiary requesting a government audit.

This suaveness of no ‘monitoring and supervision’ on the financial activities of the NBP has cracked a new debate of national sovereignty of all deposited taxes, revenues Pension/Donation Funds and other relevant merchandises spreading wings on history of undetected complaints for the last eight-years.

According to the NBP document available for public viewing, it has six companies under its ambit as subsidiaries. As a standard practice all subsidiaries of NBP including NBP Exchange Company Ltd, NBP Capital Limited, NBP Modarba Management Company Ltd, Taurus Securities Limited, Cast –N- Link Product Limited are using identification LOGO with visible difference. Only NBP-Fund Management Limited is using mirror imaged Logo, which has drawn attention to masses.

With the NBP, Government audit department is refusing audit of its other subsidiaries as officials of the NBP link SHC’s order with it, which claimed to be separate independent entities.

The twist came underway when governmental audit refuser, NBP was inquired about its cherry picked subsidiary NBP-Fund Management Limited who found using NBP LOGO in its original form was replicating spitting image all over from its website, links extending to official documents.

The reported negligence over investments could not be entertained under halted accountability of the so-called major holder bank. This subsidiary had mislead clients towards believing that investments have safe identification under government owned bank which is not the case. Not many investors of the same Fund are exposed to this bitterness till the bank was approached multiple times for wrong doings of NBP’s subsidiary where due-diligence with customer concern was neglected despite knowing unlined issue. The ultimate bank has failed respecting the investor’s rights and investments taken under the given name to its subsidiary.

Using the typical stereo brand name and identical LOGO of NBP by its weak shareholding subsidiary NBP-Fund Management Limited has instigated new horizon on the accountability of National Bank of Pakistan. NBP-Fund Management Limited has tasted the same flavor of non-compliance in its operational tagline. Under inevitable events the subsidiary is busy in minting money by taking opportunity hands by depending on the on-going support of NBP’s name and LOGO representation in its business system. The subsidiary is operating business suiting owns interests in the name of Pakistan Stock Exchange under lime light of NBP without any restriction and accountability. Ongoing allied irregularity has firm hands in its subsidiary’s growth and number of NBP name believing customers in the company who are unaware of dual sided playing subsidiary.

The Chief Executive Officer (CEO) NBP-Funds Amjad Waheed has instantly replied over our previous report, “We have responded to SECP, NBP on this matter. As you know all subsidiaries of banks whether in mutual fund business, or exchange or leasing, or brokerage use the same LOGO as their parent bank. However, the name is different. Our name is NBP Funds and not National Bank of Pakistan. Also, all investors investing in mutual funds have to go through a risk profiling exercise to ascertain the level of risk that suits them, and there are proper risk disclosures, which is not the case in bank deposits. Using of the parent company’s LOGO is an interesting practice as well. Only one out of our 78,000 investors has complained about this, and is going around maligning us. We do not want to get into a media trial to such absurd allegations.”

After this reply from the company’s CEO, a debate has sparked among investors and general readers curious to know the reality. Once NBP Funds is not National Bank of Pakistan then what are the letters NBP standing out loud in the name of a company which is registered as NBP Fund Management Limited in Securities and Exchange Commission of Pakistan? The burden is shifted smoothly over the Board of Directors of that time by NBP Fund Management Limited over the raised question of identity. The fact what the Board of Directors of National Bank of Pakistan has allowed to use its LOGO and same name it is not over and above the Companies Act 2017 under which the subsidiary has attained working license. Any such agreement of mutual business is between two separate legal entities for their own corporate interests. The investor’s perspective is entirely different and nothing to do what both organizations are exchanging goodies for themselves.

The regulatory authority of such companies have received a wakeup call over the issue to look into their set of rules and regulations if such permission can be granted lawfully from their platform in any extra ordinary circumstances where two companies are mutually adhered in any business contract but is not in favor of general public. Impact of using the typical stereo brand name has plunged misrepresentation creating uneasiness among local mutual fund investors.

The sponsoring bank – NBP — is now exposed to reputational risk in the event of the sponsor/shareholding entity encountering financial and operational difficulties in fraud related matters which are kept undetected intentionally in most cases yet if detected then left catatonic. NBP’s subsidiaries are now under the eye out bounding this luxury and enjoying being above the laws. Audits based on suspicious circumstances or complaints that include specific procedures to extract the desired results are left numb.

The utility of external governmental auditing becomes need of the vulnerable situation where correct shareholding position of the bank into its low margined subsidiary can be contested is an unwanted event of debate for the bank. National Bank of Pakistan is the custodian of trillion of rupees of the federal & provincial governments. Presumably information on government’s financial affairs are lacking transparency in such unique unidirectional approach.

An official of the government Audit Department said, “the State Bank of Pakistan (SBP) is directly involved in the audit of NBP, but its responsibility is to audit only government’s funds and investments, while government audit department audits deposits of private investors. “The bank’s private audit team has given somehow a clean chit to go-head whatever submitted before them through approval of its Board of Directors and the top management. External auditors representing government of Pakistan have a substantially niche interrogative and directional approach which can serve as a check on abuse of power exercised.

Earlier, the Transparency International (TI) Pakistan has asked Pakistani authorities to order National Bank of Pakistan (NBP) not to allow the use of its LOGO to NBP-Funds.

Ministry of Finance has an integral and dignified role to rule out such controversial irregularities which are now making ripples in order to maintain accountability process in correct order for National Bank of Pakistan and governmental interludes linked in the process.

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