Federal Investigation Agency has arrested Mumtaz Hasan, founder of the Hascol Petroleum (HPL) in Rs 54 billion scam
KARACHI: Securities and Exchange Commission of Pakistan (SECP) has appointed M/s Parker Russels AJS, Chartered accountants as an investigator for carrying out serious Fraud Investigation/Forensic audit of Hascol Petroleum Limited in terms of section 258(1) of the act.
It was disclosed by the Hascol in a notification at Pakistan Stock Exchange (PSX) website here on Monday.
On January 23, the Federal Investigation Agency (FIA) has arrested Mumtaz Hasan, founder of the Hascol Petroleum (HPL) in a Rs 54 billion scam.
According to the FI, a total of 30 suspects including present and former top officials of the National Bank of Pakistan (NBP), HPL, and other organizations had been booked in the case and efforts were under way to arrest the remaining suspects.
The FIA Sindh’s chief described the scam as the ‘country’s biggest financial fraud’ that was committed by the HPC in connivance with the NBP’s top management and those of other commercial banks, who would be investigated separately.
“During the period (from) 2015 to 2020 in the shape of bank loans, funded and non-funded financial facilities were granted to the HPL by the NBP in violation of prudent banking laws, practices, which amount to criminal breach of trust causing wrongful loss to the NBP/national exchequer and wrongful gain to HPL,” said FIR.
Amir Farooqi said the total amount of default stood at Rs 54bn, of which Rs 18 billion pertained to the NBP alone.
Sharing details of the FIA inquiry, he said Hascol’s credit line was increased by NBP presidents and credit group officials from Rs 2 billion to Rs 18 billion against ‘weak securities’.
The NBP’s credit heads, namely Reema Athar and Irtiza Kazmi, were the ‘key players in the scam.
Ms Athar was a director at the Clover Pvt Ltd, a company owned by Saleem Butt, a co-accused, and also served as a director on the board of Fossils Energy, a subsidiary of Saleem Butt’s company.
The NBP opened fake letters of credit (LCs) to the tune of Rs 95 billion for Hascol in favour of Byco petroleum. The official said Byco’s part (now named Cnergyico) will be investigated as a separate criminal inquiry, the FIR said.
“No fuel was underlying for this quantum of LC and these were opened only to increase the liquidity in Hascol,” said the FIA director.
Apart from the NBP, several other banks opened non-product LCs to the tune of Rs 54 billion for Hascol.
“Hascol and another company Vitol (exclusive supplier of POL products to HPL) through over-invoicing transferred $42 million illegally outside Pakistan,” said Mr. Farooqi.
He alleged that “Hascol siphoned off funds through fake contractors to the tune of Rs 117 million”.
In addition to possible money laundering, the FIA is also looking into the possibility of tax evasion by Hascol of up to Rs 5 billion.
According to the FIA documents, HPL was incorporated by Mumtaz Hasan as a private limited company in 2001 for procurement, storage, and marketing of local/imported petroleum products, chemicals, and LPG.
It was converted into a public utilised company in 2007 and listed on the Pakistan Stock Exchange in 2014.
The HPL’s first significant borrowing started with Summit Bank in 2009, but the NBP entered the scene in 2014 when it gave Rs2 billion to it “in response to HPL’s request addressed to accused Ms Reema Athar who had moved from Pak-Iran Investment Company (PIIC) to the NBP as its SVP (senior vice president)”.