SC seeks explanation about waived loans from 222 firms

Dawn

ISLAMABAD: The Supreme Court on Friday directed 222 companies and firms involved in written-off non-performing loans worth billions of rupees taken from commercial banks to come up with their explanations in a week.
The directive was issued by a three-judge bench headed by Chief Justice Mian Saqib Nisar which had taken up suo motu proceedings initiated in 2008 on press reports that the central bank had quietly allowed commercial banks to write off non-performing loans under a scheme introduced by then president Pervez Musharraf.
On May 13, the Supreme Court had asked the representatives of 222 industrial units to appear before it.
On Friday, the court asked them to furnish comprehensive reports to explain their position in a week.
“We will refer the matter of those companies to the National Accountability Bureau which had failed to return the loan,” the chief justice said.
Warns it may refer matter to NAB and even order confiscation of defaulters’ properties, assets
He warned that the court even might consider ordering confiscation of properties and assets of those defaulters who had got their loans writen off.
“We are surprised to learn that despite making default on returning the loans, the companies are still functioning and running their business,” the chief justice said.
Several lawyers representing different companies requested the chief justice to adjourn the matter and consider issuing notices by involving the Securities and Exchange Commission of Pakistan, but he retorted that the case could not be postponed rather it would be heard on a daily basis in view of the significance of the issue.
The court said that it had already issued public notices and those who did not want to make representation before the court should do it at their own risk.
Before postponing the hearing till June 19, the court made it clear that those companies which preferred to avoid court appearance should expect ex parte action against them.
Soon after the October 2002 elections, then finance minister Shaukat Aziz and his financial team at the State Bank of Pakistan (SBP) had approved the loan write-off scheme and subsequently the governor of the bank had issued the BPD Circular 29 of 2002 containing new guidelines on write-off of irrecoverable loans.
Instead of launching an effective campaign for the recovery of the loans, the SBP offered an incentive scheme to the banks and development finance institutions (DFIs) for waiving the loans of the organisations showing “loss” for three years.
On Feb 20, 2013, the Supreme Court had ordered making public a 2,200-page report compiled by one of its former judges, Syed Jamshed Ali Shah, as head of a three-member commission to probe bank loan write-offs worth billions of rupees from 1971 to 2009.
According to the report, the total amount of waived loans over the past four decades was Rs87 billion, the major chunk of which was Rs84.621bn between 1992 and 2009, whereas it was Rs2.3bn from 1971 to 1991.
In the report, the commission said that it had examined 740 cases and regretted that despite its efforts, the banks and the DFIs had not provided information about the loans sanctioned or written off on “other than business considerations”. It said that either the bankers were afraid of politicians or civil/military bureaucracy, or were privy to sanctioning of loans or factually the quantum of such loans was not high.
Meanwhile, the chief justice has taken notice of a letter of the registrar of the Sindh High Court to the Chief Court of Gilgit-Baltistan, asking it to provide protocol and security to a judge and his family who are on a visit to Gilgit-Baltistan. However, the notice does not identify for which judge the protocol was sought.
The chief justice asked the SHC registrar to explain under what authority the letter was written.

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