BaDaR
15th April 2008, 22:07
ISLAMABAD: A couple of exporters and the management of a financial institution have allegedly committed a fraud by drawing a hefty amount of Rs327 million on fake letters of credit in the Faisalabad region, official sources in the finance ministry confirmed to The News.
“Despite knowing this alleged fraud, the financial institution has not yet adopted a legal course by registering an FIR against the culprits,” a source dealing with this issue told The News on Monday. He added that even after the lapse of several months, no action has been taken against the culprits so far.
According to details and relevant documents available to The News, two parties allegedly managed to withdraw Rs327 million on account of fake L/Cs from a branch located in the Faisalabad region.
Sources said that one party withdrew Rs130 million on account of 14 export bills, while the other party withdrew Rs196.983 million. The management of the financial institution, sources pointed out, did not obtain acceptanc from the opening bank and did not bother to verify the signature of the Letters of Credit of advising banks. This paved way for withdrawal of the hefty amount on allegedly fake L/Cs.
The financial institution management also undertook fresh negotiations and violated basic guidelines by not verifying the genuineness of bills of loading. The first due date of a bill was October 18, 2007 and the last bill’s due date was Jan 31, 2008. Despite overdue payments the management allegedly continued en cashing the bills.
The President of the financial institution, in a letter written on March 26, 2008 states, “recently a fraud has been unearthed at a large branch of the bank, where clients have succeeded in withdrawing money against the negotiation of export bills, drawn under fake Letter of Credits”.
“Besides other types of lapses, his (manager) ineptness also contributed towards the commission of fraud, where the financial institution is likely to suffer financial losses.” Under Letter of Credit management, if a discrepancy is found in the documents, then certification of the foreign bank is required, otherwise the foreign bank along with the bank in Pakistan, are not bound for any payments.
The compliance officer of the financial institution had warned the management not to pay any dues on L/Cs as he found certain discrepancies in them. Sources said that this is not the first fraud, as a similar incident had happened a few years earlier in the same branch of the financial institution.
Sources alleged that the parties concerned had committed the fraud in a clever manner. The financial institution has taken charge of three factories along with Rs163 million stocks and negotiations were underway to settle the matter. —MH
Rs327 million fraud detected (http://thenews.jang.com.pk/daily_detail.asp?id=106783)
“Despite knowing this alleged fraud, the financial institution has not yet adopted a legal course by registering an FIR against the culprits,” a source dealing with this issue told The News on Monday. He added that even after the lapse of several months, no action has been taken against the culprits so far.
According to details and relevant documents available to The News, two parties allegedly managed to withdraw Rs327 million on account of fake L/Cs from a branch located in the Faisalabad region.
Sources said that one party withdrew Rs130 million on account of 14 export bills, while the other party withdrew Rs196.983 million. The management of the financial institution, sources pointed out, did not obtain acceptanc from the opening bank and did not bother to verify the signature of the Letters of Credit of advising banks. This paved way for withdrawal of the hefty amount on allegedly fake L/Cs.
The financial institution management also undertook fresh negotiations and violated basic guidelines by not verifying the genuineness of bills of loading. The first due date of a bill was October 18, 2007 and the last bill’s due date was Jan 31, 2008. Despite overdue payments the management allegedly continued en cashing the bills.
The President of the financial institution, in a letter written on March 26, 2008 states, “recently a fraud has been unearthed at a large branch of the bank, where clients have succeeded in withdrawing money against the negotiation of export bills, drawn under fake Letter of Credits”.
“Besides other types of lapses, his (manager) ineptness also contributed towards the commission of fraud, where the financial institution is likely to suffer financial losses.” Under Letter of Credit management, if a discrepancy is found in the documents, then certification of the foreign bank is required, otherwise the foreign bank along with the bank in Pakistan, are not bound for any payments.
The compliance officer of the financial institution had warned the management not to pay any dues on L/Cs as he found certain discrepancies in them. Sources said that this is not the first fraud, as a similar incident had happened a few years earlier in the same branch of the financial institution.
Sources alleged that the parties concerned had committed the fraud in a clever manner. The financial institution has taken charge of three factories along with Rs163 million stocks and negotiations were underway to settle the matter. —MH
Rs327 million fraud detected (http://thenews.jang.com.pk/daily_detail.asp?id=106783)