mehrangate mehran bank scandal corprate governance

1. [Type text] [Type text] [Type text]
Mehrangate Scam
A Black spot in Pakistan History
5/4/2014
L11422
Naveed Shoukat
National University of Modern
Languages

2. Mehrangate Scam Naveed Shoukat
National University of Modern Languages Page 1
Mehrangate scandal
Mehran bank was founded in 1991 as a public limited company. It was listed on KSE and
LSE. Its paid up capital was 300 million .there were six branches of Mehran bank all over the
Pakistan which were located in Karachi, Lahore, Mirpur-khas, Peshawar, Quetta and
Rawalpindi as per its annual report of 2004.its assets were consisted of 2.9 billion and its
stock market capitalization was 500 million.mr Younis Habib was the founder of Mehran
bank and working as chief operational officer. He was already convicted of 148.5 million
DBC fraud. From the beginning of its foundation there were doubts about it as per an article
licence of Mehran bank was issued as a result of a threat to governor Imtiaz Alam Hanfi at
that time by jam Sadiq Ali who was considered a mafia don .a few month later son of state
bank governor Imtiaz Alam Hanfi was kidnapped and shortly after that Mehran bank was
issued license and it started its working from 22nd of January 1992.
Scene started when chief of army staff general Mirza Aslam Baig were paid a loan of 140
million by ISI director-general lieutenant-general Asad Durrani and engineer-in-chief
lieutenant-general Javed Nasir through the owner of Mehran bank, Younis Habib. ISI
deposited funds to unite opponent of PPP and weak the Bhutto government
The scam came to sight when new ISI director-general lieutenant-general Javed Ashraf Qazi
decided to transfer ISI funds back to state owned banks as per official rules as a result
Mehran bank could not return back the money because of its poor financial position.
Investigation began and the coo of bank found accused for all this matter. After investigation
found that about 5 billion of amount was transferred to 39 fake and unknown accounts.
The case was initiated by then interior minister Asghar khan on 20 April in national
assembly. As per a list given by him following people found to be beneficiaries of this
scandal

3. Mehrangate Scam Naveed Shoukat
National University of Modern Languages Page 2
1. Jam Sadiq Ali ( Rs. 70 million through Habib bank and Rs. 150 million through
Mehran bank)
2. MQM’s Altaf Hussain ( Rs. 20 million)
3. Yusuf Memon for Ejazul Haq and Javed Hashmi (Rs. 50 million)
4. Nawaz Sharif (Rs. 6 million)
5. Chief minister Sindh Muzaffar Hussain shah through his secretary (Rs. 13 million);
6. Afaq Ahmad’s MQM Haqiqi (rs5 million)
7. Former sports minister Ajmal khan (rs1.4 million
8. Jam Mashooq Ali (Rs. 3.5 million)
9. Liaqat Jatoi (rs1 million)
10. Dost Mohammad Faizi (rs1 million)
11. Jam Haider (rs2 million).
In an interview to geo Mr. Yusuf said that he was not asked to made payment to MQM leader
Altaf Hussain
On 7 April 1994 Mr. Younis Habib was arrested on the complain of state bank of Pakistan for
committing fraud of DBC (dollar bearer certificate) amounting rs.36.7 and not to deposit the
receiving from its sale within 72 hours.
On 14 December 1995 Younis Habib found guilty for misuse of public funds and violating
banking rule and imprisoned for 10 years.
On Feb. 29 1996 petition filed against chief of army staff Mirza Aslam Baig by Asghar khan .
In this petition Asghar khan said all politician will be punished for receiving money from ISI
to destabilize the government
In 1995, State Bank of Pakistan made merger of Mehran Bank with National Bank of

4. Mehrangate Scam Naveed Shoukat
National University of Modern Languages Page 3
Pakistan (NBP). . In 1996 the NBP had to make full provision for Mehran's liabilities which
resulted in a net loss to NBP that year of Rs 1.26 billion. A petition was filed in objection
to the amalgamation of Mehran Bank by some of the share holders. High Court admitted
the petition against this amalgamation.
As a whole It was a realy big failure of corporate governance and regulatory authorities in
the history of Pakistan.

5. Mehrangate Scam Naveed Shoukat
National University of Modern Languages Page 4
References
i. Shaheen Sehbai (March 11, 2012) printed edition
ii. Ghazali, Abdus Sattar. "Islamic Pakistan: Illusions & Reality"
iii. M. H. Askari, "Aftermath of the MBL scam" - Dawn (1994)
iv. "NAB recovers Rs1.6bn in Mehran Bank case: Younis Habib’ s property sold"
DAWN.
v. Zaidi, Mujtaba Haider.( May 16, 2013) "Apathy towards Asghar Khan Case" The
Frontier Post Daily English Newspaper. http://pakistanthinktank.org/apathy-towards-
asghar-khan-case
vi. Dawn.com (8 March 2012). "Central character of Mehran Bank scandal resurfaces".
Dawn.com.
vii. Ghazali, Abdus Sattar. "Islamic Pakistan: Illusions & Reality".
viii. M. H. Askari,( 27 April,.1994) Aftermath of the MBL scam - Dawn
ix. DAWN. (02 Feb. 2009)"Nab Recovers Rs. 1.6 billion In Mehran Bank Case: Younus
Habib’s Property Sold" Dawn.com
x. Zaidi, Mujtaba Haider.( 16 May, 2013) "Apathy towards Asghar Khan Case" The
Frontier Post Daily English Newspaper.http://pakistanthinktank.org/apathy-towards-
asghar-khan-case
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http://www.thenews.com.pk/TodaysPrintDetail.aspx?ID=12853&Cat=13#
xiv. Dawn News,(07 Mar, 2012) "Central character of Mehran Bank scandal resurfaces"
dawn.com
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xvi. Rashid, A. (28 Apri, 1994,). "Private patronage. Review".
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xviii. The Nation (21 April, 1994,)."Mehran Bank’s fallout".
xix. (9 December,1996,).Mehran Bank report reveals massive irregularities. Financial
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xx. Rafique, M. (1996, July 2012). "MBL scam: Habib offers government to repay
money". Frontier post
xxi. Haqqani, H. (8 May,1994). "Mehrangate: Shaking up the political order". The
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xxii. Gauhar, A. (December ,1996,). "Mehran Bank report- a judicial parody". The Nation.
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xxv. Rafique, M. (1996, July 20)."MBL scam: Habib offers government to repay money".
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xxvi. The Pakistan Times(19 February, 1995)."Amalgamation of MBL with NBP approve"
xxvii. Iqbal S. (23 February, 1995). "SBP announces Mehran bank’s merger with NBP".
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xxviii. (23 June 1995)"SHC admits petition against MBL amalgamation". Financial Post.
xxix. Dawn (22 |April, 1994) "The Mehrangate Scandal".
xxx. The Nation(21 April, 1994) "Mehran Bank’s fallout.