ISLAMABAD, March 8: Zarai Taraqiati Bank (ZTBL) has suffered losses of more than Rs400 million due to embezzlements by its management, disbursement of loans for uncultivable land, non- recovery of loans and awarding of illegal bonus to staff , reveals the Auditor General of Pakistan (AGP) in its report for 2002-03.
NON-RECOVERY: The report said the ZTBL, Cantonment Branch Lahore, disbursed Rs154.352 million loan against various schemes from 1973 to 1999. However, due to weak internal controls during initial scrutiny, the bank failed to recover any amount despite the lapse of repayment period.
It said in the Small and Medium Enterprises Bank (SME), Peshawar branch, 32 borrowers drew Rs5.035 million from 1973 to 1996 but nothing was repaid to the bank up to June 30, 2002.
Resultantly, a sum of Rs9.939 million inclusive of mark up remained un recovered as the loan applications were not thoroughly scrutinized prior to sanctioning/disbursement of loans.
The ZTBL, City branch Rawalpindi, transferred six loans amounting to Rs1.3 million - disbursed during 1992-95 - to Jhelum branch on December 14, 1998. Review of the contract documents revealed that only Rs298,000 out of the total amount was recovered. Those who had taken the loans closed their business at Rawalpindi and did not intimate the branch while shifting to Jhelum.
UNCULTIVABLE LAND: The Kotli Loharan branch of the ZTBL disbursed Rs13.568million to 61 people belonging to various villages for tractors, potato crop, dairy farming and agricultural implements from 1997 to 2001 against uncultivable land located near river beds. Except a few, all the loans went into default.
AIBL: Management of the defunct Regional Development Finance Corporation (RDFC) invested Rs20 million in Assets Investment Bank (AIBL) in contravention of the instructions of the Finance Division in May and October 1996.
According to the rules of the Finance Division, surplus funds of public-sector enterprises can only be invested in various saving schemes introduced by the Central Directorate of National Savings, Federal Investment Bonds or in any government security.
The report said the Rs20 million principal amount and Rs15.781 million mark up remained outstanding against the AIBL since maturity of the investment in 1997, besides the additional Rs3.619 million mark up worked out by the auditors up to September 30, 2002.
BONUS: According to the Finance Division (Regulation Wing), bonus cannot be paid to the employees of autonomous bodies and corporations without its approval. However, in contravention of these directives, a payment of Rs20.391 million was made to the employees of the bank for the period ending December 31, 2002, as bonuses on the directives of the Board of Directors.
VOLUNTARY SEPARATION SCHEME: Small Business Finance Corporation (SBFC) appointed senior executive vice-president and senior vice-president on July 1, 1999, after the merger of Youth Investment Promotion Society (YIPS) in it. The appointees, the report shows, were paid all terminal benefits by the YIPS but still they joined the SBFC as fresh appointees.
According to the report, the officers were not qualified for the posts against which they were appointed in the SBFC. Both the officers opted for Voluntary Separation Scheme introduced by the SBFC in June 2000 and a benefit of Rs5.405 million was allowed to them under clause 3 (i) despite the fact that they were already being paid terminal benefits by the YIPS.
Similarly, the report also highlights embezzlement committed by the manager concerned at Vehari branch who disbursed loans worth Rs627,000 during February 1996 to May 1997 among four unemployed persons of Vehari district.
The four persons had informed the Prime Minister Secretariat and the SBFC Vehari branch that they had not received any loan under the YIPS as the manager had demanded bribe and now they had also received recovery notice from the SBFC.
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