A letter of credit (L/C) fraud allegation revealed nearly five years ago in Pakistan has still not come to court, triggering media speculation that political considerations are stalling judicial proceedings.

The L/C fraud is one of several allegations of malfeasance at the Bank of Punjab (BOP).

Allegations

The alleged L/C fraud involves the extension of L/C facilities of up to 15 million rupees on the basis of fake ID cards.

Other allegations, revealed in a November 2006 internal audit of the bank, include the extension of huge credit facilities to certain companies.

Ghost companies

In some cases, huge loans appeared to have been extended to companies that do not exist.

In other cases, properties pledged as collateral were overvalued.

Speculation

Media in Pakistan is now reporting that the authorities are not keen on cases based on these allegations coming to court because the State Bank of Pakistan (SBP) knew about some of the BOP irregularities.

The press is also speculating that banking industry regulators have acted inefficiently in this matter.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.