Reports are emerging from the Faisalabad region of Pakistan that a financial institution has yet to act on an alleged letter of credit (L/C) fraud that appears to have cost it the equivalent of more than US$5 million.

The alleged scam is reported to involve two exporters and the management of a financial institution who have drawn a total of 327 million rupees (Rs327 million) on fake L/Cs according to a local news source.

No action

"Despite knowing about this alleged fraud, the financial institution has not yet adopted a legal course," a finance ministry source reportedly told The News. It says that the alleged fraud has been known about for several months.

The newspaper says it has seen documents showing that the alleged perpetrators managed to withdraw Rs327 million on account of fake L/Cs from a branch located in the Faisalabad region.

Withdrawals

Quoting unnamed sources, The News says one party withdrew Rs130 million on account of 14 export bills, while the other party withdrew nearly Rs197 million.

The management of the financial institution is reported to have failed to deal properly with the bank that opened the L/C before it paid out on it and did not verify signatures related to advising banks on the documents.

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