Telenor is reportedly investigating an “extensive fraud” in its microfinance bank in Pakistan, according to news reports from Norway.
Verdens Gang (VG), a Norweigian tabloid newspaper, and Dagens Næringsliv (DN), a Norweigian business newspaper, both reported on the ongoing case earlier this week.
In an article published on December 7, DN reported that the Telenor Microfinance Bank says it has been scammed for around NOK 30 million, or around Rs514 million. The bank has identified 14 people, 12 of whom are local bank employees, while the remaining two are external loan agents.
The DN managed to obtain access to a police report in Lahore. According to the article, there was a hearing on Saturday in Lahore where Telenor bank’s lawyer, Waheed Riaz, and several of those accused of fraud appeared. The meeting, however, was postponed.
According to the police report, the loan agents were recruited by the branch’s staff, who created 1,638 false loan applications.
According to Riaz, the accused constructed ‘ghost clients’ to create fake loan applications. The bank employees then approved the loans and transferred money.
The accused have denied the allegations.
The fraud has been alleged to have been ongoing since February 2017. The actual amount may differ, as the current figure only refers to one branch, out of the bank’s 171 branches in Pakistan. Other bank branches are currently under investigation.
Telenor’s communications director Gry Rohde Nordhus said in an email to DN that they cannot comment on the details of the case as the investigation is still ongoing.
As per the article, after issues with the branch’s loan portfolio arose, the bank set up an investigation team in August 2019 to investigate. The team concluded there had been a number of false loan applications, and that bank employees had granted loans to people without sufficient documentation.
The bank’s management in Pakistan notified Telenor in Norway in September 2019 of the possible scam. Telenor’s board was also informed. Telenor ASA then decided to start an investigation in October 2019.
Telenor Microfinance Bank is based in Karachi and was founded in 2006. It was later acquired by Telenor Pakistan in 2008. Telenor now jointly owns the bank along with the Chinese fintech company Ant Financial.