Par­lia­men­tary body calls rep­re­sen­ta­tives of banks

The Pak Banker - - COMPANIES/BOSS -

A par­lia­men­tary body has de­cided to sum­mon rep­re­sen­ta­tives of three in­ter­na­tional banks, which the govern­ment hired for the pur­pose of is­su­ing $500 mil­lion Eu­robonds late last year, af­ter it sus­pected that money in­vested by 'for­eign­ers' had ac­tu­ally been flown in from Pak­istan.

The Se­nate Stand­ing Com­mit­tee on Fi­nance and Rev­enue de­cided to call the rep­re­sen­ta­tives af­ter the govern­ment could not sat­isfy the par­lia­men­tar­i­ans about the na­tion­al­ity of those who in­vested in the dol­lar-de­nom­i­nated Eu­robonds. The govern­ment on Wed­nes­day gave the briefing dur­ing an in-cam­era meet­ing but did not give any ma­te­rial in­for­ma­tion, said a sen­a­tor while speak­ing on con­di­tion of anonymity.

In Septem­ber last year, the govern­ment had is­sued a $500 mil­lion Eurobond with a ma­tu­rity pe­riod of ten years in the in­ter­na­tional mar­ket at an in­ter­est rate of 8.25%. The govern­ment had paid 6.12% over and above the US trea­sury rate for ten-year bond - a cost that high­lighted in­vestors' sen­ti­ments about the health of the coun­try's econ­omy.

How­ever, the govern­ment's de­ci­sion to go ahead with the is­sue de­spite un­favourable cir­cum­stances fu­elled spec­u­la­tions that some dig­ni­taries had availed the op­por­tu­nity.

"We have in­for­ma­tion that some Pak­ista­nis ac­tu­ally in­vested in the Eu­robonds and the money flew from here," said Sen­a­tor Saleem Mand­vi­walla, chair­man of the stand­ing com­mit­tee af­ter the meet­ing. He said that de­spite the in­for­ma­tion, Sec­re­tary Fi­nance Dr Waqar Ma­sood in­sisted that Pak­ista­nis did not in­vest in the Eu­robonds.

Mand­vi­walla said that in or­der to dig out the truth the com­mit­tee de­cided to call the fi­nan­cial ad­vis­ers that had been hired to carry out the trans­ac­tion. He said the rep­re­sen­ta­tives of the Citibank, Deutsche Bank and Stan­dard Char­tered Bank were called to ap­pear in the next meet­ing.

The chair­man said that the fi­nan­cial ad­vis­ers had the ac­count de­tails of those who in­vested in the Eu­robonds. The Citibank and Deutsche Bank were also fi­nan­cial ad­vis­ers for the last two bond of­fers when Pak­istan raised $3 bil­lion.

Mand­vi­walla said that the fi­nance sec­re­tary told the com­mit­tee that three Pak­istani banks in­clud­ing Bank Alfalah and United Bank Lim­ited also in­vested in the Eu­robonds. How­ever, Ma­sood said that the off-shore branches of th­ese banks in­vested in the bonds and money did not go from Pak­istan. Roughly 14% of the $500 mil­lion were in­vested by Pak­istani banks.

Ma­sood said that State Bank of Pak­istan reg­u­lates the for­eign cur­rency regime and only the cen­tral bank can tell whether some Pak­ista­nis in­vested in the Eu­robonds. The SBP rep­re­sen­ta­tive was not present in the in-cam­era meet­ing.

The fi­nance sec­re­tary said that the of­fi­cial cir­cu­lar for the trans­ac­tion barred lo­cals from in­vest­ing in the bonds.

The com­mit­tee mem­bers also ex­pressed reser­va­tions over the source of re­mit­tances, ar­gu­ing that a sig­nif­i­cant por­tion of it was ac­tu­ally black money that was be­ing routed through re­mit­tances back into Pak­istan.

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