According to the company ordinance 1984 section 196 the directors should practice following powers.
- The directors should manage the business of a company; this may include all the expenses of promoting and registering the company. Any power being practiced by the director should be approved from the board meeting.
- The director can call for the shareholders for their unpaid shares.
- The director is able to issue shares.
- Director issues debentures
- Director can borrow money other then the use of debentures or such other instruments.
- Director is capable of investing the funds of the company
- Directors can make loans.
- Directors are responsible to approve the periodic financial reports.
- Directors are responsible for approving the employee bonuses.
- Directors can do capital expenditures or the disposal of any fixed asset but it should be in the limits being prescribed.
- Director is responsible to announce the interim dividends.
Scandal / Corruption:
The NEWS revealed the corruption in the bank of Punjab in 2007 during the Musharraf's government. The main character in the scandal was Hamesh Khan (president BoP at that time). Investigations revealed that different techniques were used in order to deceive the banking system. For example bogus NICs, and false company documentations, useless lands near the river of which there was no value.
It was also revealed the Hamesh Khan was a good friend of General (R) Parvez Musharraf. And there were attempts from the presidency to influence the investigations. And also there were attempts to stop the investigations.
It was revealed the there was a fraud of Rs. 13 Billion of which NAB was able to recover 5 billion.
Major Players in the Fraud:
Following are the major players of the scandal at Bank of Punjab.
- Hamesh Khan (President of BoP at time of scandal) falsified the accounts.
- Former Board of Directors falsified the accounts.
- Muhammad Munir (Having Dual NICs) acquired the financial facility from the BoP in the name of companies, Haris Steel, Wisdom Trading (Pvt) Ltd, Al-Hammad Enterprises and Better Traders by using all bogus documents. According to the investigations these three companies were fake and to hide this fraud Hamesh Khan helped Munir out.
- Muhammad Afzal (Multiple NICs)
- Muhammad Jamil (Multiple NICs)
- Ali Ijaz acquired major financial facility for the companies Haider steel, unique enterprise, and lucky enterprise. The companies other then Haider steel were fake. He is an accountant in Haris steel and he also possessed multiple NICs.
- Waris Malik who also availed a major financial facility in the name of fake companies and he also possessed multiple NICs. But his original name was Abid Raza that was never used in any deal or documents.
- Rs 5 billion availed in the name of Haris steel, and Haider steel.
- Rs 4 billion in the name of 23 different fake companies.
- The total amount and increased from 9 to 13 billion rupees that was merged into the accounts of Haris steel, Haider steel, and Prime steel with the help of Hamesh Khan and other board of directors also the whole amount was rescheduled for next 12 years with zero markup.
- 200+ land collaterals ware submitted in order to avail these financial facilities and these collaterals were of the value of Rs 900 million.
Updates on the case:
Updated at: 1912 PST, Tuesday, November 24, 2009: One of the major participant in the fraud at Bank of Punjab sheikh Afzal apologized in the supreme court of Pakistan. He also said that Federal Minister Baber Awan demanded him for Rs 35 million to get the case closed. He also said that his son Haris Afzal has nothing to do with that case.
LAHORE, Dec 3: Punjab Chief Minister Shahbaz Sharif said "PCO judge Justice Bilal issued the orders that (then BoP president) Hamesh Khan must not be touched by the Punjab government, paving the way for his escape from the country through the Peshawar airport,"
10 December 2009: The former CEO of Bank of Punjab Hamesh Khan was arrested and detained in USA by Interpole.
Role of BOD in the corruption:
As from the above data we see that the major hand in this corruption was from the board as they helped the people who acquired the financial facilities by fraudulent and fake documentations. Te board of directors also helped them get out of the investigative situations. The board could have never done that if there were proper checks upon them. The president of BoP is said not to be eligible for the post he was on. He knowingly made the wrong decisions to get hug benefits. Also as mentioned above he was backed by General (r) Parvez Musharraf as the investigations were tried to be stopped.
So we can say that the board of directors was fully and knowingly involved in this huge corruption. They were able to do so because there was no check upon them anlso the whole system was helping them out.
- Company Ordinance, 1984, section 196, page 132-134