A former Bank of Punjab (BOP) official has alleged that the bank's board of directors as well as its former president should bear the responsibility for extending money to a customer that had already defaulted on an inland letter of credit (L/C) facility.

The multi-billion rupee facility to Haris Steel Mills was restructured by the bank's former president, Hamesh Khan, in collaboration with BOP's board of directors, according to the bank's former executive vice president and head of credit division, Izat Khalil.

L/C default

The former bank official told local media that he thought it criminal on the part of BOP's board of directors to have kept quiet over the management's decision to reschedule the 9 billion Pakistani rupee (Rs9 billion) L/C facility.

Instead, the bank should have recovered its money from Haris Steel Mills, Khalil said.

Accusations

"The BOP Board of Directors is equally responsible along with the institution's former President Hamesh Khan for hoodwinking the public money of this quantum," according to Khalil.

"Remember, the BOP president does not have powers to sanction anything beyond Rs50 million to anybody, and we are talking here about a fraud in excess of Rs9 billion," he alleged.

Khalil retired from BOP in 2002 after a 37-year long banking career.

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