NBP Audit Reveals Rs 5.7M Outsourcing Scam, Rs 15.2B in Bad Sugar Loans

Nadeem Tanoli

Islamabad: The National Bank of Pakistan (NBP) is facing mounting criticism after a recent audit revealed alarming financial mismanagement, including Rs 190 billion in unrecovered loans, irregular appointments, outsourcing violations, and questionable loan settlements.

During a review of over Rs 452 billion in audit paras, the Public Accounts Committee (PAC) expressed serious concern over the bank’s failure to uphold institutional standards. The Finance Secretary disclosed that only Rs 28.7 billion has been recovered to date, leaving more than 10,400 loan recovery cases pending.

PAC Chairman Junaid Akbar Khan questioned the lack of collateral in high-value disbursements. Among the biggest defaulters is Hascol Petroleum, which owes Rs 54 billion. Despite 32 suspects being named in an FIA FIR, recovery has been minimal.

PAC member Afnan Ullah Khan noted that Hascol, still operational with Rs 30 billion in assets, has yet to face any serious repercussions, raising doubts about FIA’s performance.

The committee also flagged Rs 15.2 billion in bad loans granted to sugar mills. Only one has been fully recovered, three restructured, while 17 loans remain outstanding. PAC directed aggressive recovery and postponed final decisions.

Beyond financial lapses, the committee highlighted misuse of authority in staff appointments. Audit Para 8.2.4.47 revealed that individuals without mandatory law degrees were appointed as litigation officers at inflated salaries, despite the availability of better-qualified candidates.

PAC also questioned the promotion of Mr. Qamar Hameed Khan, a German national at the NBP Frankfurt branch, who was made General Manager without competitive advertisement, in violation of the Overseas Posting Policy. His post was upgraded to Vice President, along with a 20% salary increase—moves termed as favoritism, though management insisted they were board-approved.

In another alarming disclosure, NBP has been covering the salaries of seven outsourced employees posted at NAB and FIA offices since 2012—amounting to over Rs 5.7 million. The bank cited a clause in the NAB Ordinance as justification, but PAC demanded a review of such practices and internal controls.

Two controversial loan settlements drew particular ire. NBP waived Rs 742.88 million for Ansari Sugar Mills despite having a court decree in its favor, recovering only Rs 213.55 million through a negotiated deal. In another case, Cast-N-Link Products Ltd. repaid just Rs 80 million of Rs 272.67 million owed. Both cases involved massive interest and markup waivers.

While NBP management claimed these settlements were within policy and didn’t involve principal write-offs, the PAC warned that such leniency undermines the bank’s credibility and accountability.

The committee urged tighter oversight and signaled zero tolerance for policy violations and financial negligence in future dealings.