NBP officials under fire as Rs 24 billion fraud case linked to Hascol unfolds

ISLAMABAD: Public Accounts Committee headed Junaid Akbar on Wednesday deferred its decision on an audit para involving officials of M/s Hascol Petroleum Limited (HPL) and the National Bank of Pakistan (NBP), concerning a financial loss of Rs 23.8 billion due to credit facilities granted to the company allegedly involved in fraudulent activities.
A representative of Federal Investigation Agency (FIA) official informed the committee that the investigation had been initiated based on a media report, not an official referral. He stated that the National Bank had extended credit lines without securing collateral or hypothecation.
The official further alleged that the bank’s credit lines were unusually increased, and the investigation revealed that certain bank officials who approved these facilities had received kickbacks.
According to the audit report, NBP’s Head Office in Karachi granted various financing and credit facilities to M/s HPL in 2022 without adhering to prudential regulations or properly assessing the company’s financial position.
It was noted that personal and corporate guarantees held as security were removed and de-tagged without loan clearance or adjustment, following a decision taken during the 613th Credit Committee meeting on November 21, 2017.
The Senior Executive Vice President of the Corporate Banking Group allegedly routed the credit proposal through his own group instead of the Investment Banking Group, bypassing standard procedures.
The Chief of the Corporate and Investment Banking Group recommended and approved an additional running finance facility of Rs 1 billion, backed by stocks and receivables that were already encumbered against existing LC lines.
Rather than reducing exposure, the bank significantly increased its exposure to HPL—even though the oil industry was experiencing major challenges in 2018, and most oil refineries and oil marketing companies, including HPL, were seeing a decline in profitability. Despite this, the LC facility was raised from Rs 12 billion to Rs 18 billion in October 2018.
The bank further allowed deferrals for charge upgrades and opened new LCs despite the presence of overdue FATR/FPADs. It also restructured existing facilities by converting short-term loans into long-term ones.
Moreover, defaulted LCs worth Rs 8 billion were converted into a long-term loan, while the LC line was reduced from Rs 18 billion to Rs 10 billion. Yet, shortly thereafter, LCs were again opened to fully utilize the Rs 18 billion limit. The requirement to maintain FPADs at Rs 8 billion for restructuring purposes was also relaxed.
The NBP management has since filed a lawsuit against the defaulter. The FIA has submitted a challan against 11 officers in court. The report also highlights that several officers had resigned from the bank before the case surfaced and received full end-of-service benefits.
As of August 31, 2022, HPL’s total exposure of Rs 23 billion has been classified as a loss, with 100 percent provisioning made. However, the bank has recovered Rs 197.27 million from the Diminishing Musharaka facility, which was fully settled by October 31, 2023. The case remains under investigation, and NBP is actively pursuing legal action. Ends