When NAB (National Accountability Bureau) was established in 1999 the initial target was to go after those who had done bank fraud and/or did not return the loans taken on flimsy pretexts. The first monies recovered was from bank defaulters, over Rs 50 billion in the first two years. The State Bank of Pakistan (SBP) then stepped in and convinced military dictator Gen Pervez Musharraf that because the entrepreneurs were getting nervous, investment in new business was becoming shy. Despite the enormous amounts of monies lying un-recovered, NAB post-2002 was duly restrained by NAB (Second Amendment) Ordinance 2000.
Once the Amendment came into force, no inquiry, investigation or proceedings in respect of imprudent loans, defaulted loans or re-scheduled loans could be initiated or conducted against any person, company or financial institution without reference from Governor SBP. Cases already pending before the Accountability Courts prior to the Amendment continued to be prosecuted without reference to the Governor SBP.
A bank fraud cannot take place without connivance of bank officials, willful default being often avoided by re-scheduling of loans by the bank, SBP has prime oversight of the financial institutions to prevent these. With documentation of collateral often suspect, and in many cases over-priced in collusion with surveyors, the senior management in some cases tends to indulge in unnecessary and/or extravagant expenditures on non-core issues.
Pakistanis are clearly the best banking professionals in the world, a few black sheep are giving the whole industry a bad name, some are not even bankers but media, HR persona, etc (the President/CEO’s traveling “entourage” from bank to bank converted into “bankers” at his sole discretion)? Can SBP look the other way at a Bank without a qualified CFO? From 2003 to 2015 defaulters/violators of banking laws, bank clients and/or bank management, have not been held accountable with the same intensity as compared to the period 1999 to 2002. Accountability by the electronic and print media is avoided by using advertisement budgets as bargaining/blackmailing tools. Shareholders’ money is splurged on entertainment, travel, administration, padding advertisement budgets, fraudulent schemes, mass junkets to St Petersburg, Paris, etc while lining their pockets on kickbacks on miscellaneous expenditures, interestingly under the head of “Others”.
A sampling of the expenses incurred by any three Bank Presidents of commensurate bank size over a six month period will give (1) how much time they have spent in the Head office (2) if not, where and why (3) their hotel accommodation, travel, entertainment, etc. Out of 180 days if the concerned bank President/CEO has spent more than 120 days away his the Head Office, who is looking after the shop? The extravagant wastage affects the bottom line, who is to be held accountable? One must not forget the kickbacks in outrageous bank schemes like air bridges, reality shows, printing of new stationery, etc, anything where money can be spent without oversight of SBP inspectors. SBP has not looked the other way, they just do not go into such details. The money saved from this daylight robbery could have been paid out as dividends, this gives negative connotations for market perception of the entity’s commercial viability, no guesses why the share prices in the stock market remain in the doldrums.
The Financial Crimes Investigation Wing (FCIW) in NAB was established to carry out financial-specific accountability, it badly needs to be strengthened by re-structuring, being placed under separate administrative and operational control within NAB. They are many retired bankers with “credit control” and “recovery” experience. Susceptible to pressure because of career considerations, serving bankers should not serve in FCIW. For the Regional NABs it is recommended that a senior retired banker act as Advisor to DG on financial crimes cases while others must be part of investigation wings as experts, forming an integral part of Combined Investigation Teams (CIT).
CIT must be strengthened, with semi-independent sections created with administrative legal and operational capacity in each regional wing. The Special Operation Wing (SOW) in each Regional Bureau should cover the mandate of Section 9 (a) to conduct raids to curb bribery and ill legal gratification cases. No one of any stature should be spared. A separate senior officer in NAB must be made responsible to coordinate with the Regional Bureaus to ensure strict supervision and for on-the-spot-decisions to speed up the operational work. Whistle blowers response and protection system thereof do exist but must be more than lip-service, established on modern lines and properly advertised for public awareness and response. Public confidence gaining-measures must be propagated through media to attract attention to ongoing corrupt practices, the role of the Media Cell must be enhanced. Feedback should be taken from the media as to which bank staff is threatening to cut down advertisements if any adverse accountability process is publicized.
While over the years NAB has established drills and procedures and well trained investigation staff it must keep pace with developments in law, legal practices, forensic and scientific methods, training of its investigators or modern techniques, development of its own training institution, merit-based recruitment (a key aspect of success of any institutions specially prosecutors and legal consultants in case of NAB) and merit-based postings and promotion system. Prevention of corruption within NAB must be contracted through an internal affairs department (intelligence setup), application of law and SOPs across the board, structuring of discretionary powers reaching out to international jurisdictions through MOUs, amendment in NABO as per Section 37, i.e. the right person for right job and for that purpose development of own officers with total denial to lateral entry specially against higher positions. Any organization involved in special disciplines needs to have experts, consultants and advisors, the diversification of functions do demand to have outsourced intellectual and technical expertise, NAB is no exception.
NAB has recently set up an internal accountability mechanism. This will depend upon on complaints from the general public, monitoring the violation of Standard Operating Procedures (SOPs) and observations given by courts of law. Enjoying tremendous reputation for both honesty and competence, SBP should set up a similar internal mechanism to ensure the integrity of the institution. Without evolutionary processes and continuous development includes re-structuring of the FCIW, institutions like NAB are bound to decay. Compromises because of political interference compounds inefficiency and professional compromise. Notwithstanding all these factors compounded by a couple of very corrupt Chairman who need to be made an example of, NAB has functioned well within its potential.
Time now for NAB to concentrate most of their capabilities as per their original mandate to go after those looting the banks, both within and outside the banks!
The writer is a leading defense and political analyst of Pakistan. He can be contacted at email@example.com