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The Institute of Forensic Accountants of Pakistan (IFAP)

(Set up under license of Federal Government of Pakistan issued by Registrar Joint Stock Companies Under the Societies Registration Act of XXI of 1860)

January 2012 Monthly

The Forensic Accountant (FA)

(Official organ of The Institute of Forensic Accountants of Pakistan (IFAP)

Look Inside A
Articles How to Prevent Financial Fraud in your Organization, 11, 12 President Communication, By: FA Barrister Sohail Nawaz - President IFAP, 4, 5 Recognizing the Elements of Fraud, By: FA Barrister Umer Abdullah - Member Executive Council IFAP, 6-11 Top Corporate Governance Stories of 2011, 12, 13

IFAP About, 74 Executive Council / Board of Directors, 75 MoUs /Reciprocal Arrangements, 73 Objectives, 74 Recent / New Members, 73

News International News ACCA News, 71, 72 ACFE News, 48-54 AICPA News, 66-68 AML & Financial Crime News, 54, 55 CIMA News, 72, 73 FASB News, 65, 66 ICAEW News, 68-71 IFAC News, 61, 62 IFAP News, 73

IFRS News, 62-65 Serious Fraud Office (SFO NZ) News, 59-61 Serious Fraud Office (SFO UK) News, 57-59 Transparency International News, 55, 56 National News FBR News, 32, 33 Fraud & Corruption News, 13-28 NAB News, 39-41 SBP News, 34-39 SECP News, 28-32 Transparency International Pakistan News, 41-48

President Communication
Dear Professional Colleagues,
"There's no question that the Enrons and WorldComs of the world have heightened the need for better governance, and that momentum has carried all over the globe." The fast-changing world of information technology and the exponential increase in the use of computer systems threaten the forensic auditing fraternity. The technology used by criminals and fraudsters is changing constantly and forensic auditors need to stay on top of their game to prevent and detect these crimes. Through the growth of the Internet and connectivity technology, the world is faced with opportunities for crime and fraud that were not available before. Forensic auditing techniques need to evolve just as fast as the techniques used by hackers and criminals. This can be done by employing former hackers to write security tools to aid Forensic Accountants/Auditors. One caveat, though, is that these security tools should not be exploitable by hackers and fraudsters to aid them to commit their crimes. Employees and ex-employees with a thorough knowledge of the computer systems of an organization can pose a significant risk to the security of the system. By changing access control procedures after an employee has left the organization, the threat of an external attack by the former employee can be minimized. Surprise audits can assist to control the risk of current employees perpetrating fraud. A risk assessment can also help to reduce the likelihood of fraud. Prosecuting computer crime and computer-based fraud is becoming increasingly difficult to accomplish. Reforms in laws and statutes of specific countries, as well as extradition laws and international cooperation, are necessary to bring computer criminals to justice. The rate at which the law is adapted to accommodate computer crime needs to be increased if such crimes are to be prosecuted successfully. Case law can help to expedite these reforms. The law and the courts are not evolving fast enough to deal with computer crimes. New laws and statutes regarding information technology often take a long time to prove useful. The law needs to evolve alongside forensic investigations to successfully transform and allow for the change in technology and the way business is conducted in the world. The education of law enforcement, legislators and the judiciary in computer literacy will also ease the task of prosecuting computer criminals. The forensic auditor is only as good as the follow-through with successful litigation. Responsibility for preventing and detecting fraud rest with management entities. Although the Forensic Accountant/Auditor is not and cannot be held responsible for preventing fraud and errors, in your work, he can have a positive role in preventing fraud and errors by deterring their occurrence. The Forensic Accountant/Auditor should plan and perform the audit with an attitude of professional skepticism, recognizing that condition or events may be found that indicate that fraud or error may exist. Based on the audit risk assessment, Forensic Accountant/Auditor should develop programs to audit procedures by which to obtain reasonable assurance that the financial statements in their entirety, all significant errors and fraud have been identified. It is expected that the Forensic Accountant/Auditor to implement procedures that will lead to the discovery of errors or fraud without significant impact on the financial statements can not be held responsible for undetected such irregularities. The Forensic Accountant/Auditor should communicate with the management of his client. He should ask the management information concerning any significant fraud or error has been detected in order to detect key problems that could lead to certain activities, the implementation of audit procedures more than usual However the Forensic Accountant/Auditor faces the risk inevitable that some significant errors to be detected, even if the audit is planned and done properly. With trillions of dollars in capital sailing the globe in search of investments, the shareholders' crusade for more open, well-run companies is gaining strength across many major and emerging markets. In what some call a worldwide corporate-governance movement, shareholders are pushing for stronger corporate-governance laws, teaming with investors from different countries and negotiating behind the scenes with businesses. In earlier years, it was hard for shareholders to dig up details from thousands of

global companies on their finances, their directors, executives' pay packages and other information critical to making investment moves. Directors, regulators and shareholders, but also policymakers and the general public, need to pay more attention to corporate governance. This tells us how firms operate, their motives and principles, their reporting lines, who they are accountable to, and how they manage profit, remuneration and, in the case of many financial firms, other people's money. When times were good, too many people took their eye off the ball and now we see the consequences. The public outcry has been loud and understandable, not least in relation to executive pay. And even some top executives have now admitted the lack of relationship between pay and performance and called for a salaries shake-up. We now realize that constantly rising share prices is not necessarily a sign of good corporate governance. In fact, as recent history shows, it could actually be the opposite. Forensic accountancy is often no more than presentation of financial issues in a form that is easily understood by disputing parties. This includes the police or other regulators, the lawyers, the Judge and the Jury. Complexity of financial accounts is often cited as a red flag of fraud. Complex group structures with inter-company transactions and charges often cloud the simple facts of the business taking place. Sometimes the reason is to cover up fraud, but often it can simply be the policy of the company owners structuring their business innocently. Many businesses will use a different bank account for each strand of their business operation, often having several accounts for each company. Then they might have several companies to act as vehicles for different aspects of their activities. Thus one business may run with one company and one bank account, whereas a similar business may have dozens of bank accounts and a straggling group of companies. The complexity of the group might mean that if a dispute arose, forensic accounting would be needed to break things down to a simple level and present almost as if the business was like the single company. Many solicitors working in all areas of the law routinely use Forensic Accountants (FAs) to assist them with the financial and business aspects of a case. However, some solicitors may be faced with the need to instruct an expert accountant for the first time, or must explain to a particularly demanding client why there is a need to spend additional money on appointing another person to the team! Victims of fraud may wonder if spending more money investigating their loss is worth it. This examines why forensic accountancy adds value to any fraud matter, business crime defense or confiscation proceedings. Any criminal or civil dispute involving fraud, money laundering or matters of finance generally tend to be more complex than other disputes. The reason why loss has occurred is often due to the confusing nature of money transactions hiding somebodys attempts to steal. Sometimes business losses are targeted by the regulators as frauds simply because the money trail is confusing! In short, there are many instances where it is essential that a clear and succinct picture is drawn up of any particular transaction, or series of transactions, so that a complete understanding is facilitated for all parties, many of whom do not have a clear or detailed understanding of finance issues. Financial crimes threaten your organization at multiple points of vulnerability. Focusing on a single channel or line of business can hinder management visibility and allow fraud and money laundering to go undetected. A single, holistic management framework that integrates disparate detection systems with alert and case management can automate crime prevention, helping to protect your organization from the financial and reputational loss associated with financial crimes. Leveraging detection systems for both fraud prevention and detection and anti-money laundering (AML) processes helps reduce risk and improve analyst efficiency. Financial services organizations that undertake a comprehensive, structured approach to the prevention and detection of fraud and financial crime can obtain benefits that contribute to higher performance as well as reductions in fraud loss. Activities aimed at improving data quality can support better business intelligence, while standardization of processes throughout the organization improves financial services organizations overall processing efficiency. FA Barrister Sohail Nawaz President IFAP January 31, 2012

Recognizing the Elements of Fraud

By FA Barrister Umer Abdullah (Member Executive Council IFAP) A government agency official directs the owner of a company doing business under contract to provide equipment and contractor staff that will be used to perform non-contract related work for the agency. When seeking payment, the contractor bills the hours for non-contract work as having been expended on contract related activity. The billing occurs with the knowledge of the agency official, and the agency official instructs lower level staff to approve the bill for payment from agency accounts. Because the contract is part of a federally funded program, the agency in turn files a claim for reimbursement with the federal government, which the federal government, in good faith, pays. Some people might say that the agency official is a creative manager. I'd say that agency official is a crook. FRAUD occurs when all of the following elements exist: An individual or an organization intentionally makes an untrue representation about an important fact or event; The untrue representation is believed by the victim (the person or organization to whom the representation has been made); The victim relies upon and acts upon the untrue representation; The victim suffers loss of money and/or property as a result of relying upon and acting upon the untrue representation.

Fraud can be for the benefit and gain of an individual, or for the benefit and gain of an organizational entity or program. When an individual commits fraud, the benefits and gains may be direct (receipt of money or property), or indirect (reward of promotions, bonuses, power and influence). When an organization (actually an employee acting on behalf of the organization) commits fraud, the benefits and gains to the organization are usually direct, in the form of financial gain. Some states have specific fraud statutes. Other states may have specific laws to deal with bribery and corruption; and may prosecute other types of fraud under larceny, robbery, embezzlement or other specific statutes. Whenever the U.S.A government is injured through fraud, the matter falls within the jurisdiction of the US Justice Department and the federal courts. Therefore, a fraud could be prosecuted as a felony under both state and federal laws. In addition, under U.S.A federal Law, anyone who engages in fraudulent activity and uses telephones, telegraph and/or the Postal Service to discuss or either send or receive correspondence or documents in furtherance of the fraud, can be prosecuted for felony mail fraud and/or wire fraud; and if two or more persons act in collusion to defraud, U.S.A federal conspiracy statutes also apply. Also, under U.S. federal law, anyone who has knowledge that a felony fraud has actually been committed against the U.S.A government; fails to report the fraud to appropriate authorities; and helps to conceal the fraud by giving false information, concealing facts, obstructing justice, or taking some other positive action, is also guilty of a felony crime punishable by up to three years in federal prison. In addition to the general laws governing fraud, there are U.S.A laws that deal with and/or regulate specific industries and business transactions. These laws also usually contain specific statutes for prosecuting fraud. Some examples would be statutes pertaining to bank fraud, forgery or insurance fraud. Generally, there are twelve crimes that fall under the umbrella of Fraud.

1. Bribery
Bribery is the giving, receiving, offering, or soliciting of any "thing of value" in order to influence an official in the performance of, or failure to perform, the lawful duties of that official. This includes influencing or

soliciting the commission, or collusion to commit, any other type of fraud; or influencing an official, or soliciting by an official, to do, or omit to do, any act that violates the lawful duty of that official. Bribery defrauds the victim (usually an organization or political entity) of the right to honest and loyal services from those employed by the victim.

2. Commercial Bribery
Commercial bribery is the giving, receiving, offering or soliciting of any "thing of value" in order to influence a business decision without the victim's (usually a business organization's) knowledge or consent.

3. Illegal Gratuity
An illegal gratuity is the giving, receiving, offering or soliciting, after the fact, of any "thing of value" for or because of an official act that has been taken. Following are examples of bribery and illegal gratuities: A government inspector solicits payment from the owner of a business regulated by a government agency. In return, the inspector fails to report important safety and financial violations discovered during the last inspection. In this situation, the victims are those who rely upon the honest reporting of deficiencies, and the loss is salary paid to the inspector for work not performed, plus any damages that result from failure to perform. The owner of a company doing business under contract for an organization knows that the manager responsible for overseeing the contractor's activities plays an influential role in deciding whether or not the contractor is satisfactorily meeting the performance terms and conditions of the contract. The manager uses personal influence and position to assure that the contractor receives satisfactory performance evaluations and is paid, even though the contractor's work is substandard, and lower level staff in the organization have legitimate concerns about the cost of the contract and the contractor's ability to perform. The contractor secretly gives financial and other incentives to the manager in return. In this situation, the victims are those who expect satisfactory performance of contract terms. The loss is dollars paid for unsatisfactory work. A senior organization official accepts financial and other incentives from a contractor to assure that a request for proposals is written in such a way that only that one contractor will be able to submit a satisfactory bid proposal. In addition, the senior official uses personal influence and position to persuade other senior officials that a good faith effort to obtain competitive bids has been made. As a result, the favored contractor wins the bid award at a noncompetitive price. In addition, once the contract is in effect, the same senior official approves and justifies several high cost contract amendments, for which additional illegal gratuities are received. In this situation, the victims are those who expect a fair and impartial competitive procurement process. The loss is dollars needlessly spent as a result of noncompetitive pricing and price gouging.

4. Conflict of Interest
A conflict of interest occurs when a person or organization acts on behalf of another individual or organization; and has, or appears to have, a hidden bias or self-interest in the activity undertaken; and the hidden bias or self-interest is actually or potentially adverse to the interests of the individual or organization being represented; and the hidden bias or self-interest is not made known to the individual or organization being represented. When a person's conflict of interest results in economic or financial loss to the individual or organization on whose behalf the person is acting, then fraud has occurred. Conflict of interest can exist on its own, or can be an intricate part of other frauds such as bribery and illegal gratuities. Conflict of interest laws apply to government employees and those doing business with government. In the non-public sector,

conflict of interest may not be a prosecutable offense, although the criminal results of such conflict would be. The examples given for bribery and illegal gratuities are also examples of conflict of interest resulting in fraud. Conflict of interest can also occur and result in fraud without the presence of bribery and illegal gratuities. This happens when an individual or organization acting on behalf of another individual or organization has a hidden financial interest in the outcome of an event or transaction.

The typical example is that of a company official or employee, or an immediate relative of an official or employee, who has a hidden financial interest (stock or direct ownership) in a vendor doing business with the company. If the official or employee is in a position to influence the amount of business the vendor does with the company, then a conflict of interest exists. If that conflict of interest results in unnecessary orders being filled or paying higher than fair market prices for the goods or services, then fraud has occurred. This is because the involved individuals will benefit financially through higher valuation of stock or direct distribution of proceeds from doing business with the company. The victims here are those who expect company officials and employees to act in the best interests of the company, rather than in selfinterest. The loss is dollars needlessly spent on overpriced or unnecessary goods and services. Conflict of interest can also exist and result in fraud when an organization has a hidden interest or benefit from the outcome of an event or transaction. In a government environment, for example, this more subtle type of conflict of interest could occur if government officials, acting on behalf of the government, either alone or in conspiracy with providers of services, obtain state and federal funds and use those funds for other than intended program purposes. In this instance, the government agency, in acting as the conduit of state and federal funds, has a hidden self-interest that is actually or potentially adverse to the interests of the state and federal government. An example of this would be the following situation:-

An agency official directs the owner of a company doing business under contract with the agency to provide the agency with equipment and contractor staff that will be used to perform work for the agency that is unrelated to the terms and conditions of the contract, and unrelated to the federal program under which the contract is funded. This favor and benefit creates a conflict of interest because there is no longer an arms-length relationship between the agency, which acts on behalf of the government, and the contractor. When seeking payment, if the contractor intentionally bills the hours for non-contract work as having been expended on contract related activity, then the contractor has committed fraud. If the fraudulent billing occurs with the knowledge of the agency official; and/or the agency official instructs lower level staff to approve the bill for payment from agency accounts; and the agency in turn files a claim for reimbursement with the federal government, which the federal government, in good faith, pays, then the agency official has also committed fraud under federal law. The example given is a fraudulent act resulting from conflict of interest because the actions of selfinterest by the contractor and the official acting on behalf of the agency are hidden from the state and federal governments, and constitutes obtaining state and federal funds under false pretense (see False Statements and False Claims, below). The victims are the state and the federal government, from which the funds were obtained, and the loss is the funds illegally obtained.

5. False Statements and False Claims

A false statement fraud and false claims fraud occur whenever anyone knowingly and willfully falsifies a material fact or makes a false or fictitious representation or files a false or fictitious claim that results in economic or financial loss to the party to whom the false representation has been made. Example of False Statements and False Claims: An employee prepares and submits a monthly payroll time report, and intentionally falsifies the document by not reporting unpaid leave taken while the supervisor was away on business. As a

result, the employee is paid for the time not worked. The same principle applies to an employee who falsifies a travel voucher by reporting expenses that were not incurred. The victim is the employer, and the loss is the money wrongfully paid to the employee. A senior company official disagrees with a court decision for which all legal remedies have been exhausted, and which the company must therefore comply with. The decision has a significant financial impact on operations. The senior official knowingly and intentionally continues practices that the court decision has prohibited. The failure to comply with the ruling results in the chief operating officer filing false statements, reports and vouchers with the government. The victims are those who rely on accurate reporting to the government, and the loss is funds illegally obtained or expended; or economic or property losses incurred because of the improper reporting. A company performs contract work for a government agency. Under the direction of company managers staff charge time to a government program that reimburses 75% of incurred costs, instead of charging the time to the actual government program that they worked on, which only reimburses 50% of incurred costs. The employees recognize that the wrong program is being charged for their time, but are unaware of the differing reimbursement percentages. When the employees question their instructions, the company managers tell them not to worry since both programs are paid from government funds, and the cross-charging doesn't really matter. The government is subsequently fraudulently mischarged as a result. The company managers have engaged in fraudulent activity that results in false statements, false claims, and probably mail fraud. Under U.S. law, the employees who filed the false time reports are guilty of conspiracy to defraud. Though the employees neither benefited from the mischarging, nor were aware that the mischarging was illegal, they are also parties to false statements, false claims mail fraud and conspiracy statutes. The employees knew they were improperly charging their time, and by falsely preparing the time documents, the employees concealed the fraud. Whether they knew that the mischarging was illegal is not a consideration. As a result of the employees' actions, when the government was billed for reimbursement, the company managers were able to defraud the government of costs that should have been borne by the company.

6. Extortion
Extortion occurs when a person or organization obtains something from another individual or organization under color of official office and/or through the use of actual or threatened force or fear, including fear of economic or fiscal loss. Examples of Extortion: A government inspector solicits payment from the owner of a business regulated by a government agency, and in order to secure the payment, the inspector threatens the business owner with charges of severe code violations and heavy fines. Faced with a threat of economic and fiscal loss, the business owner makes the payment. In this situation, the victims are those who rely upon the honest reporting of safety issues and deficiencies. The loss is salary paid to the inspector for work not performed and the money extorted from the business. An official responsible for contract procurements also has a great deal of influence among contract procurement officers in other companies and government agencies. The official informs a contractor that in order to continue receiving contracts, the contractor must provide special gratuities, favors or services without compensation to the contractor. If the contractor fails to cooperate, the official threatens to blacklist the contractor and cut the contractor off from any further work. Faced with a threat of economic and fiscal loss, the contractor complies. In this case, the victims are those who rely upon the official to carry out duties and responsibilities with honesty and integrity. The loss is the cost to the contractor of providing non-reimbursed services.

7. Mail Fraud and Wire Fraud

Under U.S. federal law, anyone who engages in fraudulent activity and uses telephones, telegraph and/or the U.S. Postal Service to discuss or either send or receive correspondence or documents in furtherance of the fraud, can be prosecuted for felony mail fraud and/or wire fraud. Examples of Mail and Wire fraud:If any of the perpetrators of the previously described crimes used the postal system to mail reimbursement claims, mail bid announcements, exchange correspondence with co-conspirators or victims, submit/return contract amendments, or in any way used the postal system to carry out the fraud, then they can be prosecuted for mail fraud. Similarly, if a modem was used to electronically exchange data or file claims related to the fraud; or if co-conspirators discussed related activities over the telephones or in any way used telephones or telegraph to carry out the fraud, then they can be prosecuted for wire fraud.

8. Conspiracy
Conspiracy occurs when there is the specific intent that a crime be performed; and there is an agreement with another person to engage in or cause that crime to be performed, and one of the conspirators commits an overt act in furtherance of the conspiracy. At state and local levels, there are various degrees of conspiracy, ranging from misdemeanors to felonies, depending upon the crime that is committed. Under U.S. federal law, conspiracy is a felony. When two or more persons conspire to defraud the United States, or any agency of the United States, for any purpose or in any manner, each person is subject to a $10,000 fine and imprisonment of five years. Examples of Conspiracy All of the crimes previously described could be prosecuted under conspiracy statutes if the elements of conspiracy exist.

9. Breach of Fiduciary Duty

A breach of fiduciary duty occurs when a person, who is employed by and owes a duty to an organization or another individual, does something that is not in the best financial interest of that organization or individual. Breach of fiduciary duty is a civil matter, not a criminal offense. However, as a civil offense, the elements of proof required for conviction are considerably simpler than for criminal fraud, and it is not necessary to prove wrongful intent.

Examples of Breach of Fiduciary Duty: All the previously cited examples of bribery, illegal gratuities, fraudulent conflict of interest, and making false statements are felony crimes. They are also breaches of fiduciary duty. This means that in addition to criminal charges, the persons who have committed wrongful acts can be sued for damages in civil court. There are other types of breach of fiduciary duty. These fall under the umbrella of gross negligence, gross mismanagement, and abuse. An example would be failure to design adequate systems of internal controls that ensure the accuracy of data and information upon which company funds are disbursed. The victim is the organization, and the loss is the funds inappropriately disbursed.

11. Embezzlement
Embezzlement is the fraudulent conversion of personal property by a person in possession of that property where the possession was obtained pursuant to a trust relationship. Examples of Embezzlement: Typical examples are the use of a kiting or lapping scheme to steal money.


Kiting can occur when a bank allows withdrawals to be made on checks deposited by a customer but for which the actual funds have not yet been collected from the bank on which the check is drawn. In reality, the cash could either be in transit or non-existent. Goods and services are then purchased, or cash is obtained from legitimate sources, by writing checks against non-existent account balances. The fraud is perpetuated by continuous "kiting" from bank to bank checks that are drawn on non-existent funds. In a kiting scheme, the victim is usually the bank that has paid out on uncollected deposits, and the loss is the money paid out by the bank. Lapping is the use of funds received from payment of accounts receivable to cover a theft of cash. The perpetrator initially steals cash tendered in payment of an outstanding receivable. To cover the initial theft, a payment made by a second customer is charged against the account from which the initial theft was made, thus "lapping" the two accounts. Payment from a third customer is used to cover the second account, and so on. The victim in a lapping scheme is usually the company from whom the money was stolen, and the loss is the amount of money stolen.

12. Failure to Report a Federal Felony to Appropriate U.S. Law Enforcement Authorities
If an individual: knows that a fraudulent act has been committed under federal law; and fails to report the fraudulent act to appropriate U.S. law enforcement authorities; and then actively engages in concealing the fraudulent act or evidence of the fraudulent act; then that individual is guilty of a felony crime punishable by up to three years in U.S. federal prison. Examples of acts to conceal fraud include: changing, hiding or destroying official records in order to conceal the fraudulent act; suppression of evidence regarding the fraudulent act; directly or indirectly causing others to withhold or suppress information pertaining to the fraudulent act; making false statements to investigators regarding the fraudulent act; or any other affirmative action designed to conceal the fraudulent act from authorities. Consider the implications of this for auditors: Since the auditor's primary duty is to examine, evaluate and report, if an auditor becomes aware of fraudulent activity, and fails to report it to appropriate law enforcement authorities a prosecutor could argue that the failure to report is an "affirmative act" by the auditor to conceal the fraud.

How to prevent financial fraud in your organization

Financial fraud affects not only the person who commits the act, but also casts the company involved in a bad light. The unfortunate truth is that while financial fraud is usually heavily publicized if the company at the center of the controversy is large or publicly traded, these acts of dishonesty can also occur in small and medium sized businesses and perhaps these companies are more susceptible to fraud because there may be a lack of measures in place to prevent them from taking place. The following are a few steps that can help any organization to reduce the incidence of financial fraud, regardless of its size:-

Hire the Right People

The first step to stamping out financial fraud is to be vigilant about the people you hire. If you take the time to choose the right people from the start you are less likely to run into problems later on. This means following up on references, doing background checks if necessary and using proven interview techniques to detect personality traits that may raise red flags before you offer a contract for employment.

Adopt Proper Financial Standards

There are internationally accepted standards of conduct surrounding financial transactions and depending on the industry you are in you may be legally required to train your employees to understand and accept them before they are hired. The financial industry for instance routinely deals with sensitive information and there is ample opportunity for all types of financial fraud to occur, so there are strict measures in place to govern companies in this industry. Even if you are not mandated to follow these standards it is good practice to use them as a guideline for how you conduct business.


Make Employees Aware of Rules and Procedures

It is not enough to make a high level decision to accept standards to deter financial fraud, but the rules and procedures must be passed down to all levels of the company for them to be effective. Regular meetings and workshops should be held to sensitize employees on the issues and possible breaches of policy that may make room for financial fraud to occur.

Conduct Annual Audits

Although it may not be mandatory for your company to undergo an annual audit this type of action sends a strong message that you are serious about detecting and dealing with financial fraud. An annual audit also provides an opportunity to highlight issues of inefficiency that may otherwise go uninterrupted for a long time, so there are other benefits as well. There are a number of things you can do to prevent financial fraud in your organization. The tips listed above can go a long way towards creating a creating an environment that is free from any illegal action and one that engenders the trust of your consumers and clients.

Top Corporate Governance Stories of 2011

From the collapse of MF Global in the U.S., to a string of bailouts in the European banking sector, 2011 was a year filled with high-profile corporate governance stories. Below are a few highlights from Governance Perspective stories in 2011.

Sino-Forest- A Canada-Listed Chinese Lumber Company Comes Crashing Down

In June 2011 Sino-Forest Corporation, a Canadian-listed Chinese forestry company, saw its share price fall by more than 80% after activist investor Muddy Waters claimed that the company lacks legal rights to much of the land it claims to own and that there was reason to suspect stratospheric fraud. In 2011, a number of institutional investors criticized Sino-Forest for not following globally recognized best practices when it comes to corporate governance. For example, investors have raised concerns about the fact that Sino-Forest director Simon Murray attended fewer than 1/5 of his regularly scheduled board and committee meetings. Other investors, like the Ontario Teachers Pension Plan (OTPP) raised concerns about the fact that Sino-Forest never separated the roles of Chairman and CEO. In June, I wrote an article explaining that according to data from GMI, the New York City based corporate governance research firm, only 1/3 of the directors at Chinese-listed corporations are independent, compared to 75% in the U.S. Furthermore, only a fifth of the independent directors at major Chinese corporations appear to have significant relevant industry experience. Only two major companies in China have appointed an independent director who is a risk management expert. In the second half of 2011, Sino-Forest saw more trouble. In August the company launched an internal investigation into Muddy Waters claims, became the target of an investor lawsuit, and saw its CEO resign. In November, Canadian regulators opened an investigation into the companys finances, and in December, Sino-Forest missed a $10 million interest payment, defaulting on $1.8 billion worth of debt. Governance policies at Chinese listed companies continue to face scrutiny from international investors.

Olympus in Focus: Japanese Camera-Maker Faces Serious Governance Criticism

In 2011 Olympus found itself at the center of the largest corporate governance scandal in Japans recent history. In October, 2011 I wrote an article explaining that the companys British CEO, Michael Woodford, had been summarily fired by the companys board, allegedly after he raised questions about massive advisory fees Olympus made in connection to a recent deal. In October, 2011 Olympus acknowledged that it paid a record-breaking $687 million to financial advisers for its purchase of a U.K. company, confirming a key allegation made by Mr. Woodford and contradicting statements by the companys chairman Tsuyoshi Kikukawa, who had previously said the


payment totaled about 30B yen ($390M). The company has yet to explain why it paid advisory fees worth more than a third of the value of the deal to two financial companies, one of which is based in the Cayman Islands. In an October, 2011 article I explained that it seems clear that the companys board has failed to effectively provide independent oversight on behalf of shareholders. Only three of the companys 14 directors are independent. None of the companys independent directors have experience in the camera or electronics industries. One of the companys independent directors is a medical doctor. Furthermore, not one independent director appears to have significant experience in risk management. Woodford, Olympuss former CEO, has stated publicly that he commissioned Pricewaterhouse Coopers, the accounting firm, to conduct an independent investigation, the results of which he distributed to the board of directors. He said that the day before he was fired he had called for Olympus executives, including Mr. Kikukawa, the companys 71 year old Chairman and former CEO, to resign. Olympus denied the allegations of misconduct, but in the end, the company found itself targeted by investigations by the U.S. Federal Bureau of Investigation, the U.K.s Serious Fraud Office, and by authorities in Japan. In late October, Mr. Kikukawa resigned as Olympuss chairman. The company announced that its entire board would resign by early 2012. In December, Olympus announced a $1 billion hole in its balance sheet, and saw its offices raided by Japanese prosecutors. The companys legal troubles will no doubt continue in 2012.

Murdochs Management Style Comes under Fire

In July, 2011 I wrote an article explaining that as the result of an ongoing investigation into allegations of phone hacking and other illegal conduct by News Corp employees and affiliates, Rupert Murdoch, one of the worlds highest profile media magnates, had to testify before the U.K.s parliament. He told the audience that this is the most humbled day of [his] life, but also added that News of the World accounts for less than one percent of our company, which employs 55,000 people around the globe. I explained that for a number of analysts the current scandals are a sign of much deeper management problems. For decades, Mr. Murdoch has held the dual roles of Chairman and CEO, stifled internal dissent, and shown no qualms about appointing his children to senior executive positions, rather than looking out to a field of better qualified external candidates. In 2011 as authorities in the U.K. arrested one former employee after another, Murdoch closed down his News of the World subsidiary, and saw his management style face unprecedented criticism. In July, Murdoch told Parliament that in spite of the scandal, he thinks that he is still the best person to clean this [mess] up. In a subsequent article in October, 2011 I explained that News Corp, although publicly traded, features a dual class share structure that allows Mr. Murdoch to effectively control director elections and other matters that are subject to shareholder vote, even though he does not own a majority of the companys outstanding shares. Given the companys governance structure, it was no surprise when at the companys 2011 Annual Meeting, Rupert and his slate of directors were re-elected to News Corps board. On December 21, 2011 a 52 year old British police woman was arrested in connection to the News Corp scandal. By all accounts, News Corps legal troubles will continue in 2012. Mr. Murdoch, however, has not indicated that he will loosen his grip on the board, or appoint an independent chairman.

National News
Fraud & Corruption News
Expensive Government land on Murree Road allotted illegally
Government land costing billions of rupees on the Murree Road has allegedly been allotted. While widening the Murree Road in 1998-99, the then Punjab chief minister, who also holds the post now, had decided to allot alternate land instead of financial compensation to some of the affected persons.


Working swiftly, the Highways Department first got transferred six acres of land on the main Murree Road owned by the Agriculture Department in their own names and then transferred it illegally to fake victims. The Revenue department had also declared the allotment illegal six years back. After probe, it was learnt that land was provided to Raja Abdul Latif without any legal justification ignoring the legal claimant Zia Rashid. Likewise, Raja Shafqat, son of Raja Mohammad Siddiq, was also allotted land while the actual claimant, Mohammad Hashim Khan, son of Haji Manzoor Hussain, was ignored. Two other real claimants Mohammad Usman and JamilaAkhtar were also not included in the list. A six-member committee consisting of officials of the Revenue and Highways departments in the light of a detailed report of tehsildar Rawalpindi had ruled that all bogus allotments may be cancelled and the land illegally allotted maybe got vacated. The committee had also ruled that the genuine affected persons may be given alternate lands elsewhere.

OGRA`s move robbed consumers of Rs.70 billion

If the gas shortage were not bad enough, the ineptness of those running the sector simply compounds an already critical situation. Gas consumers are reported to have suffered a whopping Rs.70 billion loss over three years thanks to a single decision of the Oil and Gas Regulatory Authority (OGRA) to hike the prices in a violation of then rules. And worse still, this `wrong` decision to increase prices was leaked in advance allowing powerful brokers to pick up extra stocks of gas companies from the market and make a killing. No wonder then that the initial information about this scandal, thanks to an inquiry conducted under the orders of the Supreme Court, has galvanized the National Accountability Bureau (NAB) into action. The bureau has sought permission to start formal criminal investigations with the aim to fix responsibility for the `improper` decision. The story, according to the documentary evidence available with Dawn, starts back in Sept 2010. Then OGRA made a substantial departure from its own previous decisions and targets, and set losses at seven per cent for 2009-10. In the past, it estimated unaccounted for gas (UFG) losses at 4.5-5.5 per cent. As a result, there was a 13 per cent increase in gas tariff for that year, followed by another 15 per cent increase in August last year and about 14 per cent with effect from Jan 1, 2011, putting the total estimated loss at over Rs.70 billion. This burdened the gas consumers with Rs.37 billion ( Rs.20 billion on account of Sui Southern Gas Company and Rs.16.6 billion for Sui Northern Gas Company Limited). On the other hand, the shareholders of the two companies reaped windfall profits. But this is not the end of this story of wrongdoing and exploitation of the consumer. The latter were also robbed of their subsidies which were rerouted to the companies instead. Informed sources said the Sept 2010 decision to increase UFG to seven per cent and to treat revenues from operating assets as non operating income was shared by OGRA leaders with powerful stock exchange brokers sitting on the board of directors of the gas companies. Consequently, the SSGCL share being traded at the stock exchange for Rs.16 on Sept 23 jumped to Rs.36 in a matter of days. Officials said this decision violated the World Bank and Asian Development Bank loan conditions. These conditions specified that required late payment surcharge meter manufacturing profit, income from Jamshoro Joint Venture and sale of condensed gas was to be treated as operating income which was to be transferred to the consumer through a subsidy on bills. As the stock players earned over Rs.10 billion, the then OGRA chairman tried to reverse the decision after an onslaught of public criticism. He tried to reverse the decision in Dec 2010 by reducing the UFG benchmark to five per cent and treating late payment surcharge, revenues from metering plant and Jamshoro Joint Venture as operating income in Dec 2010. However, this was vetoed by OGRA`s member gas. Under the agreement signed by the gas companies and OGRA, the UFG losses were required to be gradually reduced to 5.5 per cent in 2009-10 from their actual losses of about seven per cent. The agreement required that the gas companies would bear the burden of loss beyond the agreed benchmark and earn as profit if they surpassed the target. As it turned out, the gas companies UFG losses touched eight per cent in case of SSGCL and 9.63 per cent in case of SNGPL. These losses are now in excess of 9.5 per cent and 11.2 per cent respectively, causing over Rs350 billion losses to the national exchequer on account of alternate fuel imports. The UFG benchmark was increased by the OGRA on the plea that in the absence of a study on UFG and change of ground realities in terms of security situation and expansion of gas network from bulk consumers to retail sale as a result of village gasification. A perusal of the public record, however, suggests that OGRA in its 2005-06


determination had reported in detail the findings of the UFG study. The OGRA had reported in its 2005-6 judgment that UFG in nine gas companies in the US stood at less than one per cent, 12 companies up to two per cent and another nine companies up to four per cent. These companies had consumers in excess of 500,000 and up to four million. It said the UFG level for similar integrated companies in Australia ranged between 1.9 per cent and three per cent, while such losses in the UK were estimated at 0.7 per cent. As such, the four per cent target for UFG to be achieved in 2011-12 `is reasonable and provides more than sufficient allowance to cater for peculiar local operating conditions, including socioeconomic patterns, higher pressure requirements and related factors`, OGRA said, adding that the argument for aging network was also not sustainable for the fact that it has been allowing expenditure on system augmentation and maintenance of gas pipelines. The NAB in its inquiry report submitted to the apex court said `unless the decision is reversed Rs7-8 billion will continue to be added on a yearly basis for indefinite period of time` and recommended `conversion of the inquiry into investigation` to scrutinize the record for further deliberations. Under formal investigations, the NAB gets the powers to take record into custody and make arrests of alleged persons.

Audit refused as SESSI fraud surfaces

Sindh Employees Social Security Institution (SESSI) has once again refused to get its accounts audited, refusing to provide the required record to the audit team. According to sources, there has been no audit of the institution during last 30 years allegedly in an attempt to conceal fraud of billions of rupees. Running under the Labor Department, the independent institution known as SESSI had been earmarked Rs 2.5 billion by the Sindh government last year. While during last 30 years, the Sindh government provided funds to the institution worth billions of rupees about which reports of embezzlement and mismanagement have come up. SESSI had been established in 1970 for welfare of the workers in education, health and other welfare institutions in the private sector. The Audit Department, Sindh, has complained to the Public Accounts Committee, established by the Sindh Assembly, vide letter No. DGAS/PPC\SESSI 2011-12 that SESSI officers are avoiding audit of the institution. According to sources, five Afghan diploma holders had been appointed doctors a few months back in grade 17 in SESSI, in violation of rules and regulations. A petition is also being heard in the Sindh High Court against these appointments.

NRO beneficiaries not entitled to hold Government Office: CJ

Chief Justice Iftikhar Muhammad Chaudhry on Thursday declared that the beneficiaries of the defunct National Reconciliation Ordinance (NRO) could not hold government offices. The Supreme Court admitted a petition for regular hearing against Sharmila Farooquis eligibility as an adviser to the Sindh chief minister as well as member of the provincial cabinet. The chief justice ordered the removal of objections placed by the Registrars office on the application and directed it for regular hearing. Petitioner Habib Wahabul Khairi, Chairman Al-Jehad Trust, appeared in person, and said Sharmila had taken relief under the National Reconciliation Ordinance. The Chief Justice observed that if she had taken relief under the plea bargain, then her case was a continuation of the NRO issue. He remarked that her eligibility as an adviser in the provincial cabinet should be reviewed as those who got relief under the NRO were no longer entitled for such benefits now. Khairi had made the federation, Ministry of Law and Justice, Government of Sindh, NAB chairman, National Savings Director General, Usman Farooqui, Aneesa Farooqui, Sharmila Farooqui and State Bank as respondents.

Khurram Rasool swindles Rs.100 million from Karachi firm

The prime ministers former media coordinator, Mian Khurram Rasool, has swindled Rs.100 million from a big business house in Karachi, The News has learnt. Khurram Rasool had given cheques for Rs.90 million under different heads to the complainant and owner of Home Craft, Haji Abdul Hameed, 80, his sons and different directors of the company. All the checks were dishonored. The accused got into a written agreement with the said company to import scrap of ships from Ghana, Africa, in 2008. The accused also kept claiming during this period to be a close buddy of Prime Minister Yusuf Raza Gilani. In 2011, Rasool took Mian Hamoodur Rehman, a director of the said company, to the PM House in Islamabad to


pressurize him so that the business house would not proceed with litigation against him. Hamoodur Rehman told this correspondent that Rasool kept talking to the prime minister on the phone during a one-hour stroll at the PM House, making them believe he was a close friend of the premier, and that the Federal Investigation Agency or any other department could not act against him. Believing this, the complainants continuously tried to put moral pressure on Rasool to pay the amount after all his agreements, promises, oaths, and checks were dishonored. Khurram Rasool kept ensuring the victims that he was an honest person and would return their money. Karachi Chamber of Commerce and Industry (KCCI) caretaker President Muhammad Saeed Shafique also wrote letters to Interior Minister Rehman Malik and FIA Deputy Director, Karachi, Altaf, on May 30, 2010 on behalf of the victim, Haji Abdul Hameed, who is also a member of the chamber, and informed them about the details of the fraud, demanding action against the accused. But the FIA did not act against Khurram Rasool even after one-and-a-half years. In the meanwhile, senior member KCCI Siraj Qasim Teli also met Rehman Malik in person and informed him about the details of the fraud, after which the interior minister forwarded the application to the FIA with his reference. After a few days, FIAs Inspector Nabeel Mehmood called the victims and told them that a case could not be initiated against the accused on the basis of mere claims and refused to register an FIR. Haji Abdul Hameed told this correspondent that the accused opened an LC for Rs.30 million at Bank Islami, Kharadar branch, to import scrap from Ghana and made three shipments from the African country to Karachi on November 17, 2008, November 27, 2008 and December 1, 2008. However, instead of delivering, the scrap was sold off from the godowns of Maersk shipping company, while the accused stayed put in Ghana during this period. Haji Abdul Hameed sent his business partners to Ghana, who met Khurram Rasool in his business office there. The media coordinator to the PM kept demanding money from them on one pretext or the other and they sent him the cash through the Western Union, receipts of which are available with this correspondent. In the meantime, the accused also made Haji Abdul Hameed pay money to his friends and business partners. KhurramRasool conned Rs.49.458 million from the victim. Haji Abdul Hameed and the directors of his company have also filed a case against Bank Islami and Maersk in the Sindh High Court in which they have requested the court to order the accused to pay their money back. When FIA Deputy Director Altaf was contacted, he said investigations against Khurram Rasool were in their preliminary stage but it looked the accused was already in deep trouble.

Another Rs.72 billion oil scam in making

The Oil & Gas Development Company Limited (OGDCL) has awarded a Letter of Intent (LOI) of $800 million (Rs.72 billion) for project management consultancy services of three projects to a company without fulfilling the basic eligibility criteria, it was learnt. The OGDCL management has issued LOI of $800 million to M/s Zishan Engineers (Private) Limited (ZEL) for developing three projects, including KunarPisakhi-Deep, Neshpa and Mela, without seeking the reply of grievance committee of the company for pre-qualification of the ZEL for the multi-million dollar contract, a senior functionary of the OGDC told The News. The three projects will altogether add about 500 MMSCFD gas, 24,000 bbls/day oil and about 500 metric tons/day LPG in the production, which will significantly reduce the current energy crises of the country but these have again been endangered by the OGDCL management by awarding the projects to a non-deserving private party, feared an official of the petroleum ministry who spoke on condition of anonymity. M/s ZEL was pre-qualified by the OGDCL to submit the bid against the tender enquiry of KPDTAY project. The OGDCL re-tendered this KPD-TAY without returning the technical and commercial bids to ENAR the other bidder in the tender to accommodate the said private party, the official added. According to OGDCLs criteria, the official said, M/s ZEL was not eligible as it does not have the required experience of completing five projects of similar size because allegedly M/s ZEL has not completed a single project of commercial value of over $0.5 million. But surprisingly, it was still blessed with the lucrative LOI. Acting Managing Director OGDCL, Basharat Mirza, who is looking after the company on ad hoc basis for the past six months, told this correspondent. There is no PPRA rules violation and M/s ZEL was the lowest bidder. To a question of grievances for eligibility criteria of M/s ZEL filed by the other bidder for this project, Mirza said, The reply of the grievances committee of the company is not mandatory for awarding the LoI to the lowest bidder. Mirza further claimed that the losing bidders bid was nearly 100


percent more than the awardee i.e. M/s ZEL and that is the main reasons that the management had decided to award the contract to the lowest bidders. However, spokesman of the losing bidder also claimed that they (M/s ENAR) had offered 50% lowest bid but they were knocked out on technical basis from the bid. He further apprehended that the OGDCL management would compensate the awardee bidders by making changes through variation order, change order or amendment in the final MOU. As per PPRA rule 48 & SOP 46 of Manual of Procurement Policies and Standard Bidding Documents for Goods, Works and Services of PPRA, the other bidder sought rebuttal from grievance committee of OGDCL pointing out grass-root violation in the pre-qualifying of M/s ZEL, but the OGDCL grievance committee called the aggrieved management for a meeting on January 23, 2012, alleged the official of the other bidder of this multi-million dollar project. Instead of announcing the result to ENARs representatives, the OGDCL had arranged a kick-off meeting on the same day with M/s ZEL for issuing the LOI of the said projects. The team of M/s ZEL comprises three ex-management officials of ENAR. Mahmood Ali Ahmad, Pervaiz Rizvi and Sajid Pervaiz have been shown as ZEL employees whereas they are already employees of ENAR Petroleum Refining Facility (EPRF). Similarly, these executives have allegedly been involved in malpractices, misuse of power and illegal acts by forming a trust, incurring a huge loss to the ENAR, an attached department of the Ministry of Production. A case with FIA, Karachi, was filed against these individuals, said a letter of the ENAR to Director FIA and exclusively available with The News. Responding to various queries by The News, Syed Atiq-uddin Shah, Managing Director of M/s ZEL, only said, There is no irregularity in the bidding process and then cut off the call. The KPD-Tando Allah Yar project, which was annulled more than three times by the OGDCL management, would produce 400 MMSCRFD gas, 4,500 bbl/day oil and 400 metric tonnes of LPG per day, Mela has the capacity of producing 20 MMSCFD gas, 7,500 bbl/day oil and 20 metric tonnes/day LPG, whereas the Neshpa will produce 45 MMSCFD gas, 1,200 bbl/day oil and 40 metric tonnes/day LPG.

Switzerland returns former rulers $1.8 billion to Arab states

Switzerland said Tuesday it has returned nearly 1.7 billion Swiss francs (1.41 billion Euros, $1.83 billion) in illicitly placed assets to countries involved in the Arab Spring regime changes. The return of illicit assets is a key component of the system set up by Switzerland to protect its financial sector and to fight against international financial crime, the foreign affairs ministry said in a statement. It did not name the countries to which money had been returned however. Switzerland revealed the figures during a meeting of international experts on Monday and Tuesday in Lausanne that focused on the recovery of illicit assets held by autocratic leaders in countries where regime changes occurred. The seminar included experts from international aid organizations in 15 countries. Meanwhile, Swiss courts have expanded investigations into frozen Tunisian and Egyptian assets, amid suspicions that a crime syndicate may be linked to them. In addition to the suspicion of money laundering, investigators are probing the possible involvement of a criminal organization, a spokeswoman for the Attorney Generals office, Jeannette Balmer, told media.

Tariff differential subsidy to cost over Rs.300 billion

The power sector is losing a whopping Rs.103 billion per annum on account of power theft and nonrecovery of bills. The system suffered a huge loss of Rs.63 billion in 2010-11 as bills recovery stood at 89 percent with 11 percent losses. Electric power distribution companies (Discos) suffered Rs.35 billion losses due to power theft. If power theft in the Fata areas is also included, the amount rises to Rs.40 billion. This disclosure was made during the special energy committee meeting of the National Assembly held here on Tuesday. Meanwhile, the government is left with no option but to provide over Rs300 billion tariff differential subsidy as NEPRA has determined the new base tariff of all electric power distribution companies at Rs.11.826 per unit due to which the gap between the newly determined tariff and applicable tariff has risen to Rs.3.92 per unit from Rs.1.70 per unit, NEPRA Chairman Khalid Saeed told the meeting participants. He said the cost of one electricity unit based on RFO (residual furnace oil) stands at Rs.18, on high-speed diesel Rs.21-22 per unit, on gas Rs.9 per unit. And nuclear generation cost stands at Rs.5-6 per unit, hydrogenation at 1.42 per unit and electricity from Iran costs Rs.9-10 per unit. The NEPRA chairman said the new base tariff was determined keeping in view the massive increase in generation


cost because of a surge in the price of furnace oil to Rs.65,000 per ton from Rs.45,000 per ton. He said that passing of monthly fuel oil price of June, July on end consumers was earlier banned by the court, which was later allowed. This was also the reason for the recent inflated bills. Saeed said High Speed Diesel is more expensive than furnace oil. The NEPRA chairman also told the meeting that the regulator had also proposed erasing of slab benefits of consumers who consume 1,000 units in one month. He said that 100 units slab consumers are highly subsidized while those who consume up to 300 units are also substantially subsidized. But consumers who consume 700 units or more are paying the full cost and even paying beyond the marginal cost. He said commercial and industrial consumers are paying the full generation cost of electricity, but agriculture consumers are being provided subsidy.

FTO moved against discretionary powers of tax authorities

A tax consultant body has moved the office of the Federal Tax Ombudsman (FTO) against tax authorities for misusing powers for selection of cases for audit. The Karachi Tax Bar Association (KTBA) on Monday sent a letter to the FTO Secretariat to redress the taxpayers grievances regarding selection of audit under Section 122(5A) of the Income Tax Ordinance, 2001 by the officials of the Federal Board of Revenue (FBR). Anwar Kashif Mumtaz, President, KTBA, in the letter mentioned that the association had sent several letters to the revenue body regarding misusing of powers in case of the audit and multiple tax years selection of single taxpayer for audit with no reason. The field officers are also misusing the powers under the Income Tax Ordinance provision to penalize the taxpayers for their vested interests against the spirit of the law, the KTBA said. The tax body urged the FTO for immediate action to save the taxpayers from misusing of discretionary powers of the tax authorities for their vested interests. Earlier, the KTBA had urged the Member Audit, FBR, to intervene into the issue. The body had said that the audit of the taxpayer is important, but it is also equally important that the same should be strictly in accordance with the provisions of the law under the income and sales tax. Unfortunately, the field officers of the Federal Board of Revenue have negated the spirit of the Universal Self Assessment Scheme as envisaged under the Income Tax Ordinance 2001 and STA 1990 by selecting cases of a single taxpayer repeatedly for a number of years, it added. The KTBA had urged the FBR to evaluate the results of the previous audits and their fate in appeals. Repeated selection of cases for audit has resulted in widening the bridge between the taxpayer and the tax department, the FBR was informed. The KTBA said that the tax reform process of creating trust is being badly damaged by senseless audits. We are cautioning that the field formations through repeated audits, multiple notices are destroying the tax reforms and as such seriously damaging the goals of the FBR in increasing the tax-to-GDP ratio, it added. The tax body had forwarded several recommendations regarding the audit, saying that if the taxpayers case is selected for audit, than it should not be selected for audit for the next two years from the tax year in which the last audit was conducted and concluded and no significant discrepancy is unearthed during the course of audit. It suggested that the cases for audit should be selected only for tax year 2011 as the best practices of tax audit in the world, the same is always conducted for the current year and there is no concept of audit of previous years until there is discrepancy or concealment is detected during the course of audit related to the previous years.

Millers flay TCP for delaying Rs.17.5 billion

The unwarranted delay by the Trading Corporation of Pakistan (TCP) in the release of Rs.17.5 billion as price of 378,000 tons of sugar it has procured locally is creating liquidity problem for the mills and jeopardizing payments to growers. The millers allege that the TCP is holding back their payments on frivolous excuses of completing `codal formalities`, saying `some people at the helm of the affairs in the TCP were trying to delay the release of payments for personal gain` They say the TCP was delaying their payments for more than three weeks despite calls from them for an early release. Talking to Dawn on Monday, Pakistan Sugar Mills Association (PSMA) Chairman Javed Kayani rejected the TCP`s stand that it was completing codal formalities and would release the payment only after completion of the process. `What codal formalities are the TCP officials talking about? They are using this excuse just to delay our


payments for reasons known only to them, `he said, adding he had sent a letter to the finance minister to apprise him of the delays and its impact on the growers and the industry. `The ultimate sufferers will be growers whose payments will be delayed due to the TCP`s attitude. He said Pakistan produced the best quality sugar in the world. `The so-called codal formalities usually take only a few days to complete. It is for the first time that such a long delay has been caused in the release of payments to the millers. Have they found any virus in our sugar this time that is holding the TCP from making our payments? `He asked. Mr Kayani said the TCP officials took no time in awarding contracts and opening LCs without fulfilling codal formalities when low quality sugar was to be imported, but were taking their time in making payments against the purchase of good quality sugar. `Why? We do not understand, `he said. He said the TCP officials told him that some results of the tests from the PSQCA had been received and the rest were awaited. The TCP has procured sugar from the mills in line with a decision taken by the Economic Coordination Committee (ECC) in December to create a strategic buffer stock to enable the government to maintain its ability to stabilize the market in case the product`s prices rise. The ECC has also decided to purchase another 100,000 tons of sugar and is expected to procure up to 625,000 tons sugar. Another objective of the local procurement was to lift a part of the expected surplus of 1.1-1.2 million tons from the current harvest`s output projected to be over five million tons and facilitate the millers make early payments to growers for their crop. The current crop is estimated to transfer Rs.250 billion to the rural economy this year. The PSMA chairman also urged the government to allow the industry to export up to 500,000 tons of sugar. He said even after the government`s expected procurement of 700,000 tons, the industry would still be left with around 400,000-500,000 tons of sugar from the current harvest. Dawn made several attempts to reach TCP Chairman Syed Tahir Raza Naqvi for his views on the issue but he was not available.

Rs.3.65 billion for 2010 flood victims yet to be spent

The Sindh government has not yet spent even a single penny from the Rs.1.15 billion it has received from the Central Zakat Fund in addition to the Rs.2.5 billion allocated by Sindh for the reconstruction of houses damaged or destroyed in the 2010 floods, said Sindh Zakat and Ushr Minister SajidJokhio on Monday. Mr.Jokhio, struggling to answer supplementary questions during the question hour of the Sindh Assembly session, looked completely out of his depth as he fumbled through a bunch of papers placed before him but did not offer any satisfactory answer until the chief minister, who was present in the house for some other business, rose in his seat in aid of his cabinet member. Monday`s session began more than three hours behind schedule as only a few members had arrived in the assembly hall. A large number of them were busy at a meeting being presided over by the chief minister to discuss a resolution of the NPP`s Masroor Jatoi relating to a proposed amendment to the constitution about the creation of new provinces. The session started soon after the Zuhar azan was sounded at around 1pm. When the question hour, which was related to the Zakat and Ushr Department, did begin, five initial questions were not taken up as the movers the MQM`s MoinPeerzada and Heer Ismail Soho were not present in the assembly and no one else wanted to ask the question on their behalf. Arif Jatoi of the NPP, who had asked one of the questions taken up, did not ask any supplementary question, apparently conscious of the three-hour lost time, and to let another Jatoi`s resolution to be taken up. The whole question hour was completed in 10 to 15 minutes, an unusual happening in the house, where daily the entire question hour is consumed by three to four questions and never all questions mentioned in the order of the day could be answered. Responding to a question asked by Nusrat Seher Abbasi of the PML-F about the funds provided for the rehabilitation of flood victims and construction of houses for them, Mr. Jokhio in a written answer said the central Zakat council had provided Rs1.15 billion for the flood affected and that the government of Sindh had been planning to use the amount on the construction of houses for flood affected families in the province. The Sindh Zakat Council was working out modalities for the construction of houses. He had no answer to a supplementary question asked by Ms Abbasi, who wanted to know the cause of the delay saying the floods had occurred in 2010 and no house had been built even in 2012. Chief Minister Syed Qaim Ali Shah, seeing the minister utterly confused, came to his rescue and said the unprecedented floods in 2010 had caused colossal damage, particularly on the right bank of the Indus. He said as a large number of people had lost their homes, either destroyed or damaged the


government had planned to build houses for them. He said Sindh also had Rs.2.5 billion for the houses and when Rs.1.15 billion was received from the central Zakat fund, the Sindh government also added its share to the amount for the purpose. He said that keeping in view the number of people affected and houses destroyed, it would not be possible to build houses for all the affected. To handle the issue in a transparent manner, a committee had been formed which would address the issue. The step was taken to ensure transparency and to preempt allegations of nepotism and favoritism, he added. The CM agreed that around a couple of years had passed since the floods hit the province and, asking the flood victims to be patient, said that soon the houses would be constructed and handed over to affected people. He remarked: `Rome was not built in one day`. He said the federal government had also promised to provide funds for the houses, but the money had not yet been provided to Sindh yet.

Transmission issues: Power companies blamed for Rs.90 billion electricity losses
The Water and Power Development Authority (WAPDA) has held the board of directors of power distribution companies responsible for failing to improve the distribution system, which is incurring losses of more than Rs90 billion annually and spiraling the circular debt to record levels. In a report submitted to the energy committee formed by the prime minister, a copy of which is available with The Express Tribune, WAPDA says that the basic issue of majority power distribution companies (Discos) is poor governance and limited accountability. Hyderabad Electric Supply Company, Peshawar Electric Supply Company, Quetta Electric Supply Company and Multan Electric Supply Company collectively are losing power worth Rs.90 billion annually in the distribution system. These companies are not even managing to post a revenues of Rs.90 billion in a year, says the report. There should be no political and administrative interferences in Discos, says the report. Poor maintenance by former WAPDA operated power generation companies are producing almost 6 billion less units per annum than the optimum level. WAPDA recommends that provincial government representatives should be included on the boards of power distribution companies to share the responsibility and be administratively more involved in controlling line losses along with improving revenue recovery. It also proposed to lease out inefficient feeders of power distribution companies to ensure better bill collection and delivery of services. WAPDA further suggested that keeping in mind that tariffs are already at a high level, the revenue gap should be covered through improving inefficiencies. Owing to dismal efficiency level, generation companies are burning additional fuel worth Rs.11 billion per year, a cost that can be saved if optimum efficiency level is obtained, report adds. Power generation companies should be leased out or listed on stock exchanges and its industrial consumption should be preferred, report adds. The National Transmission and Dispatch Company (NTDC) is losing power worth Rs.6 billion annually in transmission, more than the normal standards. These are the real reasons of existing circular debt which has paralyzed the national economy and made life difficult for the common man, the report says. According to the report, WAPDAs hydel power is the worst affected due to inefficiencies of power distribution companies and getting collecting merely 55 per cent of its billed amount even after selling it at Rs.1.03 per unit. WAPDA also noted that the energy generation mix was equally divided 50-50 between thermal and hydel but in 2010 hydels share dropped to 32 per cent while share of thermal generation increased to 68 per cent. In year 2010-11, hydel power cost in public sector was Rs.1.54 per unit, Rs.8.74 per unit cost of electricity by public sector thermal plants, Rs.9.07 per unit by Independent Power Producers and Rs.31 per unit cost of power by rental power plants.

Illegal allotment by CDA caused losses of billions

Chief Justice Iftikhar Muhammad Chaudhry on Monday remarked, during hearing of a suo motu notice, that illegal allotment of over 4,000 plots by the Capital Development Authority (CDA) has caused a loss of billions of rupees to the national exchequer. He was heading a three-member bench also comprising Justice Khilji Arif Hussain and Justice Tariq Parvez. Representing CDA, Ramzan Chaudhry, said that employees had been allotted 20 percent quota under the governments 1993 land policy. The chief justice responded by saying that no such policy existed, adding that the CDA should refer the issue to parliament for promulgation of a new law on plots allotment. Staff report.

FBR officials involved in Rs.6 billion tax fraud cases


The Federal Board of Revenue (FBR) has detected tax fraud cases of over Rs.6 billion, committed through collusion of unscrupulous elements and corrupt tax authorities, The News has learnt. But the FBR has so far taken no action against the officials involved in these cases. Action was taken only in one case but that too was reversed within one week following the change of Regional Commissioner Karachi-III, a top official of the FBR disclosed while talking to The News here on Sunday. Such cases were also discussed during the last commissioners conference held a few days ago at the FBRs headquarters under the chairmanship of former chairman FBR Salman Siddique, who retired on January 21, 2012. The FBRs directorate intelligence and investigation has found that SRO 775 was misapplied in 7,000 cases, causing Rs.1.874 billion loss to the national exchequer. The board had sent region-wise cases to all concerned authorities to pursue them in months ahead and come up with the exact loss to the national exchequer. In a telling development, an official of Karachi Custom Intelligence, who investigated one such case, was allegedly himself found involved in getting favors. It was discovered that the persons and companies allegedly involved in this case transferred Rs.140 million into the account of his son during the period when he was investigating this particular case. The case came under discussion in the last Commissioners conference and evidence was also handed over to the concerned authorities against the officers involved in these cases but no action was taken against them. The FBR also detected over Rs.2 billion refund fraud cases as well as those involving stuck up withholding tax amount, which was collected but not deposited into the national kitty. The FBR, the sources said, also detected Rs.1.995 billion frauds in Federal Excise Duty where in two major cases the tax was not deposited fully by the beverages companies. We have identified the culprits and law will take its course, added the official. Another scam surfaced wherein Rs.400 million bogus refunds were issued and an official of the Enforcement Wing was suspended on December 7, 2011. But when Chief Commissioner Inland Revenue Service (IRS) of Karachi-111 was changed the same suspended official was restored on December 14, 2011. When Member Inland Revenue Service Shahid Hussain Asad was asked why no action was taken against the officials involved in these fraud cases he said that an inquiry would be conducted in such cases and stern action would be taken against those found guilty. Sources disclosed that the FBR has so far sent 300,000 notices to potential non-filers of whom over 60,000 have filed their returns. We have so far received tax of Rs.665 million from these persons who have now become taxpayers, the sources added.

Rs.47 million to be paid to heirs of deceased Hajis

The Ministry of Religious Affairs will pay more than Rs.47 million as compensation to heirs of 158 Hujjaj, who died during the Haj-2011, by February 10. The ministry is paying Rs.300,000 as compensation to heirs of each deceased pilgrim in phases and the process will hopefully be completed by February 10, the joint secretary (Haj) of the ministry told APP. He said that Prime Minister Yusuf Raza Gilani on the recommendation of the ministry has increased the compensation amount from Rs.200,000 to Rs.300,000 for the current year. Under the Haj Policy 2011, the amount of compensation was Rs.200,000. In the first phase, checks amounting to Rs.6 million have been distributed among 20 legal heirs of deceased Hujjaj on January 18, who nominated in Haj forms, after fulfilling all the codal formalities, he added. The ministry has collected around Rs.71 million under the scheme from more than 179,000 pilgrims, who performed the religious obligation under the government and private schemes this year. Out of these, 158 Pakistani pilgrims have died in Saudi Arabia due to natural causes. To a question, he said that claim forms are being received from heirs of deceased Hujjaj under the procedure adopted to ensure smooth and transparent disbursement. He clarified that the compensation would be applicable to all pilgrims whether they went under the government or private schemes.

Crashing figures: PIA loses over Rs.70,000 per day

Pakistan International Airlines is suffering a loss of Rs.70,676 per day. The worrying figures are in keeping with recent reports, which suggest the airline has already lost Rs.110 billion over the past three years. Defense Minister Ahmed Mukhtar informed lawmakers in his written reply submitted to the Senate on Friday that PIA suffered Rs.19 million losses over the last 273 days. Jamiat Ulema-e-Islam Senator Ismail Buledi and Pakistan Muslim League-Q Senator Begum Najma Hameed questioned why the national flag


carrier had faced such turbulence for so long. PIA is not on brink of collapse, however it is a fact that the airline is in a sorry state of affairs, acknowledged the minister, replying to questions posed by lawmakers during the question and answer session in parliament. Asked why PIA was incurring losses despite growing domestic air traffic, Mukhtar said that high fuel costs were a factor. We are looking to the government for help, before the national airline edges closer to the verge of collapse like Pakistan Railways, he added. Despite the crippling losses, PIA employees both retired and serving enjoy free travel in Pakistan as well as abroad, observed Senator Najma Hameed. Former directors and other board members are entitled to 12 tickets in economy and business plus, including other facilities, the written reply stated. Lawmakers were also informed during the course of proceedings that seven out of 26 airports were closed down due to the suspension of PIA flight operations on account of insufficient traffic load. Neither PIA nor any other airline is interested in conducting flight operations from the closed airports, he said. The Civil Aviation Authority (CAA) will consider proposals to make flights operational from the closed airports, said the minister. Earlier, the ministry of defense revealed that over the past three years 2,171 people were recruited by PIA. The number of people hired by the incumbent government is the highest in the history of the national flag carrier, with 1,179 employed in 2010 alone. A paradigm shift is needed in PIA, wrote Mukhtar in reply to this point. However, he maintained that there would be no reduction of manpower in operational staff such as pilots, aircraft engineers and specialized professionals. The defense minister also disclosed that over Rs.2.16 billion has been allocated for the Pakistan Space and Upper Atmosphere Research Commission (SUPARCO) in the current fiscal year (2011-12) budget. The highest amount, worth Rs.1.5 billion, will be spent on the Pakistan Communication Satellite System, he said. A memorandum of understanding has been signed between SUPARCO and the Institute of Remote Sensing Applications for scientific cooperation on the operational use of remote sensing technology in the fields of agriculture, water resources and disaster risk assessment.

$1.5 billion of Pakistan looted: Swiss institute

According to the International Centre for Asset Recovery of the Basel Institute on Governance in Switzerland, which assists developing countries in making use of international legal assistance to recover their stolen assets, President Asif Zardari and his late spouse Benazir Bhutto were allegedly involved in looting $1.5 billion from the national coffers. This Switzerland-based institute, which claims to act as facilitator, coach and legal representative in international asset recovery cases and supports countries in implementing the provisions of Chapter V on asset recovery of the United Nations Convention against Corruption, has revealed that only $100 million of the $1.5 billion plundered by the sitting Pakistani president and his late premier wife has so far been traced. It further writes on its website: During Bhuttos terms as Prime Minister, Zardari is alleged to have masterminded various corruption related activities involving millions of dollars with Bhuttos knowledge. Zardari gained the reputation of demanding a certain percent of government contracts issued to business people, thereby earning a succession of nicknames: Mr.5 Percent, Mr.10 Percent, Mr.20 Percent, Mr.30 Percent, and Mr.100 Percent. In total, Bhutto-Zardari accumulated assets worth over $100 million in the United Kingdom, France, Switzerland, the United States of America and the British Virgin Islands (BVI). Some estimates place Bhutto-Zardari loot at more than $1.5 billion. The Swiss institute further writes: This sum allegedly came from illicit profits through kickbacks in every sphere of government activity, including: rice export deals, the sell-off of state land, purchase of planes for Pakistan International Airlines, sugar mills, oil and gas permits, awarding of broadcast licenses, privatization of state-owned industries and rake-offs from state welfare schemes. Giving introduction of Asif Zardari and Benazir, this is how the Basel Institute of Governance describes the eminent Pakistani couple: A consummate politician, Benazir Bhutto was twice appointed Prime Minister of Pakistan (1988-1990 and 1993-1996). On both occasions she was dismissed from office for alleged corruption and misrule or bad governance. Between 1998 and 2007 Bhutto lived in exile from Pakistan in Dubai and London. She returned to Pakistan in October 2007 after reaching an understanding with President Pervez Musharraf by which she was granted amnesty and all corruption charges were withdrawn. However, Benazir Bhutto political life was ended with her assassinated on December 27, 2007. Her husband Asif Ali Zardari (now the current President of Pakistan) also played a prominent role in both administrations. He served as Minister of Investment from 1993 to 1996. The institute had cited references


of John F. Burns 1998 article House of graft: tracing the Bhutto millions a special report; Bhutto clan leaves trail of corruption that had appeared in the New York Times and also made use of material in BBCs obituary story on Benazir Bhutto and Raymond W Bakers 2005 book Capitalisms Achilles Heel: Dirty money and how to renew the free-market system. It is pertinent to note that the key partners of the International Centre for Asset Recovery of the Basel Institute on Governance in Switzerland include the International Monetary Fund, the International Ant-Corruption Academy, the Council of Europe, the European Bank for Reconstruction and Development, the Organization for Economic Cooperation and Development (OECD), the Swiss Agency for Development and Cooperation, State Secretariat for Economic Affairs of Switzerland, Transparency International, For the sake of knowledge, the Stolen Asset Recovery Initiative of the World Bank and United Nations, The United Kingdom Department for International Development, the United Nations Development Program, the United Nations Office on Drug and Crime, Swiss National Science Foundation and the University of Basel (Switzerland) etc. The Basel Institute of Governance website also carries an interesting introductory paragraph about one of the books Non-state actors in assets recovery that has been published under its auspices. The paragraph, which is bound to raise many an eye-brow, read: Non-state actors are of fundamental importance in the prevention and combating of corruption within asset recovery processes. Their roles and responsibilities were considered during an experts meeting hosted by the Basel Institute in September 2010. This book contains essays presented at the meeting, written by practitioners and academics with extensive experiences in the numerous fields, which comprise asset recovery processes. The contributions offer a diversity of views on roles, which non-state actors can play in preventing and combating corruption and other forms of financial crimes. This Swiss institute under review says it is compiling case studies on small and large precedent-setting recovery proceedings, which would soon be made available on its website with convenient links to relevant judicial, legislative and executive documents. It has also invited affected states to submit information on ongoing and past recovery cases for inclusion under country specific headings. The institute maintains on its website: As the amount of case information in this section grows, the Centre will index and cross-reference the volume of material by key features such as jurisdiction, criminal or civil, freeze orders, etc. However, a lot of details about two dozen corrupt global rulers and key government functionaries are already available with facts pertaining to the efforts being made by the ruling regimes of the robbed countries to ensure the repatriation of their stolen assets, many of which are still stashed in off-shore havens like Switzerland. The corrupt international rulers/government officials discussed on the website of the Basel Institute of Governance are: Hosni Mubarak (recently deposed Egyptian dictator), Ferdinand Marcos (former rulers of Philippines), Jacob Zuma (President of South Africa), Jean-Claude Baby Doc Duvalier (defamed ruler of Haiti), PavelIvanovichLazarenko (former Prime Minister of Ukraine), Daniel arapMoi (Kenyan dictator), DiepreyeAlamieyeseigha (a Nigerian Governor), Frederick Chiluba (former Zambian President), Tommy Suharto (son of former Indonesian ruler Suharto), ShriSukh Ram (former Indian Union State Minister for Communications), Omar Bongo (former President of Gabon), Arafat Rahman Koko (son of former Bangladeshi Premier Khalida Zia), Raul Salinas (brother of the former President of Mexico), Zine El Abidine Ben Ali (former Tunisian dictator), Joshua ChibiDariye (a former Nigerian Governor), General SaniAbacha (former Nigerian dictator) and Vladimiro Lenin Montesinos (ex-head of Perus secret service under President Alberto Fujimori) etc.

Pepco fails to recover Rs.60 billion arrears

The Pakistan Electric Power Company (PEPCO) has failed to recover a staggering Rs.60 billion arrears from the private sector and government departments during the first five months of the current fiscal year, raising further the power sector`s receivables and circular debt. Interestingly, PEPCO received Rs.45.25 billion as subsidy from the federal government during the July-Nov period and another Rs.12 billion in December. The total subsidy of Rs.57.25 billion is almost equal to the arrears accumulated during the period. According to PEPCO`s own figures, its receivables, which stood at Rs.285 billion by the end of June last year, jumped to Rs.345 billion by the end of November Rs.12 billion a month or Rs.400 million a day. Nine distribution companies (Discos) of PEPCO billed Rs.331 billion to different consumers during the first five months of the current fiscal year, but were able to recover only Rs.271 billion. Arrears of


government departments increased during the period from Rs.142 billion to Rs.172.93 billion and of private sector consumers from Rs.142.644 billion to Rs.171.67 billion. The Karachi Electric Supply Company remained the biggest defaulter. Its arrears increased by Rs.11 billion to Rs.51.95 billion from Rs.40.89 billion. The Federally Administered Tribal Areas was second on the list with Rs.10.37 billion arrears, followed by Azad Kashmir with Rs.9.88 billion. During the first five months of the current fiscal, PEPCO tariff was raised by Rs.3per unit -an average increase of almost 30 per cent. `The figures reflect the reality of power sector which has become a rudderless ship over the past few months, says a PEPCO official. `No-one knows who is running the sector? Officially, it should be the water and power ministry, but practically the finance ministry is running the show because of huge subsidies involved. It does not have the required expertise, thus relegated the sector to the Planning Commission. He said all of them jointly, and officially, dissolved PEPCO but it still existed and no-one knew what kind of relationship the company had with distribution companies. A former member (power) of WAPDA said seven of the nine distribution companies were being run by officials working on an `acting charge basis.

MNAs enjoyed Rs.120 billion perks in four years

Members of the National Assembly have secured perks worth Rs.120 billion during the last four years and an equal amount was spent on the house and its staff. The members not at all needed some of the perks given. On the contrary under the current situation plans are being made to extend some more attractive concessions to the MNAs. According to the Cabinet Division, each MNA elected by the poor masses had drawn a monthly salary of Rs.120,000. In addition during legislation each member had drawn another 100,000 per month plus 140,000 for office expenditure. He was also granted unlimited railway tickets in first class air-conditioned along with wife and children and 40 air tickets, unlimited residential facilities in different cities, free electricity and telephone up to 50,000 and 200,000 units respectively. In addition they were allowed free medical facilities and Rs.48,000 facility in case of visiting Islamabad any time. Moreover mobile phone calls, local and international telephone calls worth millions of rupees were also allowed.

Rules abused in funding Rs.50 billion projects

The government undertook politically motivated development projects worth Rs.50 billion while employing the method of anticipatory approval to accommodate directives of president and prime minister, an official report available with The News disclosed. The politically motivated programs, according to the report, are Peoples Works Program (PWP)-1 and PWP- 2, packages for different cities such as Multan Package and others Rs.13 billion and non-funded projects with exact amount of Rs.6.856 billion. An analysis on Public Sector Development Program (PSDP) stated that the method of anticipatory approval was used to utilize money on development projects executed on directives of President and Prime Minister. These projects were undertaking by the government without even waiting for the approval from relevant forums, it added. A review report prepared by the renowned economist Dr. Hafeez A Pasha along with experts on directives of Planning Commission, a copy of the yet un-released report available with The News, goes on to point out that, on top of this, there is somewhat surprisingly inclusion of a provision of almost Rs.7 billion for un-funded important projects, presumably in anticipation of directives from President and Prime Minister. The report states that the Planning Commission (PC) itself encourages this mechanism and has formalized the process through a Performa for such requests for both new and ongoing projects. This contravenes principles of fiscal responsibility and good governance, it further states. According to the report, the anticipatory approval circumvents the approval and sanctioning process. It is recommended that this process should be discarded. Therefore, the forms will no longer be required and may be abandoned the report further recommends. In fiscal year 2010-11, out of the total PSDP of Rs.242 billion, Rs.50 billion allocations were slated for politically motivated projects, indicating a share of 21 percent in the overall allocation of PSDP size. In this detailed review report of PSDP, there is a separate box titled By-Passing Standard Operating Procedures, stating that in some instances, sponsoring agencies by-pass established procedures through what is euphemistically referred to as anticipatory approval. The report also elaborates that the approval is not limited to concept clearance but also authorizes expenditures, which have not been budgeted for thus skewing


the allocations for development. Moreover, such approvals subsequently create de facto situation when the formal request for approval is submitted. This practice needs to be curtailed the report recommended. It also states that yet another method for sanctioning projects is the special directives or those nominated by the legislators. Both types circumvent stated procedures. Politically motivated projects can be justified as long as they are well thought out, aligned with Medium Term Development Framework (MTDF) and Medium Term Budgetary Framework (MTBF), planned and monitored properly, and executed under a robust project governance model.

Spotlight on Elahi in Rs.9 billion BOP loan scam

Without naming, Bank of Punjab (BOP) President Naeemuddin Khan revealed that a political family was behind the Rs.9 billion loan scam disclosing that the name was on page 306 of the BOP scandal report. The BOP president who was called by the Senate Standing Committee on Finance to give updates on the Rs.9 billion loan given to Harris Steel Mills was reluctant to reveal the name of the political family behind the scam despite being pushed by the panel. According to page 306 of the BOP report obtained by The Express Tribune: Kamran Rasool (the Punjab chief secretary during Pervez Musharrafs regime) was instrumental in the appointment of Hamesh Khan as the banks managing director in the year 2003. His sole reason for recommending Hamesh for the said job was that he liked him as a banker while he worked for the Kunjha Textile Mills in Gujrat which was owned by family of former Punjab chief minister Chaudhry Pervaiz Elahi. The BOP report is based on the investigation carried out by the Punjab police additional inspector general on the directives of the apex court. This would be the second blow to Pervaiz who is the senior minister for industries and defense since his son Moonis Elahi is already accused in the multi-billion rupee scam in the National Insurance Corporation Limited (NICL). The BOP president claimed that Hamesh has claimed that Punjab Chief Minister Shahbaz Sharif has been pushing him to take Pervaizs name but the investigators found his claim untrue. According to the investigators, Sheikh Afzal, a director of Haris Steel, with co-accused Muhammad Munir, Ali Ijaz, Abid Raza and Irfan Ali, in connivance with Hamesh and other officials opened 23 fake accounts with forged national identity cards and obtained loans of approximately Rs.9 billion from 2005 to 2007 using fake documentation, bogus collaterals, fictitious guarantees and mortgage deals executed by fictitious persons. The Supreme Court took the suomotu notice of the case and got former Bank of Punjab president Hamesh extradited from the US. Hamesh had fled the country despite being named on the Exit Control List. The report further stated that all the firms used or established by Afzal the main accused were just facades for obtaining paper loans. The report also claims that directors Mughis Sheikh and Khuram Iftikhar were instrumental in the scam since both were rubber stamping credit approvals for the company via circulation. A salvage committee constituted by the apex court under Justice (Retd) Syed Jamshed Ali has so far been able to locate 24 locally seized vehicles, gold bars weighing 5177.2 grams and 14 gold and diamond watches. In total, Rs.2.4 billion has been recovered through a plea bargain and voluntary return. The committee has directed the BOP management to recover the looted amount along with markup.

BISP seeks $150 million loan for poverty project

The Benazir Income Support Program (BISP) is seeking about $150 million from the World Bank to set up an effective national safety net and foster human development of the poor in the long term. Sources told Dawn that the loan from the International Development Association (IDA), the soft window of the World Bank group, is expected to be approved early next month. Additionally, the UK Department for International Development (DFID) will provide $95 million for the project. The new proposed funding will be an addition to the original credit amount of $60 million for the project which was approved in May 2009. The project has four main components which are: establishment of a national targeting system, strengthening safety net operations, enhancing safety program management, accountability and evaluation and developing social protection policy and strategy monitoring. However, the new funding will bring restructuring and entail changes in the project which include renaming of the project to reflect the expanded and restructured scope; changes in the component and its cost; a change of lending instrument from a technical assistance loan to a specific investment loan to introduce result-based


financing mechanism and extension of closing date till June 2016. The IDA funding will support the expansion of the basic cash transfer program to eligible poor families and to introduce a co-responsibility cash transfer for BISP beneficiaries linked to primary education. With this package, the BISP intends to counter the long-term poverty cycle and reduce beneficiary dependence on the income support program, which is an objective stemming from the country`s social protection strategy. The National Targeting System and Expanding Coverage of Basic renamed from the National Targeting System will add support for the expanded coverage of BISP`s basic income support program and will cover additional costs for data processing analysis. The strengthening of safety net operations, which involves IDA credit of $81 million and $53 million from DFID, will be expanded to build on progress made to date, and to expand the focus of safety net operations to the introduction of a conditional cash transfer component. The BISP intends to provide all beneficiary families with primary school children ages six to 12 years a benefit with two components: abase transfer of Rs.1,000 in continuation of the present income support, and a co-responsibility transfer of Rs.200 per month for each child attending primary school, up to a maximum of Rs.600 for three children in a specified age range. The new funding will also support BISP in taking the pilots of technology-based payments to scale for enhanced transparency and accountability. It will support the additional surveys needed to measure the impact of the conditional cash transfer and the expanded period of cash transfers and help to make public the results of the BISP evaluation for both future policy making and public information on results. Appraising the project, the World Bank says that the potential positive social effects of the project are expected to be significant. The project design relies heavily on international experience as well as on work undertaken as part of the impact evaluation of a conditional cash transfer program pilot implemented by Pakistan Baitul Maal as well as findings from various analytical background papers prepared for the draft social safety net report currently under preparation by the World Bank and results of the impact evaluation of a conditional cash transfers pilot program implemented by Baitul Maal.

Railways rides on ancillary success to net Rs.6.1billion loan

Its a very happy new year for Pakistan Railways (PR), though not everyone shares the mirth. The stateowned corporation has received a loan of Rs.6.1 billion from a banking consortium through its ancillary, Pakistan Railways Advisory and Consultancy Services (PRACS). The management of PRACS, however, is planning to call a strike, as they think that PRACS does not have the resources to pay back the loan. Top officials fear that the step will default the profitable ancillary in no time. PR has tried in vain to take a loan from various banks and financial institutions. No-one has been willing to back the failing organization. PRACS, however, is a profit-earning ancillary of PR thus it was decided by top PR officials to use the ancillary to take a loan. PRACS was established in 1976 and is currently run by retired and on-duty PR officers. With a small team of 800 officers and workers, PRACS has been a profit-earning company, in marked contrast to PR. Most of these 800 officers and workers are working on a contract basis, which many feel is the reason for its greater efficiency. As the National Bank of Pakistan has agreed to provide Rs.6.1 billion loan to PRACS, the PR management is now working out how to spend the money. The initial plan was to buy 40 new locomotives from China. Now the thinking is to use the loan to rehabilitate 96 locomotives currently lying off track. The PRACS management fears that the rehabilitation of locomotives will open a new door for corruption, as no-one will know about the exact numbers of spare parts that will be purchased to fix the engines. Khalid Bashir, assistant director PRACS, said that the loan installments will be around Rs.110 million monthly, but PRACS earns only about Rs.15 million per month. He said that, although Railways officials claimed the installments would be paid by PR finance division, everyone knows what the financial condition of PR is. Bashir added that almost 90% of officials are worried about the future of PRACS and are planning to protest. PRACS Managing Director Junaid Quraishi said that it was due to the goodwill of PRACS that PR was getting loan. He said it would be his duty to make sure that the funds were used for the repair of locomotives and not for other purposes. PRACS will rehabilitate and make records of all the spares purchased, he added. Quraishi said that things are not finalized but PRACS would only accept the loan once PR signed an agreement agreeing to repay the loan on time. If PR refused to do this, the loan would never be accepted. We have to make sure that the credibility of PRACS will not be spoiled due to the agreement, Quraishi added. Pakistan Railways has already


received Rs.4 billion from the Planning Commission, under the Public Sector Development Program in December, which will also be spent on locomotives rehabilitation.


Rs.80 million gas stolen per day

Pakistan has the largest number of CNG refueling stations in the world. The total number now stands at around 3,000. Pakistan also has the highest number of CNG-powered vehicles-on-road. The number is estimated at around 2 million vehicles. The other truth that Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company (SSGC) want to hide is that more than 500 million cubic feet of gas per day is stolen, leaked or illegally sold to enrich private pockets at public expense. For SNGPL and SSGC, the unaccounted-for-gas (UFG) accumulates to an annual loss of over Rs.30 billion or Rs.250 Crore a month, every month of the year. The All Pakistan Textile Mills Association (APTMA) claims that it lost Rs.100 Crore in December because of gas and electricity outages. According to a World Bank report, UFG in Organization for Economic Cooperation and Development (OECD) countries is typically 1-2 percent while the same at Pakistan two gas distribution companies has now risen to as high as 13 percent (every percent gas loss amounts to a loss of Rs.2.5 billion for the two gas distribution companies). The main culprits in Pakistan are gas theft, tampered meters, illegal connections and CNG stations (particularly the ones owned by parliamentarians). There have also been reports that the Oil and Gas Regulatory Agency (OGRA), in connivance with gas thieves, has been aiding gas theft. No one in the PPP government is paying much attention to UFG. According to the State Bank of Pakistan (SBP), the worst is yet to come as SBP fears gas crisis to worsen in 2016 when shortfall is expected to hit 3.021 billion cubic feet per day with no big discoveries in sight. Stolen gas or UFG, according to the World Bank, is a major contributor to the gas supply crisis and if the volume of lost gas could be channeled to power generation the furnace oil substitution value would be three times higher. Intriguingly, some four years ago UFG was one-third of what it is now.

NAB recovered Rs.9.52 billion in three years, NA told

The National Assembly was informed on Monday that as many as 684 cases including 25 those of politicians were pending with the National Accountability Bureau (NAB). In written reply to a question from Dr Muhammad Ayub Sheikh, the Law Minister Maula Bakhsh Chandio said that the NAB while pursuing its mandate, primarily initiate proceedings in offences covered under the provisions of National Accountability Ordinance 1999. The offences against which the NAB acts include accepting or offering gratification, obtain pecuniary advantage through illegal means, misuse of authority, willful default, cheating members of public at large, breaches of trust assets beyond known sources of income. The minister said the 684 cases pending in the NAB include 25 cases of politicians, 334 cases of government servants, 174 cases of business and 151 those of others. To a question from Shireen Arshad Khan, the Law Minister said that NAB recovered Rs.9.52 billion from culprits in the last three years. He said that during this period, the Bureau took up 871 inquiries and out of those 587 inquires were completed. As many as 335 which were completed were pending for the last many years while 253 references against accused were filed in courts on completion of inquiries. As many as 164 references were disposed of with punishments awarded to the accused persons.

Blown fuses: Cash-strapped civic body to pay Rs.8 billion for light bulbs
The capital managers have decided to execute a multi-billion-rupee plan that has been panned by all and sundry within the Planning Commission and Transparency International (TI), The Express Tribune has learnt. The Capital Development Authority (CDA) Chairman Farkhand Iqbal seems bent on getting the wheels turning on a Light-Emitting Diode (LED) project. Under the project, around 65,000 conventional streetlights in the city will be replaced by LED lights, which cost significantly more than normal lights, but have lower operational costs, longer life, and are more environment friendly. The CDA has awarded the LED lights contract, worth approximately Rs.8 billion, to a firm backed by an influential Islamabad-based businessman with close ties to the upper echelon of the ruling Pakistan Peoples Party. Transparency International (TI) expressed concern over the opaque manner in which the contract was awarded. TI Chairman Adil Gilani confirmed the development and said that TI is still investigating the project, while adding that he had asked the CDA chief to revisit the award decision as transparent procedures were not observed. The suggestion seems to have fallen on deaf ears. The project was also discussed by the


Senate Committee on the Cabinet Division, during a recent meeting, with Committee Chairman Shahid Hussain Bugti referring to the project as a scam in the offing. CDA officials would not confirm the final award of the project, but sources said that it has already been awarded to an international company. The project will be financed by a loan from the Asian Development Bank. CDA officials said the proposed loan would severely impact the already weak finances of the CDA, which are bleeding in the red at the moment. The sources added that the. A senior CDA official said priority should be given to dozens of public-interest projects including new sector development and the replacement of water supply lines, both of which have been delayed due to the agencys inability to finance them. Sources in the Planning Commission told The Express Tribune that former CDA Chairman Imtiaz Inayat Elahi could not ensure the early execution of the project, which in turn led to his replacement with Farkhand Iqbal, who was the senior chief of the Planning Commissions energy wing. The sources believe that Iqbals background in the Planning department could help get the project pushed through. The sources also said that Iqbals name was forwarded by Faisal Sakhi Butt, the chairman of the new Prime Ministers Task Force on CDA and a well connected member of the ruling party. When approached for comment, Butt told The Express Tribune that he had only suggested Iqbals name from a list of potential candidates and that the final decision was the prime ministers alone. Another historic first may be connected with the deal, as CDA Electrical and Mechanical Director General Abrar Shah, who is also in charge of the project, was recently promoted to member engineering. It is the first time since the CDA was set up that an electrical engineer has been appointed member engineering, a post usually occupied by civil engineers. When The Express Tribune approached Faisal Butt, he said the LED lights project is vital for the city based on donors recommendations and the fact that the project would save the CDA 30 to 40 per cent on its power bills (around 18 megawatts) that could be used for other purposes, while adding that he had nothing to do with the project. CDA Chairman Farkhand Iqbal did not answer his phone when contacted. However, CDA spokesperson Ramzan Sajid said that Iqbal was busy preparing a presentation for Planning Commission Deputy Chairman Dr. Nadeem ul Haq on the citys proposed energy system. Dr. Haq would not comment on the project, saying that his comments had previously been distorted in the media, and he would not be making any statements on the issue.

SECP News (www.secp.gov.pk)

SECP Chairman meets KSE Board of Directors
The SECP Chairman, Mr. Muhammad Ali, met the outgoing and newly constituted Board of Directors of the Karachi Stock Exchange on Thursday. In his address to the Board members he appreciated the valuable services rendered by the outgoing Board. He expressed the belief that the new Board would deliver in the best interest of the capital market adopting a coherent approach and discouraging any compartmentalization of the Board while benefiting from the extensive knowledge and expertise of individual members. He emphasized that the investors interest should be supreme, over and above members interest and the management and Board are jointly responsible for the protection of investors.

Seminar on corporate compliance and eServices

The SECP organized a seminar in collaboration with the Institute of Chartered Accountants of Pakistan (ICAP) at the ICAP House in Lahore. The purpose of the seminar was to make practicing members of the ICAP more aware of the corporate compliance requirements in the wake of the modernization in corporate compliance culture for companies operating in the eServices regime. The keynote address regarding Corporate Compliance & its importance was given by Mr. Nazir Ahmed Shaheen, Executive Director (Corporatization & Compliance) Department, SECP, who touched on the governing statute for the companies and the SECPs role as an apex regulator of corporate sector and capital market.

Finance Minister appreciates SECPs initiative

The Federal Minster for Finance upon invitation of the Securities and Exchange Commission of Pakistan (SECP) had a visit to the Karachi Stock Exchange, today. The Minster highlighted various financial and economic reforms undertaken by the Government of Pakistan over the last few years. While


appreciating the SECPs initiative for improving liquidity in the market, enhancing investor education and awareness and the brokers capacity to trade, he announced the approval of SECPs proposal on revamping of Capital Gains Tax (CGT) submitted to the FBR last week. The SECP had been in dialogue with the Ministry of Finance and the FBR on the rationalization of CGT. The following solutions have been agreed upon for a more balanced and investment friendly CGT approach.

SECP relaxes condition of license to non-profit associations under Section 42

The SECP has made amendment to the conditions for grant of license to not-for-profit associations under Section 42 of the Companies Ordinance, 1984, regarding allowing of investment in associated companies. The condition in this regard required that the not-for-profit association shall make no investment, whatsoever, in its associated companies, was originally imposed to restrict improper use of funds by the associations. However, it has been observed that the condition was causing problems for transactions backed by genuine reasons. The SECP has, therefore, amended the said condition of license. Now investment in associated companies can be made after prior approval of the SECP. After amendment, the above condition shall read: The Association shall make no investment, whatsoever, in its associated companies except with the prior approval of the Commission and subject to such conditions as it may deem fit to impose. It is hoped that the amendment shall facilitate genuine transactions by the not-for-profit associations which was earlier not possible.

SECP to consult public on new takaful rules

The SECP has approved the draft Takaful Rules, which will be published in the official Gazette of Pakistan to elicit public opinion. They will also be available on the SECP website. The 2012 draft Takaful Rules have suggested the establishment of a Central Sharia Board at the SECP, allowing conventional insurers to have takaful windows, formulation of risk management and rating procedures by takaful operators, and separate solvency requirements for each participant takaful fund. It is expected that after the promulgation of the new rules, the number of takaful service providers in Pakistan will increase substantially as all life and non-life insurance companies will also be allowed to offer takaful products. These companies have a wide distribution network in the country. This will enable them to tap into the large market which refrains from conventional insurance products considering them un-Islamic. Consequently, it would increase the insurance penetration in Pakistan. At present three general takaful (non-life insurance) companies and two family takaful (life insurance) companies are operating in Pakistan.

Updated website declared mandatory for all listed companies

All listed companies, as of May 1, shall be required to maintain a functional websitean initiative aimed at providing investors with cost-effective, easy access to information. The SECP has approved notification for mandatory requirements for listed companies to have a functional website. The said notification also details minimum information required to be disclosed on the website. The requirements for mandatory website have been approved after extensive consultation with both internal and external stakeholders. For purpose of convenience of stakeholders, website of companies shall disclose maximum information comprising of comprehensive profile and contact details of the company and its management, financial facts, figures, reports and symbol of the company.

Investments in associated undertakings SECP approves regulations to ensure transparency

The SECP has approved the Companies (Investment in Associated Companies or Associated Undertakings) Regulations, 2012, which will be given effect through notification in the official gazette. The regulations prescribe disclosure requirements and specify conditions and restrictions on the nature, period, amount of investment and terms and conditions attached to investment by a company in its associated companies or associated undertakings. This will help achieve the following objectives:-


To ensure transparency in transactions involving investments made by companies in their associated companies or undertakings through adequate and standardized disclosures to the members. To curb the unfair practices that have been observed in such transaction by imposing certain restrictions and conditions felt necessary based on regulatory experience; and To introduce detailed and standardized requirements in order to avoid ambiguities and fill the gap in the perspective of the corporate sector vis--vis that of the regulator in respect of investments in associated companies or undertakings.

Insurance companies directed to combat money laundering

The Securities and Exchange Commission of Pakistan (SECP) has issued a directive to the insurance companies on the anti-money laundering (AML) regime, including the customer due diligence/know your customer (CDD/KYC) policies and designation of compliance officers. The directive has been issued to address the gaps related to the threat of money laundering in the insurance industry. In order to promote the anti-money laundering practices such directions are prescribed and implemented by regulators globally in the financial sectors. It is pertinent to mention that such regulatory directions on AML are already enforced and applicable by the SECP in the non-banking and finance sectors in Pakistan. In the larger interest of the insurance industry for customer due diligence and to combat money laundering, it is important that the regulator and insurance industry join forces for the implementation of this directive and other future course of action on the AML. This directive is applicable to all public and private sector insurance companies. It may be added that money laundering refers to the process of concealing the source of illegally obtained money and the methods by which money may be laundered. Many regulatory and governmental bodies have taken measures to prevent this practice and regardless of the difficulty in measurement, the amount of money laundered each year is in the billions dollars and poses a significant policy concern for governments. As the governments and international organizations undertake efforts to deter prevent and apprehend money launderers, the financial institutions also make efforts to prevent and detect transactions involving laundered money, both as a result of government requirements and to avoid the reputational risks involved.

SECP briefs NA body on its functions and performance

The SECP Chairman, Mr. Muhammad Ali, briefed the National Assemblys Standing Committee on Finance, Revenue and Planning and Development on its functions and performance in a meeting held at the SECP head office on Thursday. Ms. Fauzia Wahab, Chairperson of the committee chaired the meeting. The SECP Chairman welcomed the honorable members and thanked them for taking time out to visit the SECP. It was an interactive session during which the members provided suggestions and sought clarification on various issues. In his detailed presentation, Mr. Ali outlined the SECPs role, objectives and responsibilities. He also briefed the committee on major issues faced by the capital markets as well as the corporate, NBFC and insurance sectors. Mr. Ali also discussed the future roadmap and strategy of the SECP, especially with regard to legal, fiscal and regulatory reforms. He highlighted the importance of a robust legal and regulatory framework for the development of the financial markets as it provides the necessary structure for product innovation, market integrity and enables the regulator to maintain investor confidence. He also requested the honorable members for support in finalizing pending legislation.

KSE Board: SECP names independent directors

The Securities and Exchange Commission of Pakistan has re-nominated/re-appointed Mr. Muneer Kamal, Shazad G. Dada, Asif Qadir and Abdul Qadir Memon on the Board of the Karachi Stock Exchange (KSE) for the 2012 term. They had also served on the KSE Board last year as independent directors and their appointment can be seen as a fair balance of the requisite qualifications and skills on the board. Mr. Muneer Kamal, presently vice-chairman of the KASB Bank Limited, has over 28 years of extensive experience of the banking and financial sector during which he has served locally and internationally on senior positions at various renowned banks. Mr. Shazad Dada, CEO, Barclays Bank PLC, Pakistan is a


seasoned banker and a prominent capital market professional. He has over 20 years of major national and international financial markets experience. Mr. Asif Qadir, president and CEO, Engro Polymer and Chemicals Limited, has over 30 years of management and marketing experience of the chemical and fertilizer sector and has served in key management positions on the chemical giant Engro Corporation Limited. Mr. Abdul Qadir Memon, Fellow of the Institute of Taxation Management Pakistan and President, Pakistan Tax Bar Association, is a senior resource and is a renowned tax and corporate laws expert, possessing an in-depth knowledge about the various aspects and implications of the corporate matters and company laws. It is expected that the KSE Board in particular and the capital markets in general, will continue to benefit from the mix of extensive knowledge, global experience and diverse expertise that the above professionals possess. It is hoped that the directors will continue to contribute positively to promoting principles of good governance, transparency and will be instrumental in bringing about various capital market reforms.

SECP issues orders and warning letters

In order to develop an efficient and dynamic securities market and to safeguard the investors interest, the Securities Market Division of the Securities and Exchange Commission of Pakistan took enforcement actions and penalized the market participants for non-compliance to the regulatory framework during the month of December 2011. An order was passed against Zafar Moti Capital Securities Ltd, member KSE, under the Brokers and Agents Registration Rules, 2001 whereby the registration of the said brokerage house was suspended for 15 days for non-compliance to the Commissions earlier orders. Further, a show cause notice was served to a commercial bank under section 15E of the Securities and Exchange Ordinance, 1969 and to a brokerage house of KSE under Section 22 of the Securities and Exchange Ordinance, 1969. In two separate instances, warning letters were issued to two brokerage houses of KSE and two individual investors for execution of Wash Trades. Warning letters were also issued to two brokers of KSE and LSE for execution of Blank Sales. Moreover, 2 warning letters were issued to the directors of a listed company for non-compliance to Section 224 (4) of the Companies Ordinance 1984.The copies of all the warning letters are available on the SECPs website. During the month, SECP granted approval under Section 57(1) of the Companies Ordinance, 1984 to issue, circulate and publish the prospectus for issue of 12.50 million ordinary shares by Next Capital Limited. 22 investor complaints pertaining to brokers and 4 complaints pertaining to listed companies were resolved. Further, three amendments were approved in the regulatory framework of NCCPL and ISE.

The SECP registered 271 companies during December 2011

The Securities and Exchange Commission of Pakistan (SECP) registered 271 companies during the month of December 2011. A total of 3,596 companies were registered during the calendar year 2011 as compared to 3,137 during 2010, reflecting an increase of 15%. These companies constitute 3,239 private companies, 28 public unlisted companies, 255 single member companies, 51 not-for-profit association, 15 foreign companies, 5 trade organizations and 3 companies limited by guarantee. During December 2011, private companies have the highest share in new incorporation totaling 239 followed by 20 single member companies, five public unlisted companies, three not-for-profit associations and foreign companies, each, and a trade organization. Of the three foreign companies, two are from Turkey and the USA and have been registered in Islamabad, while a foreign company from Netherlands is registered in Karachi. Foreign investment by nationals from China is witnessed in three new local companies in the auto and allied, mineral, and services sectors and by nationals from Singapore and Afghanistan in two new local companies in tourism and communications sectors. The sector-wise position shows that the trading sector has the highest new incorporations with 39 companies, followed by services with 35, hajj and umrah services with 20, education with 14, construction and information technology with 13 each, communications with 12, tourism with 11, and food and beverages with 10. Company Registration Office (CRO), Lahore registered the highest number of companies, i.e., 88 followed by CROs Islamabad and Karachi registering 78 and 67 companies, respectively. Remaining CROs at Peshawar, Quetta, Multan and Faisalabad registered 17, 10, 7 and four companies respectively. The authorized capital and paid up capital of 271 companies, is Rs.4.53 billion and Rs.475.06 million, respectively. During the month, 19


companies increased their authorized capital with the aggregate authorized capital increment of Rs.1.57 billion and 42 companies raised their paid up capital with the total paid up capital increment amounting to Rs.3.15 billion.

The SECP enables automatic verification of e-Challans for payment of fee

The Securities and Exchange Commission of Pakistan (SECP) has enabled automatic verification of eChallans for payment of fee to it. The new procedure shall be implemented with effect from January 3, 2012, i.e., tomorrow, and is only available for online applications. Previously, at least one day was required in e-Challan verification after payment by the depositor at the bank. Under the new procedure, systems of both the SECP and MCB have been linked online and now payments can be verified automatically within a few hours time. As soon as the user shall make payment at the designated bank branch of MCB; the bank branch shall automatically send intimation to the SECP of receipt of payment, for further processing. This new procedure is expected to enhance facilitation to the SECPs eServices users and substantially improve the turnaround time in disposal of online applications. This initiative is another step towards switching over to online environment as only the process of payment to the SECP is presently carried out offline. As a way forward, the option of direct transfer from the depositors MCB accounts to the SECP account in case of fee for online applications, is also being considered for implementation and is expected to be operational in the coming months.

FBR News (www.fbr.gov.pk)

Negotiations held between Pakistan and Senegal on Avoidance of Double Taxation
First round of four-day negotiations concluded here today at Islamabad between the delegations of Pakistan and Senegal on the draft Convention for Avoidance of Double Taxation and Prevention of Fiscal Evasion with respect to Taxes on Income. Pakistans delegation was headed by Mr. Shahid Hussain Asad, Member (Inland Revenue), Federal Board of Revenue, while the Senegalese delegation was headed by Mr. El Hadji Ibrahima DIOP, Director of Legislation, Studies and Litigation. The Senegalese delegation was briefed about the tax system of Pakistan, its economy and the 61 Conventions/Agreements for Avoidance of Double Taxation that Pakistan has signed with other countries so far. The negotiations were conducted in a cordial and friendly atmosphere at FBR Headquarters, Islamabad. Both sides presented and appreciated each others respective positions. The negotiations will continue in its second round to reach an agreement between the two countries in near future.

Customs collectorates to remain open on Saturday 28th January, 2012

FBR has ordered that all the Model Customs Collectorates shall remain open on Saturday 28th January, 2012, as normal working days in order to facilitate the trade and industry in getting their cargo cleared for imports and exports. The management of State Bank of Pakistan and National Bank of Pakistan has been requested to provide banking facility by the designated branches on the above mentioned dates to ensure the payment of duty and taxes. The port authorities/port operators have also been advised to synchronize their working, accordingly.

Taxpayers Interaction Seminar held at RTO Hyderabad

Facilitation and Taxpayers Education (FATE) Wing of the FBR arranged a Taxpayers interaction seminar at Regional Tax Office (RTO) Hyderabad today. The seminar was arranged by FATE Wing, in coordination with RTO Hyderabad, as part of a series of seminars currently being arranged under Taxpayers Awareness Initiative and was attended by members of Hyderabad Tax Bar Association, Central Sindh Tax bar, representatives of major withholding agents, Chambers of Commerce & Industry of Hyderabad, Mirpurkhas and Thatta; Sindh-Balochistan Rice Millers Association, representatives of Pakistan Tax Bar Association and FBR officials. During the interactive seminar, detailed presentations were made on working of the Facilitation and Taxpayers Education (FATE) Wing, Documentation of Economy & Tax Evasion and e-services for Taxpayers followed by a detailed Questions and Answers session. During the Questions and Answers session, the participants voiced their concerns over the topics covered in the


presentations and highlighted their general and specific issues. The FBR officials present in the seminar addressed those concerns and noted down the suggestions for further perusal. The participants also appreciated the initiative of Taxpayers interaction, awareness and facilitation undertaken by the FATE Wing of the FBR and said that this should be made a regular feature. The Chief Commissioner RTO Hyderabad Mr. Misri Ladhani, thanked the participants for attending the seminar and making it a success. He also appreciated the efforts of FBR officials of RTO Hyderabad for arranging the event and thanked the FATE Wing for providing an avenue for interaction between the taxpayers and the Federal Board of Revenue. Additional Commissioner Mr. Farooque Azam Memon and DC (HQ) Mr. Peer Khalid also addressed the seminar. During the Questions and Answers session, the participants voiced their concerns over the topics covered in the presentations and highlighted their general and specific issues. The FBR officials present in the seminar addressed those concerns and noted down the suggestions for further perusal. The participants also appreciated the initiative of Taxpayers interaction, awareness and facilitation undertaken by the FATE Wing of the FBR and said that this should be made a regular feature. The Chief Commissioner RTO Hyderabad Mr. Misri Ladhani, thanked the participants for attending the seminar and making it a success. He also appreciated the efforts of FBR officials of RTO Hyderabad for arranging the event and thanked the FATE Wing for providing an avenue for interaction between the taxpayers and the Federal Board of Revenue. Additional Commissioner Mr. Farooque Azam Memon and DC (HQ) Mr. Peer Khalid also addressed the seminar.

FBR promotes officers of IRS to BS-20 & 21 on the basis of FST, Islamabad decision
The Federal Board of Revenue (FBR) strongly contradicts the false impression created through a section of the press on 29.12.2011 regarding promotion of IRS officers from BS-19 to BS-20 and BS-20 to 21, alleging that the promotions were made in gross violation of the verdict of Federal Services Tribunal, Islamabad. Promotions in Inland Revenue Service were made on the recommendations of Central Selection Board (CSB) and with the approval of the competent authority. Federal Service Tribunal in its decision dated 02.12.2011 had inter-alia observed that "Promotion and seniority are definitely not vested rights. Sections8 and 9 of the Civil Servants Act, 1973 read together with section 4(1) proviso (b) of the Service Tribunals Act, 1973 are very clear on that However, to be considered for promotion and seniority is a vested right. A civil servant may not be able to file an appeal to get seniority or promotion but he can definitely file an appeal to get meaningful consideration for his seniority/promotion. In the present case the appellants could not claim safeguard of their right to seniority and promotion. However, they could definitely make a prayer that they should have been considered correctly for their seniority/promotion. Recognizing the jurisdiction of FBR, the Honorable FST has further given observations as under:- That the Government/FBR is fully competent to decide this assertion of the appellants and respondents that some promotions have already been made in violation of seniority rules and even the aggrieved parties can seek remedy in appropriate forum. The Honorable FST vacated the stay order imposed on promotions with the following remarks: - That the FBR/Government may make promotions on the principle of seniority discussed above and the embargo imposed by the FST in that regard is lifted." In light of the decision of FST, Islamabad Seniority List dated 14.12.2010 is now valid for all practical purposes. Promotions already made from BS-20 to BS-21 and BS-19 to BS-20 vide Notifications dated 02.12.2011 & 03.12.2011 have not been rejected/nullified by FST, Islamabad and the final promotions were made in compliance of the orders of FST, Islamabad. The cases of those officers which could not be presented to CSB and so not considered for promotion due to seniority dispute or being junior in seniority in the impugned seniority list would be presented in the next CSB according to their seniority based on the list upheld by the FST. The senior officers if recommended for promotion would be re-assigned seniority in next scales as per their seniority upheld by the Honorable FST, Islamabad.

FBR Collects Rs.840.7 billion up to December 2011

According to the provisional figures, the FBR through cash reporting system has collected Rs.201.7 billion during the month of December 2011. Federal Board of Revenue (FBR) collected Rs.840.7 billion of revenue estimates up to December 2011, as compared to Rs.661.7 billion collected during the corresponding period of the last year i.e. up to December 2010, showing an increase of 27.05 per cent.


State Bank of Pakistan News (www.sbp.org.pk)

Government making headway towards improving its finances: SBP First Quarterly Report
Recent fiscal figures show that the government has been making some headway towards improving its finances. The budget deficit for the first quarter of FY12 was 1.2 percent of GDP, compared with 1.5 percent during the same quarter last year, says State Banks First Quarterly Report on the State of the Economy released today. It said that this reduction in the budget deficit was caused primarily by 29.7 percent growth in FBR revenues, on the back of increased tax collection efforts and higher revenues from imports. Non-tax revenues also recorded impressive growth of 50.4 percent, it added. However, on the basis of seasonal trend in FBR revenues, the amount collected up to end-Dec 2011, falls short of the amount needed to meet the annual target of Rs.1,952.3 billion, it said, adding that meeting end-year revenue targets would also depend upon the realization of CSF and sale of 3G licenses (around Rs.150.0 billion), in absence of which, it would be difficult for the government to contain the fiscal deficit within its annual target. The Report said that the federal government has budgeted a surplus of Rs.125.0 billion on part of provinces, however, due to 52.8 percent increase in their expenditures, provinces managed only Rs.11.6 billion surplus up to Q1-FY12, which was 85.7 percent lower than the corresponding period last year. Any short fall in the contribution by the provinces would make achievement of the fiscal deficit target more challenging, the Report cautioned. According to the Report the lack of external funding has put the burden of financing the deficit disproportionately on the banking system, which has led to crowding out of private sector and is acting as a disincentive for banks to perform their role of financial intermediation. Government borrowing from the banking system up to end-Nov 2011 was Rs.736.8 billion, against Rs.336.1 billion in the corresponding period last year. This amount includes Rs.391.0 billion borrowed from banks to retire PSE debt, which has now been transferred on to the governments books, it said, adding that unfortunately, PSEs continue to hemorrhage as a credible restructuring plan has not been put into action. As a result circular debt issue is likely to persist, the Report said. The Report said the governments efforts to keep its borrowing from SBP in check during the initial months of FY12, helped in keeping demand-driven inflationary pressures at bay, which was supplemented by the easing of food prices. As a result, YOY CPI inflation declined to single digit (9.7 percent) in December, 2011 after remaining in double digits for the last two years. While the increase in energy prices, recent weakening of Pak Rupee and the base effect may increase inflation in the coming months, the end-year average inflation is likely to fall close to 12.0 percent as projected earlier, the Report added. While SBP has shown its willingness to relax its policy to support the private sector as it did in July and October, 2011, it cannot add to the stress on the economy arising from weaknesses in other sectors. The most recent policy decision to keep the policy rate unchanged was influenced among others, by the weakness in external accounts during Q1-FY12, the Report observed. It said that Pakistan was fortunate in FY11 that its current account ended up in a surplus and, despite the drying up of FDI and other foreign investments; there was a net increase in its FX reserves. Given the rigidities in the trade account and the vulnerability of the financial account, sustaining this performance in FY12 was always going to be difficult. Nevertheless, the pace at which the current account deteriorated during the first quarter of FY12 took many by surprise. Specifically, the current account deficit for Sep 2011 alone was over US$ 1.0 billion, the Report added. The Report said that in the past, Pakistan has sustained larger current account deficits without losing its foreign reserves due to healthy inflows in the financial account. Unfortunately, owing to both domestic weaknesses and the international financial upheaval, financial flows have almost dried up, adding to the countrys economic vulnerability, it said, adding that while some financial inflows are expected, a part of the current account deficit is likely to be financed through reserves as was the case during July-October FY12. This has important implications for monetary management and price stability, the Report observed. The Report noted that the government is, however, optimistic that the 3G telecom license fee will be realized. In addition, due to recent developments, there is still optimism that parts of the CSF, bilateral assistance from the US, and the privatization proceeds of PTCL will be received. Furthermore, currency swap arrangements, which were recently formalized with the central banks of Turkey and China, will also facilitate bilateral trade and investment, easing the stress on the countrys reserves. Nevertheless, SBP remains vigilant that pressure on the Rupee is not translated into market speculation, which could


become self-fulfilling, the Report said and added that striking a balance in managing a flexible exchange rate driven by economic fundamentals and by market speculation (within the context of sharp currency movements in the global economy) is challenging. SBP will continue to monitor the forex market closely to remove any excessive volatility in the Rupee, the Report added. The Report said the policy makers were hopeful that the country would put up a better economic performance in FY12 after last year, which was a difficult one for the economy, not only due to the devastating floods that hit the country early in the fiscal year, but also due to the lack of external financing and energy shortages. The Report observed that realizing the 4.2 percent growth target for FY12 GDP looks difficult due to a host of factors that include, among others, gas shortages, high oil prices and decline in global prices of agricultural commodities. (The complete text of the Report both in English and Urdu languages is available on SBP website: www.sbp.org.pk).

Mr. Yaseen Anwar asks banks to adopt agri. financing as viable business model
Mr. Yaseen Anwar, Governor, State Bank of Pakistan (SBP) has urged upon the banks to adopt agricultural financing as viable business model through development of specific products/ schemes and disseminate best practices through grass-root level programs for farmers. Presiding over a meeting of Agricultural Credit Advisory Committee (ACAC) at SBP, Karachi today, he said the relevant federal & provincial government departments, farmers representatives and other players in value chain also need to create credit absorption capacity of farmers through adoption of best modern farming practices, development of storage & marketing systems and resolution of other real side issues. He said that heavy rains of 2011 and devastating floods in 2010 have greatly affected the national economy in general and agriculture sector in particular. The credit requirements of farmers have also increased significantly besides adjustment of existing agricultural loans, he said, adding that agriculture remains the mainstay with a contribution of more than 21% to the GDP and around 60% of the population depends on agriculture related activities for its livelihood. SBP Governor said that banks need to develop a comprehensive agricultural finance policy for settlement, rescheduling & restructuring of loans of the affected borrowers in addition to providing fresh credits for the rehabilitation and revival of the economic activities in the affected areas. The federal & provincial governments would also need to initiate support & relief packages for the affected areas, he added. Mr. Anwar said that in order to ensure timely and quick loan disbursement to help the agriculture sector and revival of economic activities in the affected areas, SBP in collaboration with banks has taken a number of initiatives including Refinance Scheme at discounted rates of 8% coupled with Credit Guarantee Scheme for loss sharing of banks up to 40%. Banks were also allowed to restructure the existing loans and write-offs in cases where the recovery of loans is not possible, Mr. Anwar added. He said the crop loan insurance scheme introduced by the government for production loans for five major crops has also supported the sector whereby claims of around Rs 800 million (including around Rs.550 million of the borrowers of ZTBL) have been settled by insurance companies in 2010 and 2011. He pointed out that agricultural credit is highly skewed towards farm sector i.e. around 68% whereas credit to non form sector including livestock sector is only 32% as compared with its contribution of 55% to agriculture GDP. The SBP Governor announced the setting up of an Implementation Committee to ensure timely implementation of the action plan prepared by the ACAC Special Committee, constituted in December, 2010. This Implementation Committee will be headed by the Executive Director, State Bank of Pakistan and include members from provincial agricultural departments, farmers representatives, Pakistan Banks Association (PBA), ZTBL and SBP Banking Services Corporation. The Committee will also collaborate with Regional Agriculture Focus Groups of SBP-BSC offices to get feedback on the implementation strategy and ensure timely implementation of decisions/ recommendations. The update on the progress of implementation would be made to the ACAC in its next meeting. Mr. Anwar highlighted the key initiatives taken by SBP during July, 2010 to December, 2011 that include: Introduction & completion of Pilot Project Phase III with 87% achievement of set targets, in 51 agriculture intensive districts covering 75% of total farm households in the country.


Successful arrangement of six Training Workshops for CAD/Risk Management Departments of Banks on Agricultural Loan Documents/Procedures, training 178 senior officials of agricultural lending banks, SBP and DFSD, SBP-BSC. Finalization of a primary framework of commodity operations after deliberations with key stakeholders which will evolve proper storage, fair & transparent price mechanism & postharvest financing system (the assignment has now been shifted to Pakistan Mercantile Exchange for its implementation). Arrangement of Agribusiness Finance Workshop at Netherlands for senior officials of SBP & SBP-BSC and agricultural lending banks to create awareness, build capacity of banks in enhancing outreach of agricultural credit. Launching of 6-week specialized Internship Program for students of Agricultural Universities/Departments from 5th July, 2010 at SBP to facilitate provision of quality human resource for banks in agricultural financing to achieve the overall objective of access to finance to the farming community. Arrangement of Knowledge Sharing Session with Central Bank of Indonesia for learning their key success factors in the area of agricultural/ rural finance. To educate agriculture graduates about the basic structure of agricultural financing, related policies, schemes, initiatives taken by SBP to enhance the outreach of agricultural/ rural finance, arranged eight Policy Adequacy and Awareness Seminars on Agricultural Financing so far at different agriculture universities of the country. To ensure timely disbursement of agricultural credit to the farming community, revised the list of documents to be obtained by banks against various kinds of agricultural loans and streamlined the turnaround time for agricultural loan processing through ACD Circular No. 02 of 11th August, 2010. In order to revive SMEs & agricultural activities in flood affected areas, issued a Refinance Scheme vide SMEFD Circular No. 16 of 2010 for improving access to finance in 78 flood affected districts notified by National Disaster Management Authority (NDMA). To ensure availability of credit to the farmers for the purchase and maintenance of efficient systems and techniques, developed Guidelines for Efficient Water Management Financing, which was issued vide AC&MFD Circular No.2 of 2011.

He said the above mentioned initiatives of State Bank are important but the real benefits can only be reaped through collaborative efforts of all the stakeholders including banks, relevant departments of Federal and provincial governments and farmers representatives. The meeting was informed the mid-year (July-December 2011-12) performance of agricultural credit remained satisfactory wherein, total disbursement registered an optimistic figure of Rs. 125 billion which included additional Rs. 5.5 billion by Microfinance banks as compared to the last years Rs. 102 billion for the same period with 23% overall growth rate. This positive trend indicates gradually building trust of formal sector towards agricultural financing because of its sustainable nature and showing signs of recovery after overall recessionary environment. An amount of Rs 285 billion is the indicative agricultural credit disbursement target for banks and Microfinance Banks (MFBs) for 201112 which is 8.4 percent higher than 2010-11 targets.

Financial Literacy Program to serve the interests of all financial sector stakeholders: Yaseen Anwar
Mr. Yaseen Anwar, Governor, State Bank of Pakistan has said the Nationwide Financial Literacy Program (NFLP) will work towards improving financial inclusion and also serve the interests of all financial sector stakeholders. Delivering his key-note address at the launching ceremony of the Program at SBP Learning Resource Centre, Karachi today, he said it will initially impart basic financial literacy to poor and marginalized people of Pakistan. He said the NFLP pilot will impart financial education and awareness on six personal finance themes that include budgeting, savings, investments, debt management, financial products, branchless banking and consumer rights & responsibilities to about 50,000 beneficiaries from low income strata. Pakistans first-ever Nationwide


Financial Literacy Program (NFLP) has been launched with the support and collaboration of Asian Development Bank (ADB), Pakistan Banks Association (PBA), Pakistan Microfinance Network (PMN), Pakistan Poverty Alleviation Fund (PPAF) and Bearing Point. He said the program has been developed after the Financial Literacy Gap Assessment Survey of beneficiaries. The survey has been helpful in development and adaptation of curriculum and dissemination strategy. The curriculum will also be translated into national and main regional languages including Urdu, Sindhi, Punjabi, Pushto and Balochi, he added. SBP Governor said that the Program is financed under the ADB-funded Improving Access to Financial Services Fund (IAFSF) and implemented under the oversight of the IAFSF Committee which has representation from SBP, Pakistan Banks Association, Pakistan Poverty Alleviation Fund, Pakistan Microfinance Network, education sector, and the ADB. Upon completion of the pilot phase, an impact assessment of the pilot will be conducted by a third party, he said, adding that based on the experience and assessment of the pilot, the program will be scaled-up to target more than half a million beneficiaries all over the country. Mr. Anwar said that in addition to focused training sessions of beneficiaries, the dissemination strategy involves street theatres, board games, comic strips, activity-based competitions website and media campaigns to reach out the masses on a larger scale. The training sessions will be sourced from banks, Microfinance Banks (MFBs) and Microfinance Institutions (MFIs) based on their interest and pre-defined qualification criteria, he said and added that in order to encourage and incentivize participation from partners, professional fees and out of pocket expenses of partners will be reimbursed from the program budget. Besides involvement of local institutions, the project has formed international partnerships with international financial education programs including Microfinance Opportunities, Finmark Trust, Association of Microfinance Institutions of Uganda (AMFIU), Sewa Bank, Microfinance Innovation Centre for Resource and Alternatives (MICRA), World Bank Institute, Aflatoun, and others, Mr. Anwar added. SBP Governor said that consumer protection and financial education should be vital components of any financial inclusion initiative. It is now clear that policies which focus entirely on changing the supply of financial products and services can leave consumers ill-informed, vulnerable and not willing to participate in financial markets, he said, adding that focus of financial literacy program should be broader than financial inclusion. It should aim to increase consumer awareness about their rights, obligations and mechanisms for recourse to build a fair, inclusive and robust financial sector, he emphasized. He said: I would like to encourage financial service providers to partner in the NFLP rollout and exercise proportionate level of accountability and responsibility to act in the best interest of their clients. Intermediaries should fully disclose their terms and conditions to clients before selling them a product or service. Mr. Anwar said that many poor and non-poor people do not have a bank account and very few of them understand why this puts them at a disadvantage when it comes to their personal financial management. According to Pakistan Access to Finance Survey (A2FS), only 12 percent of the population has access to formal financial services. Whereas of the remaining 88 percent, only 32 percent are informally served and 56 percent are completely excluded, he said, adding that according to the A2FS analysis, about 40 percent of the financially excluded population reported lack of understanding of financial products as the main reason for financial exclusion. This clearly identifies the need for financial education as a systemic area to be addressed to tackle financial exclusion in a big way, he said and added that financial literacy has assumed greater importance in recent years for both developed and developing countries, therefore, best practices in this area are still evolving. He briefly touched upon various conventional and non-conventional measures adopted by SBP to boost financial inclusion which are as under:i. ii. SBP introduced Basic Banking Account (BBA), a simplified financial product for low income consumers. SBP introduced Microfinance Banking Regulations in 2001 to specifically meet the demands of low income consumers.


iii. iv.

SBP has adopted innovative solutions to overcome geographical barriers, including branchless banking through retail agents and harnessing technology via mobile-phone banking. SBP has been managing various market interventions funded by donor agencies that include:-

a. The Institutional Strengthening Fund (ISF) providing grant funding to microfinance (MF) providers to top and middle tier MFBs and MFIs for key investments in HR, IT, product development, risk management systems, business plans and branchless banking development. b. The Microfinance Credit Guarantee Facility to link microfinance with financial markets for mobilization of wholesale commercial funding through partial guarantees. c. Similarly, the Financial Innovation Challenge Fund (FICF) for grants to innovative projects and testing new markets to lower cost of delivery, enable systems and procedures to be more efficient and provide new ways of meeting the larger demand for financial services. d. And the Improving Access to Financial Services Fund which is supporting todays program. However, he said that these are mostly supply side interventions aimed at increasing the financial services by removing bottlenecks and have raised financial inclusion to a certain extent. What has been missing is a demand side solution a program to impart financial education and awareness to consumers, he said, adding this recognizes that the very low level of financial awareness and confidence of financially excluded groups remains a strong barrier to their access and use of financial services.

State Banks Clarification

The State Bank of Pakistan (SBP) has categorically denied reports appearing in a section of the press today (January 20, 2012) which stated that it (SBP) opposed the debt swap deal with commercial banks. The State Bank Spokesman today said that the issue of debt swap deal with commercial banks was not discussed in the meeting of Monetary and Fiscal Coordination Board, which was held under the chairmanship of the Federal Finance Minister, Dr Abdul Hafeez Shaikh in Islamabad yesterday. Therefore, the question of SBP Governor, Mr. Yaseen Anwar conveying his reservations about the governments move to strike a deal with commercial banks to swap Rs.163 billion debt with them does not arise. The Spokesman regretted the linkage of the reports between the so-called SBP comments and the Prime Ministers policy statement in the Parliament yesterday in which Syed Yousuf Raza Gillani presented the proposed debt swap deal as a solution to the circular debt. The SBP Spokesman said that since the matter regarding the debt swap deal was never discussed in the meeting of Monetary and Fiscal Coordination Board, its linkage with the Prime Ministers policy statement is un-called for and highly mischievous.

SBP, LUMS study to help increase lending to SMEs

The State Bank of Pakistan (SBP) today launched an important study on fan industry in collaboration with the Lahore University of Management Sciences (LUMS), which will help Pakistans banking sector expand access to finance for the Small & Medium Enterprises (SMEs). The study covers important aspects of fan industry including historical growth trends in the industry, composition, contribution to national economy, supply and demand side issues, SWOT analysis, available growth opportunities, accounting practices, banking and financing needs of the sector, and recommendations on increasing access to finance for the fan cluster. According to the study, the most essential point for the sustainable development of the fan industry in Gujrat and Gujranwala is to improve the capacity for independent innovation to help the industry reach a higher place along the global value chain. The study contains four patterns of innovation proposed by the United Nations Industrial Development Organization product innovation, process innovation, function innovation and interdepartmental innovation and emphasizes the role of inter-organizational R&D departments, research centers, new & advanced technology and universities. The study also recommends for the setting up of an implementation committee, whose mandate should


be to develop an implementation plan with clear time-lines and targets based on the strategy paper. A dissemination seminar was held at SBP, Karachi today to share the major findings of the study with banks and other stakeholders. Mr. Muhammad Ashraf Khan, Executive Director, State Bank of Pakistan chaired the seminar, which was attended by senior executives of banks and other relevant SME stakeholders. Addressing the participants, Mr. Ashraf Khan commented that in Pakistan, reliable and credible data on existing SME clusters is lacking, which hampers banks understanding of SME sub-sectors dynamics and resultantly makes them shy of lending to the SME sector. In this backdrop, he said, the State Bank has been collaborating with reputed research institutions/consulting firms to conduct research on key SME clusters to facilitate financial institutions in better understanding of the sectors and accordingly come up with improved products for these clusters. Today we are here to unveil findings of research report on fan cluster and emphasize upon banks to make maximum use of the study findings while designing banking products for the industry and fulfilling their financing needs., he added. Mr. Usman Khan, Project Consultant from LUMS, gave a detailed presentation to the participants covering the important aspects of the study, which was followed by a question-answer session. The study report on fan cluster is latest addition to the surveys of 10 important clusters recently conducted by SBP in collaboration with International Finance Corporation (IFC). The booklets of these surveys placed on http://www.sbp.org.pk/departments/ihfd-ifc.htm provide important guidance to banks on increasing lending to SMEs through customized and low-cost product programs.

NAB NEWS (www.nab.gov.pk)

NAB Board Meeting Held
The NAB Board meeting today discussed thread bare case of Parliamentarians Enclave Housing Scheme, Islamabad for payment to the affectees by former senator Ayaz Khan Mandokhail. It was noted that earlier a refund or Rs.55/- million to the affectees has been made. Later on, the accused backed out from his commitment and now after 4 years he has given a commitment to the Accountability Court that if his assets are released, he would make the payment to affectees. It was decided that NAB would proceed as per law to ensure the payments to the victims of housing scheme. The meeting also approved the plea Bargain of Seth Nisar in Bank of Punjab case for an amount of Rs.1035/- million out of which NAB has already recovered Rs.451/- million from him. The Plea Bargain request of Haji Sharif Ullah contractor of KPK for construction of sub-standard road was also approved. It also approved the voluntary return of Javaid Nazir and Brothers (Private) Limited Lahore for the willful default of Rs.53/million loan of ABL. The Board Meeting was chaired by Chairman NAB Adm (R) Fasih Bokhari. The meeting approved the filing of references against Rana Muzammal-ul-Haq for misappropriation of public funds from Punjab Cooperation Board for Liquidation, against Mohammad Saeed Khan DEN Pakistan Railways for corrupt practices, against Taj Muhammad Sarparah AFC / Incharge PR Centre Sariab Godown Quetta and others for taking away wheat from the government godowns illegally. On a complaint against Gerrys travels by the pilgrims for not providing the services to them as promised during pilgrimage, it was decided to ask the M/o Religious Affairs to inform the NAB about any action taken so far against such like travel agents. It was decided that if no action is taken by the Ministry against such tour operators NAB will take the action against them in future. The Ministry should secure financial arrangements with guarantees from tour operators in future. On specific complaint verification the Chairman observed that an affidavit from the complainant will precede the verification in order to avoid the frivolous complaints. The Board also allowed the closure of inquiries against Muhammad Saeed X-EN PWD; Syed Ghazanfar Ali Sherazi Advocate; Ghulam AKbar Khichi EDO; Muhammad Ejaz Ex-DCO; Ali Asghar DSP; Ameer Zada Khan Kohati Ex-DG MDA; officials of City Distt Govt, Karachi, Liaquat Ali Jotoi former Federal Minister; and Muhammad Mumtaz Khan Asstt Electric Inspector, due to lack of substantial evidence.

NAB Executive Board Meeting Held

The Executive Board Meeting of NAB today took a serious notice of getting no response from AGs Branch GHQ despite four reminders in case of NLC scam involving huge losses worth billions of rupees


incurred by Lt Gen (R) Afzal Muzaffar, Lt Gen (R) Khalid Munir and Maj Gen (R) Khalid Zahir Akhtar. The meeting decided to write a letter to M/o Defense in the matter to inquire whether any proceedings are going on against these officials in this case or not. In case no response is received from the Ministry within a week, NAB will take cognizance of the matter and proceed according to law. The meeting held this morning was chaired by Adm (R) Fasih Bokhari. The Board authorized to conduct the investigation against misappropriation of funds through the acquisition of land by Workers Welfare Board for the construction of labor complex at Kot Najeeb Ullah at District Haripur. The meeting accepted the voluntary returns of Farrukh Ali Shah X-EN, Wapda and Abdul Hafeez Nagi Superintending Engineer GEPCO. The Board also approved the closure of inquiries against Fazal Dad Kakar DG and Muhammad Shah Bukhari, Project Director National Museum Karachi due to lack of evidence and on the report of PWD that work done on the project was of quality. In another case of traffic police Karachi when it was found that no proof of corruption was available in imposition of fines in lieu of fine charges from owners of vehicles parked in no parking zones, the inquiry was closed. It also closed inquiries against Nisar Ali Sheikh retired Chief Inspector Explosives, Aman Ullah Khan Jadoon, Former Minister Works and Services, KPK on the lack of substantial evidence. A case against PDA officials was also closed after the market price of a commercial plot by a buyer was paid to PDA as a result of settlement.

NAB Board Meeting Held

The Executive Board Meeting today authorized inquiry to be conducted in the CDA plot allotments case in which plots were allegedly allotted to the favorites for building of schools, who are already managing schools in Islamabad. There were irregularities reported in such allotments. The Board meeting was chaired by Chairman NAB Adm(R) Fasih Bokhari here this morning in NAB HQ. In another case of tax evasion in Duty Free Shop at Sialkot, the Board decided to check the possibility to recover such amount by the customs department. In case of any difficulty the case would be considered for cognizance by the NAB. A case for plea Bargain of Naeem Akhtar of TMA Kohat was turned down as the original culprit Noor Daraz was trying to escape through this plea bargain. In the case of fake auto loans of Bank Alfalah, the Board decided to refer the case to FIA for finalization of inquiry. The Board decided to close inquires against Ismail Meman former DDO, Garo Sindh, Akhlaq Ahmad former X-EN KBCA, Dr. Affaq Ahmad Khan, Director APWA KPK, Dr.Abdul Qadir Retd MS DHQ Hospital D.I. Khan and Arshad Majid former DCO Kohat due to lack of evidence in these cases.

NAB starts Inquiries on the Orders of Supreme Court in Significant cases of Corruption
NAB has started conducting inquiries and investigation on the order of Honorable Supreme Court of Pakistan, against highly significant cases of corruption which included corruption in the affairs of Pakistan Railways, ISAF missing containers scam involving colossal and huge loss of duties/ taxes worth billions of rupees and corruption/misuse of authority in OGRA subsequent to the appointment of its last Chairman. Proceedings in all these issues have been initiated under the provisions of National Accountability Ordinance 1999 and significant progress has been made on some important aspects including recoveries in Pakistan Railways. In the scrap case, Railway officials and contractor are under custody of NAB out of which contractor has agreed to voluntary return of Rs.47 million as a difference for the scrap lifted so far from Railways and another Rs.240 million more as a difference in addition to the amount already agreed for the material / scrap to be uplifted by him. Negotiations are going on with Royal Palm Golf Club and its management has agreed to pay a substantial amount as increase to Railway authorities annually. Inquiry about the purchase of spares for Chinese locomotives is at the final stage which in fact was the major cause for halting the Railway operations. The Bureau is also conducting important matters of Bank of Punjab as per the directives of the Supreme Court of Pakistan. In this case NAB has so far recovered more than 5 billion rupees from the accused persons out of the defrauded amount of Rs. 9 billion and the process of further recovery is underway. As per the judgment of the apex court about revival of NRO cases, all of the terminated cases were revived and are being pursued in accordance with law. In this respect more than 100 weekly progress reports have been submitted on revived NRO cases before the Supreme Court of Pakistan. The matters pertaining to grievances of the general public and referred by the Honorable Court for redressal are being given due priority and


compliance reports are being regularly submitted to the apex court. This shows the commitment of the Bureau towards its obligations on matters particularly entrusted by the Honorable Supreme Court of Pakistan. The Bureau is conducting its proceedings on the complaints received from various sources and matters referred by the Superior Courts. The matters related to high level corruption and particularly referred by the Honorable Supreme Court of Pakistan are being given high priority whether the referred matters are pertaining to corruption or redressal of grievances forwarded through Human Right Cell of the Apex Court.

NAB Forms Committee on Land Revenue System to Suggest Preventive Measures against Corruption
National Accountability Bureau, being apex anti corruption agency of Pakistan is committed to eliminate corruption and corrupt practices from society through focused approach as enunciated in National Anti Corruption Strategy. Since inception, NAB has been taking various initiatives to create awareness and devise preventive measures against corruption besides enforcement operations. At present the land revenue management system of Pakistan is perceived to be one of the highest corruptions prone areas which not only affect the agricultural community in the rural sector but also it is a source of perpetration of mega land scams in urban areas. To resolve the issue of illegal allotment of state land, the Chairman NAB, under the provision of section 33-C of National Accountability Ordinance 1999, has ordered to carry out a preventive study of land revenue management system. In the Executive Board Meeting at NAB Headquarter Islamabad, a case regarding grabbing Government land though illegal and dishonest means was put up for authorization of investigation. The other factors relating to corruption of revenue department were also discussed. The Chairman NAB Admiral (R) Fasih Bokhari thus ordered to form a committee under section 33-C of NAO 1999 to prevent the malpractices in the department by identifying inherent weaknesses and other grey areas causing corruption in the land revenue management system. Director General Awareness and Prevention Division Lt Col (R) Siraj ul Naeem has been assigned the subject task. Findings of the committee, after approval of the Chairman NAB will be forwarded to concerned quarters for incorporation in legislation, rules and procedures. All the stakeholders including Members Board of Revenue of all provinces will be taken on board. This effort of NAB will streamline the land revenue management system. It will not only help in minimizing the corruption from the system but will also reduce the number of litigations thus reducing the burden from the courts and provide substantial relief to millions of people.

Transparency International Pakistan News (www.transparency.org.pk)

TI Pakistan urges CJP to take Suo Motu action against PIA for 'deliberate losses' (Part 2)
Hence, the available seats/cargo capacity gets restricted revenue shall be calculated on 75 percent of the available seats and cargo capacity, if available, Pax yield will be taken as 8.7 cts, Purchase Option Price, Benefit/Adjustment of any support package, considered of value by PIA. Violations are of Rule No 8 & 9 as PIA proposed procurement is not available on PPRA website of the Annual Procurement Planning, Rule No 38 as instead of Pakistani Law, the Governing Law of the Lease Agreement by PIA shall be Law of United Kingdom. That the former Managing Director of Pakistan International Air Lines Corporation (PIAC), Muhammad Aijaz Haroon, on September 26, 2010 told the Public Accounts Committee that PIA is suffering cumulative losses of Rs.144 billion. And National Assembly's Standing Committee on Defense on December 9, 2011 was informed by the present Managing Director, Nadeem Yusafzai that financial losses of Pakistan International Airliners have swelled to approximately Rs.100 billion. That such divergent and self-contradictory financial figures submitted by Chairmen to the National Assembly Committees needs to be seriously examined by the Chief Justice in the light of allegations made against the management for misguiding the nation as well as Parliament by the Pakistan Airlines Pilots Association (PALPA), Society of Aircraft Engineers of Pakistan (SAEP), Aircraft Technologists Association of Pakistan (ATAP), Flight Engineers National Association (FENA). On October 27, 2011 it was reported in United News that the Pakistan International Airlines (PIA) had to reduced its flights by 23 percent because nine of its 39 aircraft had been grounded for want of spare parts, which


are to be supplied by a Dubai-based US firm, Transworld under a controversial multibillion-dollar agreement. That it was reported in newspapers on November 6, 2011, that PIA had allegedly committed corruption in 2010 Hajj operation by giving bribe to Saudi Officials. Adil said: It has also been reported in the press that PIA would be getting ten A321 aircraft and ten A320 aircraft in 2012. In 2013, PIA would acquire as many as four ATR-72 and five 777-300ER aircraft while it would get six A321 planes in 2014. The manner in which losses appear in PIA books reflect some foul play like Steel Mills (from plus Rs.12 billion to minus Rs.100 billion in 2011) and Pakistan Railways losses (Rs.56 billion loss in last 3 years), and similar Ministry of Water & Power case of RPP's in which LCs were mandatory, and daily rent was contracted to be paid whether the RPPs were operational or not (Loss of Rs 2.0 to Rs.2.5 billion monthly), KESC (illegal benefit of over Rs.50 billion per annum under amended agreement of 2009) and therefore needs a thorough probe into affairs of PIA as well to determine the factors causing loss to the national flag carrier which has a monopoly in Pakistan's skies and on face of it no one can say that this airline is running in huge loss. Gilani said who is responsible for corruption, and who is benefiting from such corruption and corrupt practices cannot be determined unless the Supreme Court of Pakistan takes suo motu notice of the facts and circumstances so that the persons responsible be punished and money pocketed by them at the cost of national flag carrier be recovered.

TI Pakistan urges CJP to take suo motu action against PIA for 'deliberate losses' (Part 1)
Transparency International Pakistan has requested the Chief Justice of Pakistan to initiate suo motu proceedings against Pakistan International Airlines for "deliberate losses being incurred by PIA at the cost of public money". In a letter sent to Chief Justice Iftikhar Muhammad Chaudhry, on December 12, 2011, Transparency International Pakistan Adviser Syed Adil Gilani said that PIA is following in the footsteps of Pakistan Railways, and is minus Rs.144 billion and in deliberate default of payment on repairs, which has resulted in the grounding of 12 aircraft, and is fabricating excuse for buying 39 aircraft at an estimated cost of $2.5 billion in violation of Public Procurement Regulatory Authority (PPRA) Ordinance 2002 and Public Procurement Rule (PPR) 2004. PIA employees' associations--Pakistan Airline Pilots Association (PALPA), Society of Aircraft Engineers of Pakistan (SEAP), Aircraft Technologists Association of Pakistan (ATAP) and Flight Engineers National Association (FENA)--have also alleged that "deliberate losses are being incurred by PIA at the cost of public money." The affairs of PIA are very strange, with contradictory statements given by PIA in National Assembly, which gives impression that nothing is right in PIA. Following serious facts/irregularities have been brought to the knowledge of the Chief Justice: That on February 24, 2011 Ahmed Mukhtar, Minister of Defense, informed the National Assembly (NA) that the national flag carrier, Pakistan International Airlines (PIA), was only operating in 27 countries out of more than 250. "The reason for not operating in other countries is that it is not economically viable." He further said that PIA currently had a fleet of 40 aircraft, insured with the National Insurance Company Limited (NICL), which are in operational condition. He said that although all the 40 aircraft are in operational condition; they are taken out of service for short durations for routine maintenance as per the maintenance schedule. However, on December 7, 2011, PIA tendered for leasing of 39 aircraft, with 12 aircraft to be introduced in next 4 months. The questions raised by Pakistan Airlines Pilots Association (PALPA), Society of Aircraft Engineers of Pakistan (SAEP), Aircraft Technologists Association of Pakistan (ATAP), and Flight Engineers National Association (FENA) is that there are no funds for purchase/lease of these planes, and also there is no need, as the Minister himself had declared that all 40 aircraft are operational. The allegations made by them against PIA management are the current status of PIA cancellation of flights, long delays, nonpayment of bills for firms repairing aircraft engines, viz. JALCO Amman, where four PIA engines were repaired and are ready for delivery for last five months, and two PIA engines of A 310, which have been repaired and are ready for delivery for last five months. But due to non-payment of dues, they have not been delivered. Instead, two aircraft were leased during hajj on huge payment made more than the dues for the six engines which would have made two A 310 and one B 747 operational. Many more allegations of corruption have been made by Joint Action Committee of PIA Employees (JACPIAE) in its letter of November 15, 2011. That the specifications and evaluation criteria tender documents for procurement of 39 aircraft are tailor-made for using discretion by PIA in evaluating the tenders which are violation of Rule No 10 as Specifications shall allow the widest possible competition and shall not favor


any single contractor or supplier nor put others at a disadvantage, and Rule No 33, which prohibits PIA to introduce any condition, which discriminates between bidders or that is considered to be met with difficulty. Evaluation of financial proposal is not based on the lowest offered cost, which is the basis of PPRA, World Bank, and Asian Development Bank Rules. Likely delay in delivery schedule will carry revenue penalty, 75 percent seat factor of the seating configuration but limited to 143 seats. For seats above 143, 15 percent of additional seats will be taken for revenue calculation on year round basis, Cargo revenue shall be calculated at 60 percent load factor for available capacity after accommodating passenger baggage, taking the payload into consideration.

TIP challenges Rs.900 million water project in SC

The Transparency International Pakistan (TIP) has challenged Rs.900 million project of converting importable water into potable by bringing it on surface of the ground from underground in Tharparkar. Strongly criticizing the process of awarding contract of the project for installation at the vicinity of Thar Coal Project, the TIP has accused that the tender documents for the supply of the Reverse Osmoses Water Desiltation Plants and Submersive Pumping Units were made so difficult that 12 companies purchased the tender documents but surprisingly only one company submitted documents with 100 guarantee and the contract was awarded to it. The TIP expressed strong fear that it was stressed to observe transparency in a new way on this Rs.900 million project but the issue was stuck in the office of the Sindh.

Busting the myth: the perception of corruption in Pakistan

There is no doubt that Pakistan is facing a lot of economic problems, many of which are very grave in magnitude and depth, but the perception of corruption in the country is undoubtedly exaggerated. Assuming that the general public will be impressed by slogans of eradicating corruption from the country, some political parties have started giving timelines for getting rid of top-level corruption within 90 days of coming into power (for example, Imran Khan while addressing the Karachi rally). Transparency International, which helped in creating this widespread perception of rampant corruption in Pakistan, has a methodology for ranking countries in terms of incidence of corruption. It is based on a survey of perceptions, which sums up subjective views of a large number of respondents drawn from different segments of society. While the law of large numbers may in general regress towards truth, it does not help to study the phenomenon of corruption based on the perception of individuals. In a country where irrationality abounds, lack of information and an asymmetrical access to it gives rise to a lot of speculation on the part of the general public. In periods of lower economic growth, less or ill-informed economic agents tend to attribute the so-called unexplained gap between potential and actual gross domestic product (GDP) to corruption. It is evident from the global Corruption Perception Index (CPI) annually published by Transparency International that the incidence of corruption as perceived by people is negatively related with the level of GDP of the countries, i.e., low income countries tend to have more corruption as compared to the ones falling in the higher income categories. It must be noted here that the present article does not attempt to probe into the direction of causality between corruption and GDP or its growth. It must be stressed that the CPI is not based on a quantitative measure of corruption. In fact, corruption is such a concept that it is almost impossible to quantify it in an objective way. It is possible to come up with a quantitative estimate of corruption, based on some econometric models. However, Transparency International does not attempt to do so. The present government has failed miserably to manage the economy. While GDP growth has been significantly lower during the last three years (average annual growth of 2.9%) as compared to the period of the previous government led by General (Retd) Pervez Musharraf (average annual growth of 5.2%), there is no reason to assume that the level of corruption has gone up. In many cases, the size of corruption is directly proportional to the level of economic activity. With a slowdown in GDP growth, one would expect a decline in opportunities that may fall under the purview of corruption. Even, if we accept Transparency Internationals rankings the corruption score is actually slightly better than the last few years of the previous government. If supply of power and its rationing has increased in size and frequency, it is not because of an increase in corruption. If CNG is in short supply, it is again not due to an increase in corruption. If Pakistan Railway


and PIA are not performing, an increased level of corruption cannot explain these phenomena. On the contrary, all these are results of the mismanagement of the economy. So, those highlighting an increase in corruption under the present government must look for other credible objections to build a case against it. They would not have to work hard to point out other areas of failure of the present government and its policies on almost all fronts. The writer is an economist (PhD from Cambridge University).

Greek tragedy and Pakistan (Part one)

Jamil Nasir Analysts say that the underlying causes of the current Greek financial crisis are political cronyism, bribery, corruption and a culture of patronage. The financial crisis that has gripped Greece is seemingly due to ballooning debts and unsustainable fiscal deficit. But in order to determine as to what led to the huge fiscal deficit in Greece, we need to dive into the basics. Why does the state spend so lavishly but collect taxes so poorly? is the key question that needs to be answered in a bid to understand the real causes that characterize the Greek financial turmoil. This is what Marcus Walker wrote in his article published in the Wall Street Journal titled Tragic Flaw: Graft feeds Greek crisis. Marcus says that many Greeks are of the view that the answer to the above posed question lies in two Greek words fekelaki and rousfeti. Fekelaki means little envelopes of bribes that pervade every Greek institution and without such envelopes it is exceedingly difficult for a Greek citizen to get a service, which he is entitled to legally. Rousfeti means expensive political favors doled out by the political elite, which, in turn, induce inefficiency in the economy. Thus the underlying causes of the current Greek tragedy are linked to a deep-rooted culture of bribery and corruption. If this is the case, and Marcus information is correct, then we, as a nation, need a serious introspection as bribery, corruption and culture of patronage has permeated our daily lives as well. According to Transparency Internationals (TI) survey titled Daily Lives and Corruption: Public Opinion in South Asia released recently, 54 percent of Pakistanis are reported to have paid a bribe in their interactions with various public sector service providers in the last 12 months. About two thirds of them feel that corruption has increased in the last three years. According to the survey, 63 percent of the respondents rate police and the land administration as the highest corrupt departments, followed by registry and permit services (52 percent), customs (50 percent), utilities (49 percent), tax revenue (43 percent), judiciary (29 percent), medical services (20 percent), and education (17 percent). The findings of the survey also suggest that in most cases bribery was paid to speed things up, thereby meaning that those paying the bribes were otherwise entitled to the service but the same was delayed either due to complex and non-transparent bureaucratic procedures or due to overregulation or lack of accountability of the service providers or the combination of all. The main findings of the survey have already been widely publicized in the media and need not to be repeated here for space constraints. However, some survey findings show interesting results, which I will briefly discuss even at the cost of a bit digression from the main topic. The first result relates to the anatomy of the bribe payers with respect to gender. Disaggregated gender analysis shows that women were less likely to pay bribe than their male counterparts. The reasons for this may only be guessed as the survey report does not give any details (it is not supposed to). For example women are less exposed to public life due to peculiar socio-cultural norms of our society. Alternatively, they are more idealistic in their outlook than males (my apologies to those who may think otherwise). Another is with respect to income. Findings suggest that the people in the high quintiles of income are more eager to pay bribe than those in the lower quintiles of income. This is in line with the authoritative literature on corruption that emphasizes that the impact of the corruption is differential as it hurts the poor and the disadvantaged sections of the society more and favors the rich. Thus the argument that the elite may perpetuate corruption in a society by design as it suits their interests, certainly holds. Another policy implication is that the policies aimed at tackling poverty and inequalities will remain ineffective if corruption is not controlled simultaneously. Growing inequalities will threaten the social fabric of the society. If the perception prevails that growing inequalities are the result of the growing corruption, the legitimacy of the state will also be jeopardized. This results in erosion of confidence in the government and its institutions. People become less optimistic about the future. According to the findings of the TI survey the highest proportion of the people in Pakistan reported that they trust nobody to fight


corruption. This finding is peculiar to Pakistan as in other South Asian countries; the predominant majority believes that government leaders or media can make a difference in their fight against corruption. What are the implications? Simply, institutions are perceived to be corrupt and urgent steps of revolutionary nature are needed to regain the confidence of the people. It is possible only through demonstration of strong commitment against the culture of corruption and cronyism, especially from the political elite. Cosmetic changes and slogans will not work. But one thing is encouraging that 89 percent of the survey respondents believe that ordinary people can make a difference through their fight against corruption. But in order for them to do so, their real empowerment is a sine qua non, which is possible by facilitating their access to political, social and economic opportunities.

Bidding for housing project Transparency seeks probe into complaints

The Transparency International has sent a letter to the Capital Development Authority (CDA) informing its bosses about serious objections raised by three contractors to prequalification criteria set for awarding the Rs.3 billion contract of infrastructure works in Park Enclave, a housing scheme launched in Zone-IV five months back. According to the TI letter, the authority has been asked to form a committee to probe into the objections raised by Ghulam Rasool & Company, Mohammad Ayub Brothers and Matracon. These three firms have executed mega uplift projects in Islamabad, including underpasses, bridges and residential sectors. `Kindly institute the committee comprising of odd number of persons, with proper powers and authorizations, to address the complaints of bidders according to the requirement of rule-48 of Pakistan Procurement Regulatory Authority (PPRA), and the committee shall investigate and decide upon the complaint within 15 days of the receipt of the complaint,` the letter said. The CDA had prequalified four contractom, Maaksons, Habib Rafique, Echowest and SKB and received their technical and financial bids.The technical bids have been opened while the financial bids have not yet been made public. `We have formed two separate committees; one for evaluation of contractors/bids and the second for opening of bids to ensure transparency, `said CDA`s member planning Tahir Shamshad. He said it was for the first time that the CDA was awarding the contract on the basis of design and build proposals under which the successful bidder would have to prepare its own design and site plan and lay infrastructure facilities in the housing scheme. The TI said the principal accounting officer of the CDA shall conduct administrative review under PPRA notification dated February 10, 2010, on the findings of the complaints and take action in accordance with the conduct rules in the event of unfair and nontransparent procurement process. It also asked CDA Chairman Farkhand Iqbal to ensure that its officers did not violate PPRA rules, and re-advertised the tender to avoid charges of non-procurement if the complaint was found to be correct. About 15 construction firms had applied for pre-qualification, of which the authority short-listed four. An insider said delay in documentation process for selection of the firm could put on hold the development work since the same had been witnessed in other residential sectors. The delay, he said, would discourage the potential invest on. Former CDA chairman Imtiaz Inayat Elahi while launching the project had claimed that it would be completed in a record period of time. Park Enclave housing project would involve the construction of 700 houses in phase-I and another 600 in phase-K the cash starved CDA has offered 700 and 500-square-yard residential plots in the first phase. This is the first sector the CDA has launched for private citizens after decades. The scheme is located just four kilometers from Islamabad Club near the intersection of two 600-foot wide roads.

Transparency issues Pakistan corruption survey report

Corruption watchdog Transparency International for the first time has included Pakistans military in an annual survey, listing it as a notch more corrupt than the countrys education department. The Pakistan chapter of Transparency International reviews and ranks government departments according to the prevalence of graft in the system. Our land revenue and police departments are on top in corruption. The judiciary is ranked fourth while military is in ninth position followed by the education department, Sohail Muzaffar, TI Pakistan chairman, told AFP. Transparency International advisor Adil Gilani said the military had been included to dispel the impression that our surveys are biased. This time, we have ranked the military according to popular response about corruption in it. Next time we will have more comprehensive details, he said. It is public perception that others are more corrupt than the armed


forces, he added. Last year, the judiciary came in sixth. Delay in case proceedings and punishment has heavily contributed to the development of a perception that the judicial system has also fallen prey to corruption, said Gilani.

Malik threatens to expose corruption watchdog

Interior Minister Rehman Malik severely criticized the Transparency International Pakistan (TIP) on Thursday for what he said working against the interest of the country and threatened to reveal `real truth` behind such organizations working. In its national corruption perception survey released at a press conference on Wednesday, the TIP had said that land administration and police were the two most corrupt, and education and military the least corrupt departments. Speaking at a question-hour session in the National Assembly, Mr. Malik said: `TIP is not a big gun; it is just a non-governmental organization which works for its own vested interests. When a legislator drew Mr. Malik`s attention towards the TIP survey report, he said unlike the developed world where all departments were computerized on the basis of which the TI could prepare its report, in Pakistan things were totally different. For example, he said, most of the work in the revenue department was still being carried out manually. Therefore, he added, there was no need to believe what the TIP had said in its report about corruption in various government departments. `Some people and organizations don`t wants foreign investment coming to the country and, therefore, on and off they come up with such reports. When such organizations will say Pakistan is a corrupt country who will come here for investment, `he asked. In an attempt to substantiate his argument and respond to questions of lawmakers, Mr. Malik said: `If the house agrees, I should be given time some day to explain real story behind the TIP. `About corruption in the Federal Investigation Agency, the minister said he did not rule out corruption in the agency, but the government was making every possible effort to curb it. Over the past four years, he said, the government had terminated some 40 employees of the FIA who were found guilty of serious dereliction of duty. Mr. Malik said after the FIA had taken action against people like Hanani and Kalia involved in illegal transaction of money, remittances sent by overseas Pakistanis through legal means had reached over 11$ billion. Moreover, he added, Pakistan was no more on the watch list of countries where significant cases of human smuggling took place. In reply to a question, he said there were many loopholes in the existing law of evidence which was exploited by terrorists to get themselves freed from courts. `I strongly request this house to adopt necessary amendments to make the law of evidence an effective tool in the hands of lawenforcement agencies. The minister urged the legislators to approve a bill seeking setting up of a powerful national accountability commission. The ruling PPP and the opposition PML-N have differences over the bill.

Rampant corruption
Transparency International Pakistan (TIP) has released a stunning survey, putting land administration at the top of the most corrupt government departments while police, taxation, judiciary and the power sector occupy second, third, fourth and fifth positions respectively. In addition to this, the TIP has observed that the military is least corrupt, after the education sector. These findings are a source of terrible embarrassment for the nation. The police force has fallen to the second position from first, taxation climbed up by five places from last years eighth, judiciary moved to the fourth position as compared to last years sixth and the power sector improved by two positions to end up at fifth. The Supreme Court starting with the NRO, has so far taken suo moto action in at least half a dozen cases of corruption and recovered billions of rupees plundered by those holding official positions. Be it NICL, Steel Mills, PIA, WAPDA, Railways, KESC, the officials concerned have ruthlessly looted the national wealth. Although government functionaries spend much of their time paying lip service, maintaining they respect the Supreme Court, its decisions are far from being implemented. Instead, the government has chosen to adopt a defiant attitude. The question is that if ministers and secretaries are found to be involved in corruption scandals, then who will guard the guards? A federal minister and a director general Haj are languishing in jail on serious charges. The same minister has gone so far as to accuse the Prime Ministers son of accepting a very expensive automobile as graft. Another federal minister returned millions of rupees to save his skin. Yet another former federal minister is accused of accepting huge funds


for granting contracts to a foreign firm for producing electricity. The examples of governance go from bad to worse. And yet the president, in his speech at Garhi Khuda Bukhash, claimed having implemented 80 per cent of his party manifesto and the Prime Minister speaking on the floor of the National Assembly declared that all his pledges for the welfare of the people had been fulfilled. An unsettling claim to have made given the state of affairs.

Were killing education-Opinion

Dr. Javaid R Laghari Creation and application of literacy, education and knowledge through higher education is not one and the same thing. Literacy in Pakistan amounts to someones being able to read a newspaper and write a simple letter in a language. More focused on the adult population, Pakistan falls significantly behind many countries in literacy, and will not be able to achieve the MDG of 100 percent literacy by 2015. In the last five years, literacy has risen by only 3 percent to 58 percent, and therefore will probably reach 60 percent by 2015. The NCHD, which has now been devolved, failed to achieve the MDG in education. The number of adult illiterates is actually rising. Education, which falls within the jurisdiction of the provincial governments, is in a sorry state of affairs in Pakistan. HDI 2011 ranks Pakistan 145 (out of 187 countries) showing gross enrolment ratios for primary and secondary education at 85 percent and 33.5 percent, respectively. The Education for All (EFA) Development Index ranks Pakistan at 118 out of 129 countries. Similarly, the Prosperity Index ranks Pakistan at 105 out of 110 countries in the education category. The Pakistan Education Task Force 2010 reports that one-third of primary age children are not in school. It also reports that 35 percent of those children who do attend school and make it to grade 3 cannot do single-digit subtraction. On the other hand, a recent study by AKU IED found that around 70 percent of teachers teach for only 15 minutes in a 35-minute period, and 10 percent teach for less than five minutes. The Annual Status of Education Report 2010 shows drastic reduction in school enrolment from 16.7 percent in class 1 to 3.3 percent in class 10, and that more than half the children surveyed could not read even Urdu or a local language properly. About 4,000 ghost schools exist in Sindh alone. Enrolment figures according to the Economic Survey of Pakistan 2010-11 show about 19 million are enrolled in primary schools, 5.2 million in secondary schools, 2.6 million in SSC and 1.2 million in HSSC. Out of 600,000 passing HSSC, only about 100,000 enter universities and 180,000 enter degree colleges, while another 200,000 are admitted as private students and distance students. There are just not enough room at schools, colleges and universities! The only real difference is in the domain of higher education. Despite scarcity of funding, universities and campuses have opened in farflung areas and new academic programs and technologies have been introduced. Over 1,400 HEC scholars have completed their PhDs and joined the universities. Also, Pakistans share of research publications worldwide has gone up three-folds in the last eight years, which is quite an achievement. Eleven accreditation councils are functioning and focusing on improved curriculum, while 85 quality enhancement cells established at the universities are working to improve quality of education. Universities are being ranked for the first time, and as a result of these reforms, two universities are now among the top 300 technology universities of the world. Accessibility to higher education in Pakistan for age-group 17-23 is still among the lowest in the world, about 7.8 percent. This is lower than Ghanas at 9 percent and Cameroons 11 percent. South Korea enjoys among the highest accessibility at 98 percent, Finland at 94 percent and Israel at 60 percent. Among other countries having higher accessibilities are Turkey (38 percent), Iran (36 percent), Malaysia (32 percent) and Indonesia (21 percent). India is at 15 percent and increasing due to its heavy funding of higher-education. Even though the Pakistan Education Policy 2009 plans to increase accessibility to 10 percent by 2015, and to 15 percent by 2020, the government has reduced HEC funding. Pakistan spends only 1.7 percent of GDP on education, or less than half of what Vietnam Malaysia Thailand and Indonesia spend, respectively. Only six countries in the world spend less than Pakistan does on education. Within this already reduced pie for education, only 0.22 percent of the GDP (about 13 percent of the total education spending) goes to higher education. Pakistans commitment to the higher education sector was scaled back by 10 percent this year while India has raised its higher-education budget by 25 percent. This reduction in the HEC budget was in addition to the 40 percent cut imposed last year. India is spending 3.5 percent of its GDP on education, with 1.03 percent, or $11.5 billion, on higher education alone. This federal allocation through


the UGC is in addition to the states financially supporting university budgets, and in some cases providing up to 80 percent of the university budgets. Nine new prestigious IITs have been established in the last three years in addition to the seven original ones. Indias political leadership is sending out all the right signals. India has a Knowledge Commission headed by a world-renowned expert serving as an adviser to the Prime Minister; a ministry of human resource development, and a strong and centralized UGC. Recently, the Indian cabinet approved setting up the National Commission on Higher Education and Research (NCHER), following the HEC Pakistan model. Pakistan must invest foremost in education with renewed vigor. The lower education must focus on improving quality, while the HEC must be supported to raise Pakistans knowledge workers level to world standards. Any other direction will be suicidal for Pakistans education. The writer is chairman of Pakistans Higher Education Commission. Email: jlaghari@hec. gov.pk.

Transparency places military on its list for the first time

Corruption watchdog Transparency International has for the first time included Pakistans military in an annual survey, listing it a notch more corrupt than the countrys education department. The Pakistan chapter of Transparency International reviews and ranks government departments according to the prevalence of graft in the system. Our land revenue and police departments are at the top in terms of corruption. The judiciary is ranked fourth while the military is in ninth position followed by the education department, Sohail Muzaffar, TI Pakistan chairman, told AFP. The army is widely considered perhaps the most professional institution in Pakistan. Transparency International adviser Adil Gilani said the military had been included to dispel the impression that our surveys are biased. This time, we have ranked the military according to popular response about corruption in it. Next time we will have more comprehensive details, he said. It is public perception that others are more corrupt than the armed forces, he added.

International News
ACFE News (www.acfe.com) The 10 Tell-Tale Signs of Deception the Words Reveal
Suspects and witnesses often reveal more than they intend through their choices of words. Here are ways to detect possible deception in written and oral statements. The manager of a fast food restaurant calls the police late at night to report that an armed robber had entered the restaurant while the manager was alone in the office finishing some paperwork. The manager said the gunman had stolen the entire day's cash receipts a little more than $4,000. The manager had reported a similar robbery at the restaurant about six months earlier. No other witnesses were present at either alleged robbery. The restaurant owner learns from police investigators that armed robbery is extremely unusual in the surrounding neighborhood. Also, the owner knows that the manager's wages have been garnished for the last year for nonpayment of child support. The owner hires you, a FA/CFE, to investigate whether the manager is filing false police reports to cover his thefts. You begin your investigation by asking the manager to write a description of the evening's events.

Linguistic text analysis involves studying the language, grammar and syntax a subject uses to describe an event to detect any anomalies. Experienced investigators are accustomed to studying interview subjects' nonverbal behavior, such as eye contact and hand movement. Text analysis, on the other hand, considers only the subject's verbal behavior. Because text analysis evaluates only the subject's words, investigators can apply it to written as well as oral statements. In fact, many investigators prefer to analyze suspects' written statements for signs of deception before conducting face-to-face interviews. Text analysis is based on research originating in the 1970s. Psychologists and linguists studied the language and word choices of subjects in controlled experiments and found predictable differences between truthful and deceptive statements. Susan Adams, an instructor who taught text analysis (which


she called statement analysis) at the FBI Academy for many years, described it as a two-part process ("Statement Analysis: What Do Suspects' Words Really Reveal?" FBI Law Enforcement Journal, October 1996). First, investigators determine what is typical of a truthful statement. Secondly, they look for deviations from the norm. The following section describes deviations that suggest a subject may be withholding, altering or fabricating information.

TEN SIGNS OF DECEPTION 1. Lack of self-reference

Truthful people make frequent use of the pronoun "I" to describe their actions: "I arrived home at 6:30. The phone was ringing as I unlocked the front door, so I walked straight to the kitchen to answer it. I talked to my mother for 10 minutes before noticing that my TV and computer were missing from the living room." This brief statement contains the pronoun "I" four times in three sentences. Deceptive people often use language that minimizes references to themselves. One way to reduce self-references is to describe events in the passive voice. "The safe was left unlocked" rather than "I left the safe unlocked." "The shipment was authorized" rather than "I authorized the shipment." Another way to reduce self-references is to substitute the pronoun "you" for "I." Question: "Can you tell me about reconciling the bank statement?"Answer: "You know, you try to identify all the outstanding checks and deposits in transit, but sometimes when you're really busy you just post the differences to the suspense account." In oral statements and informal written statements, deceptive witnesses sometimes simply omit self-referencing pronouns. Consider this statement by a husband who claims his wife was killed accidently: "I picked up the gun to clean it. Moved it to the left hand to get the cleaning rod. Something bumped the trigger. The gun went off, hitting my wife." The husband acknowledges in the first sentence that he picked up the gun. But the second sentence is grammatically incomplete; "I" has been omitted from the beginning of the sentence. In the third sentence, "something" rather than "I" bumped the trigger. The statement also contains few personal possessive pronouns. The witness refers to "the" gun and "the" left hand where we might expect "my" to be used.

2. Verb tense
Truthful people usually describe historical events in the past tense. Deceptive people sometimes refer to past events as if the events were occurring in the present. Describing past events using the present tense suggests that people are rehearsing the events in their mind. Investigators should pay particular attention to points in a narrative at which the speaker shifts to inappropriate present tense usage. Consider the following statement made by an employee claiming that a pouch containing $6,000 in cash was stolen before she could deposit it at the bank (I have emphasized certain words.): "After closing the store, I put the cash pouch in my car and drove to the Olympia Bank building on Elm Street. It was raining hard so I had to drive slowly. I entered the parking lot and drove around back to the night depository slot. When I stopped the car and rolled down my window, a guy jumps out of the bushes and yells at me. I can see he has a gun. He grabs the cash pouch and runs away. The last I saw him he was headed south on Elm Street. After he was gone, I called the police on my cell phone and reported the theft." The first three sentences describe the employee's drive to the bank in the past tense. But the next three sentences describe the alleged theft in the present tense. An alert investigator might suspect that the employee stole the day's cash receipts, then drove to the bank and called the police from the bank parking lot to report a phony theft. (See another example in "Antics with Semantics" at bottom.) 3. Answering questions with questions Even liars prefer not to lie. Outright lies carry the risk of detection. Before answering a question with a lie, a deceptive person will usually try to avoid answering the question at all. One common method of dodging questions is to respond with a question of one's own. Investigators should be alert to responses such as: "Why would I steal from my own brother?" "Do I seem like the kind of person who would do something like that?" "Don't you think somebody would have to be pretty stupid to remove cash from their own register drawer?"


4. Equivocation The subject avoids an interviewer's questions by filling his or her statements with expressions of uncertainty, weak modifiers and vague expressions. Investigators should watch for words such as: think, guess, sort of, maybe, might, perhaps, approximately, about, could. Vague statements and expressions of uncertainty allow a deceptive person leeway to modify his or her assertions at a later date without directly contradicting the original statement. Noncommittal verbs are: think, believe, guess, suppose, figure, assume. Equivocating adjectives and adverbs are: sort of, almost, mainly, perhaps, maybe, about. Vague qualifiers are: you might say, more or less. 5. Oaths Although deceptive subjects attempt to give interviewers as little useful information as possible, they try very hard to convince interviewers that what they say is true. Deceptive subjects often use mild oaths to try to make their statements sound more convincing. Deceptive people are more likely than truthful people to sprinkle their statements with expressions such as: "I swear," "on my honor," "as God is my witness," "cross my heart." Truthful witnesses are more confident that the facts will prove the veracity of their statements and feel less need to back their statements with oaths. 6. Euphemisms Many languages offer alternative terms for almost any action or situation. Statements made by guilty parties often include mild or vague words rather than their harsher, more explicit synonyms. Euphemisms portray the subject's behavior in a more favorable light and minimize any harm the subject's actions might have caused. Investigators should look for euphemistic terms such as: "missing" instead of "stolen," "borrowed" instead of "took," "bumped" instead of "hit," and "warned" instead of "threatened."

7. Alluding to actions
People sometimes allude to actions without saying they actually performed them. Consider the following statement from an employee who was questioned about the loss of some valuable data: "I try to back up my computer and put away my papers every night before going home. Last Tuesday, I decided to copy my files onto the network drive and started putting my papers in my desk drawer. I also needed to lock the customer list in the office safe." Did the employee back up her computer? Did she copy her files onto the network drive? Did she put her papers in the desk drawer? Did she lock the customer list in the office safe? The employee alluded to all these actions without saying definitively that she completed any of them. An attentive investigator should not assume that subjects perform every action they allude to.

8. Lack of Detail
Truthful statements usually contain specific details, some of which may not even be relevant to the question asked. This happens because truthful subjects are retrieving events from long-term memory, and our memories store dozens of facts about each experience the new shoes we were wearing, the song that was playing in the background, the woman at the next table who reminded us of our thirdgrade teacher, the conversation that was interrupted when the fire alarm rang. At least some of these details will show up in a truthful subject's statement. Those who fabricate a story, however, tend to keep their statements simple and brief. Few liars have sufficient imagination to make up detailed descriptions of fictitious events. Plus, a deceptive person wants to minimize the risk that an investigator will discover evidence contradicting any aspect of his or her statement; the fewer facts that might be proved false, the better. Wendell Rudacille, the author of "Identifying Lies in Disguise" (Kendall/Hunt, 1994), refers to seemingly inconsequential details as "tangential verbal data" and considers their presence to be prime indicators that subjects are telling the truth.


9. Narrative balance
A narrative consists of three parts: prologue, critical event and aftermath. The prologue contains background information and describes events that took place before the critical event. The critical event is the most important occurrence in the narrative. The aftermath describes what happened after the critical event. In a complete and truthful narrative, the balance will be approximately 20 percent to 25 percent prologue, 40 percent to 60 percent critical event and 25 percent to 35 percent aftermath. If one part of the narrative is significantly shorter than expected, important information may have been omitted. If one part of the narrative is significantly longer than expected, it may be padded with false information. The following statement, filed with an insurance claim, is suspiciously out of balance: "I was driving east on Elm Street at about 4:00 on Tuesday. I was on my way home from the A&P supermarket. The traffic light at the intersection of Elm and Patterson was red, so I came to a complete stop. After the light turned green, I moved slowly into the intersection. All of a sudden, a car ran into me. The other driver didn't stop, so I drove home and called my insurance agent." The subject's statement contains four sentences of prologue, only one sentence describing the critical event, and only one sentence of aftermath. The prologue contains a credible amount of detail: the day and time of the accident, the driver's destination, and the location of the accident. But the description of the critical event (i.e., the alleged accident) is suspiciously brief. The claimant did not describe the other vehicle, which direction it came from, how fast it was going, whether the driver braked to try to avoid the accident or how the two vehicles made contact. The aftermath is also shorter than one would expect from a complete and truthful account of a two-car accident. The claimant does not say which direction the other vehicle went after leaving the scene of the accident. He does not mention getting out of his vehicle to inspect the damage nor does he say whether he spoke to any people in the area who may have witnessed the accident. A claims adjuster receiving such a statement would be wise to investigate whether the policyholder concocted a phony hit-and-run story to collect for damages caused by the driver's negligence.

10. Mean Length of Utterance

The average number of words per sentence is called the "mean length of utterance" (MLU). The MLU equals the total number of words in a statement divided by the number of sentences: Total number of words / Total number of sentences = MLU Most people tend to speak in sentences of between 10 and 15 words (ACFE Self-Study CPE Course, "Analyzing Written Statements for Deception and Fraud," 2009). When people feel anxious about an issue, they tend to speak in sentences that are either significantly longer or significantly shorter than the norm. Investigators should pay particular attention to sentences whose length differs significantly from the subject's MLU.


Complete and accurate descriptions of actual events are usually stated in the past tense and tend to have a predictable balance of prologue, critical event and aftermath. Truthful statements generally contain numerous self-referencing pronouns and include at least a few seemingly inconsequential details. Truthful statements rarely contain oaths, equivocation or euphemisms. Investigators should apply extra scrutiny to written or oral statements that deviate from these norms. Suspects and witnesses often reveal more than they intend through their choices of words.

Eric Schneiderman promises aggressive financial fraud probe

New York Atty. Gen. Eric Schneiderman, who was tapped by President Obama to co-chair a new state and federal mortgage crisis unit, promised Wednesday to move aggressively to coordinate investigations into the causes of the subprime mortgage market meltdown. "Were undertaking a more coordinated effort to pull together all of the various strands of investigations relating to the conduct that created the mortgage-backed securities bubble and led to the market crash," Schneiderman told reporters in Washington after an event at the Consumer Financial Protection Bureau. "There have been investigations going on in various states and branches of the federal government," he said. "Were now making a


concerted effort to pull everything together and move forward aggressively to address these issues." He said the new unit, part of the existing federal Financial Fraud Enforcement Task Force, would go after "every aspect of the conduct that created the bubble and crash," including the origination of mortgages and the packaging of them into securities. Obama announced the new effort in Tuesday's State of the Union address. "This new unit will hold accountable those who broke the law, speed assistance to homeowners and help turn the page on an era of recklessness that hurt so many Americans," Obama said. Schneiderman has been one of the most aggressive state attorneys general in investigating the actions of financial firms and others leading up to the housing bust. Along with California Atty. Gen. Kamala D. Harris, Schneiderman and several other attorneys general have balked at the ongoing talks between state officials and large mortgage servicers to settle investigations into foreclosure process abuses. Schneiderman said Wednesday that the new unit's efforts shouldn't affect the foreclosure settlement talks because those investigations deal with conduct that took place after the housing market collapsed. "The multi-state talks all relate to post-crash conduct. These are abuses in the foreclosure process," he said. "Our working group is focusing on the conduct related to the pooling and creation of mortgage-backed securities...the conduct that created the crash, not the abuses that happened after the fact." An earlier version of this post said New York Atty. Gen. Eric Schneiderman will lead a new Financial Fraud Enforcement Task Force to coordinate investigations into the mortgage crisis. Schneiderman will co-chair a new unit focused on mortgage-backed securities abuses leading up to the housing market bust. The unit will be part of the existing federal Financial Fraud Enforcement Task Force.

Stanford Told Lie after Lie to Investors, U.S. Prosecutor Says

R. Allen Stanford engaged in a long- term fraud scheme and lied repeatedly to investors to live the life of a billionaire, a U.S. prosecutor told jurors as the financiers criminal trial started in Houston. Stanford, 61, was the ringleader of a $7 billion investment fraud the U.S. said in a 14-count indictment accusing him of mail fraud and wire fraud crimes that carry maximum sentences of 20 years in prison. Hes also charged with conspiracy to commit mail fraud and wire fraud and to obstruct a U.S. Securities and Exchange Commission probe. I plead not guilty to every count, Stanford, wearing a light gray plaid suit and a white dress shirt and no necktie, told the jury yesterday. Stanford has been in federal custody since being indicted in June 2009. His trial was postponed three times because of changes to his legal defense team, the after-effects of a jailhouse beating and a subsequent prescription-drug addiction. In Washington yesterday, the SEC urged a judge to order the federal Securities Investor Protection Corp. to create a claims process for Stanfords alleged victims. Stanford stole from investors so that he could live the lifestyle of a billionaire, Assistant U.S. Attorney Gregg Costa said in his opening statement in the Houston courtroom. He told them lie after lie after lie. The scheme stretched over 20 years of lying, cheating and bribing, Costa told the jury of 10 men and five women, including three alternates.

Real Empire
Mr. Stanfords financial empire was real and did make a lot of money and did pay every penny of what was owed to depositors for 22 years, Robert Scardino, one of Stanfords court-appointed lawyers, told the jury in his own opening remarks. Scardino and defense lawyer Ali Fazel have previously said they will use the records of Houston-based Stanford Group Co. and Antigua-baed Stanford International Bank Ltd. to prove their client never intended to defraud anyone. No investor lost money until the SEC sued Stanford and obtained a court order to take control of his businesses in February 2009, the defense has said. Costa called the $7 billion in deposits once held by Stanfords Antigua bank a real number. How did Mr. Stanford get so many people to give him so much of their savings? Costa asked. Thats where the lying comes in. Stanford lied to depositors about the liquidity of their investments, about whether his bank ever loaned those proceeds and about who was managing their money, the prosecutor said.

Compound Fraud
Youre going to see the power of compound fraud, he said. The financier lied about committing $700 million of his own money to shore up the banks finances in 2008, while he was actually pulling money out, Costa said. Stanford also waved his magic wand to increase the value of an unimproved island


property from $63 million to $3 billion during the worst economic downturn since the Great Depression, according to the prosecutor. The financier is accused of bribing his now-dead auditor and an Antiguan banking regulator who received cash, National Football League Super Bowl championship tickets and use of Stanfords private jets. Costa told jurors they would hear from investors who lost their life savings. These witnesses will tell how his lying stealing and bribing have taken that money and the dreams they had with it. Complete Picture Scardino told jurors the U.S. didnt have full access to Stanfords business records and wasnt presenting a complete picture of his clients business. He said Stanford invested more than $100 million to improve the island and obtain licenses that made the property more valuable. The defense lawyer called his client a Texas boy and a very resourceful businessman who became a billionaire. He said the jury may hear from his client during the trial, without being more specific. Stanfords lawyer told the panel that the certificates of deposit sold by the Stanford bank werent securities and that Stanfords clients had no say over how their money was invested. The banks CDs were sold only in tranches valued at $50,000 or more, to investors with either a net worth of more than $1 million or an annual income of more than $200,000, the defense lawyer said. Scardino called those CD purchasers sophisticated investors whom he said know what a CD was and what it wasnt.

Legitimate Business
They also received promotional materials from Stanfords business disclosing that past performance was no guarantee of future success and that an investor could lose the entirety of an investment. Were going to prove this was not a Ponzi scheme at all, Scardino said. Unlike frauds in which money from later- arriving investors is used to pay off earlier speculators, he said, this one was legitimate. Marc Nurik, a Fort Lauderdale, Florida, attorney who has been following the Stanford proceedings, called the defense decision to hold out the prospect of Stanfords testimony a risk. Stanford isnt required to take the witness stand. The traditional wisdom is that you dont set up for failure, he said. An opening statement is tantamount to the making of a promise to the jury, he said. Stanfords failure to take the stand would breach that promise. Nurik said Stanford might be pressing his lawyers to let him testify.

Jury Selection
Jury selection began Jan. 23 at Houstons Bob Casey Federal Courthouse with U.S. District Judge David Hittners interview of 80 prospective panelists, many of whom said they had read or heard reports about the case and some of whom told the judge they didnt know if they could be impartial. The 15 men and women selected yesterday include a retail optician, an environmental engineer, two accountants, a kindergarten teacher, a chef, a land surveyor, a pawn broker and a retired hairdresser. The trial may last about six weeks, Hittner said. In Washington, SEC lawyers asked U.S. District Judge Robert Wilkins during a hearing yesterday to require SIPC, a nonprofit corporation funded by the brokerage industry, to start a liquidation proceeding in federal court in Texas to handle more than $1 billion in possible claims related to the alleged Stanford fraud.

Judicial Review
Ultimately, what were seeking here is to provide a forum where claimants can seek judicial review of their claims, Matthew Martens, the SECs chief litigator, told the judge during a three-hour hearing. At issue is whether more than 7,000 brokerage customers who invested in the alleged Ponzi scheme run by Stanford are entitled to have their losses covered by SIPC. SIPC, a congressionally chartered group that insures customers against losses caused by broker theft, says the Stanford investments dont fit into the confines of the federal law that governs whos eligible for the payouts. Investors and their advocates in Congress say SIPC is deliberately taking a narrow view of the law to protect brokers from higher assessments. In June, the SEC ordered SIPC to start a process that could grant as much as $500,000 for each Stanford client -- the same maximum amount it offers in any case. After SIPC balked, the SEC for the first time sued the group in federal court in Washington.

Individual Investors


SIPC is responsible for providing coverage for individual investors who lose money or securities held by insolvent or failing member brokerage firms. It has agreed to cover losses sustained by victims of Bernard Madoffs multibillion-dollar Ponzi scheme and investors who may have lost money in the October collapse of commodities broker MF Global Holdings Ltd. SIPC doesnt guarantee an investments value or protect against fraud, the agency said in court papers. It also doesnt cover investments with offshore banks or non-member firms. Stephen Harbeck, SIPCs president, has said that SIPC shouldnt get involved in the Stanford case because investors received actual CDs after the brokerage passed their money to a bank. What happened after that isnt under SIPCs purview because the Stanford account holders have possession of their securities, he told a court-appointed receiver in 2009. The criminal case is U.S. v. Stanford, 09-cr-00342, U.S. District Court, Southern District of Texas (Houston). The civil case against Stanford is Securities and Exchange Commission v. Stanford International Bank Ltd., 09-cv-00298, U.S. District Court, Northern District of Texas (Dallas). The SIPC case is Securities and Exchange Commission v. Securities Investor Protection Corp., 11-mc-00678, U.S. District Court, District of Columbia (Washington).

The Institute of Money Laundering Prevention Officers (www.imlpo.com) (Latest AML & Financial Crime News)
FSA fines former compliance officer 130,000
The FSA has fined Greenlight Capital trader and compliance officer Alexander Ten-Holter 130,000 for failing to make "reasonable" enquiries before being ordered to sell the firm's shareholding in Punch Taverns. He has also been banned from performing compliance and oversight and money laundering reporting functions, after the regulator found he had not made any enquiries into whether the call had been made because of the receipt of insider information. More on the Money Marketing website here.

HSBC in new US money laundering enquiry

HSBC, which has been progressively reducing its US exposure, is the subject of an investigation by the Senate Permanent Subcommittee on Investigations. It is conducting a money-laundering inquiry. The subcommittee could hold a hearing and report this spring. More on the Independent website here.

Switzerland amends law to allow exchange of financial information

Switzerland has amended its law to allow it to exchange more financial data to help in the international fight against money laundering and the financing of terrorism. Switzerland, under fire for its rigid laws protecting financial privacy, had been warned it faced suspension from the Egmont Group of Financial Intelligence Units, a group of government agencies that aims to improve co-operation to root out money laundering and terrorist finance. More on the Reuters website here.

Outgoing SFO Director calls for an offence of "recklessness"

The work of the SFO in reducing financial crime could be improved if "recklessness" was introduced as an offence, the outgoing director Richard Alderman has said. More on the FT Adviser website here.

European Commission publishes update on third country equivalence

The UK has worked closely with other EU Member States to review and update the Common Understanding on Third Country Equivalence. The list of equivalent countries had not been updated since it was introduced and the criteria for countries being on the list was not clear to firms and others. The criteria for deciding which countries should be on the list has now been updated and a process introduced for reviewing and updating the list on a regular basis. In addition the European Commission now publishes the criteria and the list itself on their website here.

Met seizes record cash haul in 2011

The sum of 26.5 million is the largest amount of cash seized in London in a single year since the Proceeds of Crime Act (POCA) 2002 came into force. It represents a 33% rise in cash seized in London compared with 2010. In addition to the cash permanently stripped from criminals, a further 28 million is subject to


Confiscation Orders and 16.3 million to Cash Forfeiture Orders awaiting forfeiture under the Proceeds of Crime Act 2002. More on info4security.com here.

Four arrested in investigation into money laundering and corruption in the UK armed forces
Three former British military officers have been arrested in the biggest-ever Armed Forces corruption probe. Two key ex-RAF personnel, a former Army reservist and a British businessman are among those to be questioned over an investigation into money laundering and corruption. The probe centers on claims as much as 50million of British and American taxpayers' money is thought to have been paid in exchange for engineering works at an Afghan airbase. More on the Daily Mirror (!) website here.

Institutional investors concerned by SFO's warning on bribery & corruption

Institutional shareholders and lawyers have reacted with alarm to the agreement by Mabey Engineering Holdings to repay dividends worth that amount "won through unlawful conduct" by a subsidiary deal, approved by a London court on Thursday, because it was accompanied by a warning that the SFO planned to make wider use of civil recovery against investors in companies found guilty of criminal wrongdoing. More on the FT website here.

Transparency International News (www.transparency.org)

Romania National Integrity System Fail in the test of resistance to corruption
Public administration, political parties and the business climate are the main contributors to widespread corruption in Romania, appearing as the most vulnerable pillars in the national integrity system analysis. Excessive politicization of public positions and discretionary allocation of public resources by interest groups are the main reasons that led to these conclusions. In the context of elections this year, the poor performance of these pillars threatens not only public funds and the economy, but also the quality of democracy. This year, more than ever, Romanians have become aware of the effects of corruption on their quality of life and decided to take action. Corruption restricts freedom, impoverishes, misinforms, denies access to justice and public services, affects the health, and degrades the education and future of young people. Elimination of corruption in all sectors of society is therefore imperative and urgent. Study on National Integrity System, third edition, released today by Transparency International Romania (TI-Ro) shows that the Romanian institutions do not have the necessary resources and are not independent enough to resist political or group interference, generating private benefits and, by default, corruption at the detriment of society. Also, selective and very limited transparency makes liability mechanisms inefficient. Whether we refer to political leaders - national or local level - or representatives of public institutions, people have lost confidence that they could be held liable, or, promoted on the basis of objective criteria, managed either by the control institutions media and civil society. TI-Ro study shows that exposure of some cases in courts is not an appropriate treatment for corruption because it recurs, but a systematic reform that would create "antibodies" institutional corruption and not just treat symptoms, but causes is needed. This way only, will the country's government resonate with the wishes of citizens, respecting democracy and transparency, ensuring integrity and justice, ensuring responsibility and accountability, based on solidarity and courage. For an effective approach to strengthen the National Integrity System, Transparency International Romania recommended that horizontal priorities relate to the adoption of all rules of the game in a transparent manner, respecting the normal legislative process, after debate and participatory process and only after impact analysis and necessary parliamentary review. It is also imperative to adopt and implement an integrated anti-corruption strategy that addresses the vulnerabilities of all the pillars.

Transparency Ireland urges employers to protect whistleblowers

Transparency International Ireland is calling on employers to show leadership in protecting workers who speak up in the public interest. The anti-corruption group says recent coverage of the treatment of whistleblowers on RTE radios Liveline program reveals only the tip of the ice-berg of a problem which leaves whistleblowers exposed to retaliation from employers. TI Ireland runs the countrys only free


helpline which provides confidential information and guidance to people facing ethical dilemmas or reporting concerns about possible fraud, abuse of power or corruption. Its chief executive, John Devitt, says many callers to the Speak Up service are whistleblowers who fear that if they share their concerns with their employers they may lose their jobs. Our helpline volunteers are dealing with distressed callers who wish to speak up in the public interest but are unsure of their rights and responsibilities and what protection is in place for them, he said. The government has committed itself to a single law protecting people who come forward to report wrongdoing, which we see as long overdue given the succession of scandals that have emerged from our banks, the public sector and church. The cost of silence to Irish society is incalculable. We will welcome any new law that offers full protection to whistleblowers across the private and public sectors and any future law should clearly place the onus on employers to show that they have not retaliated against employees who speak up. However, employers do not need to wait for a whistleblower protection bill to be introduced we would urge all employers to show leadership in protecting workers who speak up in public interest. The State ethics watchdog, the Standards in Public Office Commission, has stated that the Governments current approach to whistleblower protection is deeply flawed and that the current piecemeal approach to introducing protection for whistleblowers may have created confusion. The agency has also questioned whether there is a real commitment to encouraging people to come forward in reporting wrongdoing. A TI Ireland report on whistleblower protection in Ireland published last year found that while safeguards had been included in individual pieces of legislation, people across the public and private sectors can still face legal and disciplinary action for honestly reporting concerns to their employers or the authorities. There is no legal safeguard for employees in the banking sector, while the only state agency that provides blanket guarantees to whistleblowers is FS. The authorities in Britain and Northern Ireland have offered blanket protection to employees there under a single whistleblower law since 1998.

84 recommendations for more integrity: Transparency Germany presents its National Integrity System assessment for Germany
The anti-corruption organization Transparency Germany today released its National Integrity System assessment for Germany. The report examines the current state of anti-corruption reform in the Federal Republic of Germany. It rates 13 institutions, basing its assessments on their financial and personal resources, the anti-corruption measures put in place, and their overall contribution to the fight against corruption in Germany. Germany generally receives goods to very good marks for the prevention and punishment of corruption. The federal structure of Germany provides numerous control mechanisms that can prevent abuses of power. In addition, no state or non-state body is limited in its independence to an unacceptable degree. Almost all the institutions examined are well-equipped with personnel and financial resources.

Protest manifestations require dialogue not violence

Transparency International Romania reproves all violence regardless of the party they were initiated by during the street manifestations occurring yesterday, the 14th January 2012, in Bucharest. The generalized corruption that has dried out public resources as well as the governments lack of transparency are the main causes which have led to a worsening of the quality of life which generated the manifestations taking place the past few days throughout the country. Arbitrary elaboration of public policies has resulted in economic deterioration of the country and infringement of the rule of law principles. Lack of transparency in the elaboration of public policies with a view to favoring certain interest groups can no longer be concealed under image or intimidation operations directed at the civil society or the mass media; it can lead to social destabilization, popular unrest, manifestations, all of which can be avoided via honest and open dialogue. Transparency International Romania believes it is the duty of public authorities to start a dialogue in order to identify solutions that can lead to social peace. This year we have seen corruption on protestors banners be they rich or poor. Whether in a Europe hit by debt crisis or an Arab world starting a new political era, leaders must heed the demands for better government, said Huguette Labelle, Chair of Transparency International on 1st December 2011. In order to prevent the distortion of the democratic instrument of protest, we call upon the protesters to refrain from any type of violence which must be avoided at all costs so that it does not degenerate.


Serious Fraud Office (SFO UK) News (www.sfo.gov.uk)

Three jailed for a 22 million forgery fraud on a Swiss bank
Mr. Steele has no previous convictions for dishonesty. The reference to past dishonesty was in fact attributed by the sentencing judge to co-conspirator, Mr Shephard, also sentenced on 27 January and named in this SFO press release, amended below. Three conspirators have been sentenced for their roles in defrauding EFG Private Bank of Zurich of 22 million through a loan application that was supported by a false claim in 2008 that over 76 million was held on deposit at a Guernsey bank as security. Kevin James Christopher Steele (d.o.b 09/06/60) of Kent, has been sentenced today to five years and six months' imprisonment. He was found guilty in December 2011. Michael Andrew Shephard (d.o.b 29/01/61) of Lancaster, has been sentenced today to six years and three months' imprisonment. He was also disqualified from acting as a company director for 15 years. He pleaded guilty in September 2011. Mark Terence Pattinson (d.o.b. 08/11/73) of Preston was sentenced on 6 January to 18 months' imprisonment. He pleaded guilty in November 2010 and entered into a SOCPA agreement to give evidence at the trial of Steele. In passing the sentences, HHJ Wood QC said of Shephard, (who has previous convictions for dishonesty) "This was a very serious escalation in your criminal activity where you corrupted other people." He also said of Shephard, "you derived some pathetic satisfaction from parading yourself as a man of wealth." The judge said of Steele, that he was, "lured into it by the dominating nature of Shephard."

Kevin Steele was a partner at London law firm Mishcon de Reya. Michael Shephard who purported to be a wealthy businessmen was one of his clients. Mark Pattinson was an associate of Shephard's. Engaged by him to assist in the dishonest venture. Together they conspired to produce letters purporting to be from Bank Julius Baer & Co in Guernsey. The false documents were presented to EFG Private Bank in order to support a loan application on behalf of Michael Shephard. The documents contained a claim that over 76 million was held in two Guernsey accounts and available for use as security on the 22 million loan. The claimed purpose of the loan application was for property developments in Turkey. The SFO investigation commenced in November 2008, and was supported by Warwickshire Constabulary, following their initial enquiry. Charges were brought against all three in June 2009. Shephard and Pattinson pleaded guilty ahead of trial, which opened on 7 November, to conspiring to use false instruments contrary to section 1(1) of the Criminal Law Act 1977 and section 3 of the Forgery and Counterfeiting Act 1981. They pleaded guilty also to conspiracy to commit fraud by false representation contrary to section 1(1) of the Criminal Law Act 1977 and section 1 of the Fraud Act 2006. Steele denied the charges against him but was convicted of the same offences on 5 December 2011. Additionally he was found guilty of fraud contrary to section 1 of the Fraud Act 2006 in that he exposed another, (Michcon de Reya) to risk of loss, he abused his position as partner in a law firm in which he was expected to protect the financial interests of the firm.

Four guilty in 70 million contracts corruption case

Four men have been convicted of conspiring to corruptly obtain payments by supplying confidential information about a series of high-value engineering projects in the oil and gas engineering industry. Amounting to around 70 million, the contracts affected were for engineering and procurement projects based in Iran, Egypt, Sakhalin Island (Russia), Singapore and Abu Dhabi, over the period 2001 to 2009. The case, named Operation Navigator, was heard at Southwark Crown Court, where the convicted defendants are to be sentenced on 30 January. Convicted defendants: Andrew Rybak (d.o.b. 28/03/56) of Newbury, Berkshire Ronald Saunders (d.o.b. 01/02/47) of Hook, Hampshire Philip Hammond (d.o.b. 11/06/54) of Brussels, Belgium Barry Smith (d.o.b. 19/04/40) of Hindhead, Hampshire. With regard to a fifth defendant, Robert Storey (d.o.b. 04/07/44) of Windlesham, Surrey, the jury could reach no verdict on the charge he faced. He has been bailed pending an SFO decision on how to proceed against him. In opening, Mukul Chawla QC for the Crown stated that this case was simply about greed and "the abuse


of privileged positions with the simple aim of making money illegally." Commenting on the outcome, SFO Director Richard Alderman said, "Corruption in business life diminishes society. Today's outcome makes it clear that it will not be tolerated. The investigation is an excellent example of collaboration between the City of London Police and the SFO. Each of us used our particular powers and skills, combined in a complex case with significant international links"

The confidential information supplied to bidders was held by companies acting as procurement agents for the projects. It is an industry where individuals who work for such companies often do so on a short term basis. Crucially, the defendants had access to inside information which they passed on to targeted bidding companies who either made, or agreed to make, corrupt payments for the information. Disguised as "consultancy services", the illicit payments were shared out amongst the co-conspirators.

The Projects
The investigation began in April 2008 as a joint operation between the Serious Fraud Office and the City of London Police. It followed a report of a suspicious approach to a bidding company. Investigators subsequently uncovered suspected corruption in a number of other similar contracts and identified the above-named defendants as being involved. The trial focused on five projects: Styrene Monomer Project, Iran: Snamprogetti Ltd, a company in Basingstoke, was appointed to provide procurement services to Pars Petrochemical Company for the construction of a styrene monomer plant in Bandar Assaluyeh, Iran. (Styrene monomer is a chemical commonly used in the manufacture of disposable transparent containers). Saunders was engaged by Snamprogetti Ltd as an agency worker between 2001 and 2003. He passed inside information about the splitter column element of this contract (valued at nearly 1 million) to Hammond and Rybak, who were co-directors of Strategic Project Services Ltd (a corporate vehicle for their purported consultancy services). Confidential information was relayed to a bidding company, Walter Tosto Serbatoi S.p.A., which agreed to pay SPS 3% plus a split of any uplift when the contract, which totalled approximately US$100,000, was awarded. The payment was then distributed between the defendants. QASR Gas Gathering Project, Egypt. In 2004 and 2005, J P Kenny, a company based in Staines, provided procurement services to Khalda Petroleum Company for the development of the QASR gas fields in Egypt. One element of the contract was a generator package valued at nearly 3 million. Saunders, together with another man (see note 1), was engaged by J P Kenny as a contractor from 2005 to 2007. Saunders supplied confidential information to Rybak for the benefit of a bidding company Mantrac Egypt and its subcontractor Impianti e Technolgie do Processo S.r.L. When the contract was awarded, Rybak received over a quarter of a million US dollars, part of which was then passed onto Saunders. Sakhalin Island Project. This is one of the largest integrated oil and gas projects in the world and involves the exploration and development of several different oil and gas fields in the Sea of Okhotsk off Sakhalin Island (part of the Russian Federation). Fluor Ltd, a company in Farnborough, managed the procurement process for this project. A number of separate packages were investigated in detail, including: air compressors, oil pumps, generator sets, gas turbines, equipment to treat fuel gas, oily water treatment and large bore pipes. These packages were worth over 17 million. Saunders and another man were engaged as contractors by Fluor Limited between 2006 and 2008. Again, Rybak and Hammond received confidential information from the insiders which they sold on to bidding companies. Some payments of around 357,000 and US$229,000, were made from successful bidders, which were then distributed between the defendants. Singapore Parallel Train Project. In August 2005, Foster Wheeler Worley Parsons, a joint venture in Reading, was awarded the Singapore Parallel Train procurement contract. The other man was again employed as a buyer (from 2007 to 2008). On three parts of the project (waste water treatment, demineralized water and carbon bed filters worth around US$35m), he passed confidential information to Rybak and Hammond which was then offered to bidders Ecodyne Ltd (a Canadian company) and


Ondeo Industrial Solutions SarL (based in France), who agreed to pay commission if awarded the contracts. GE Water & Process Technologies Ltd, another bidder corruptly approached by Rybak (using a false name), rejected the approach and reported it to the procurement company, which then led to the City of London Police and the SFO being called in. Hydrogen Power Project, Abu Dhabi. In 2008 Foster Wheeler was engaged by Masdar (Abu Dhabi Future Energy Company) and Hydrogen Energy International (based in Weybridge) to provide engineering and procurement services for the construction of the Hydrogen Power Abu Dhabi power plant. Both Rybak and Saunders were engaged by Hydrogen Energy as contractors between 2008 and 2009, and 2008 respectively. In relation to the steam turbine generator package, a contract valued at over US$42 million, corrupt approaches were made to bidders by Hammond (also using a false name). In addition, Rybak and Saunders brought Barry Smith into the conspiracy to assist with recruiting an Abu Dhabi agent for Italian bidding company Franco Tosi Mecannica S.p.A., which in turn entered into an agency agreement, the payment of which in turn was to be distributed between the defendants. The SFO alleged that Robert Storey was also involved in this conspiracy.

The companies that provided procurement services for these projects helped the investigation enormously. They were appalled at the apparent blatant disregard shown by these defendants for the confidentiality and integrity of the project environments. Our investigators sifted huge quantities of evidence including mobile phone data, travel records and e-mails, which identified and established the involvement of these defendants. Charges were brought against them in September 2010. The trial opened at Southwark Crown Court on 10 October 2011. The jury was sent out on 10 January 2012. Sentencing has been adjourned until 30 January. Confiscation proceedings will be instigated.

Innospec Ltd: Former director pleads guilty to corruption

Today, Dr David Turner (56), the former Innospec Limited Global Sales and Marketing Director (Tetraethyl Lead), appeared before His Honour Judge McCreath at Southwark Crown Court and pleaded guilty to three counts of conspiracy to corrupt. The first two counts charged a conspiracy to give corrupt payments to public officials and other agents of the Government of Indonesia (between 14/02/02 and 31/12/08) and the Government of Iraq (between 01/01/03 and 31/01/08) as inducements to secure, or as rewards for having secured, contracts for Innospec from those Governments for the supply of its products including Tetraethyl Lead. Dr. Turner additionally pleaded guilty in respect of one charge of conspiracy to corrupt Iraqi public officials and other agents of the Government of Iraq (between 01/06/06 and 31/05/07) by making payments as inducements to ensure that tests on MMT, a competitor product manufactured by Ethyl Corporation, conducted by or on behalf of the Government of Iraq, concluded with an unfavorable assessment of that product. The sentencing of Dr. Turner was adjourned. The case of two other Innospec executives, Dennis Kerrison and Paul Jennings, was adjourned until the 4th of April, 2012 for plea. The SFO investigation into the conduct of Dr Turner was assisted by the US Department of Justice, the US Securities & Exchange Commission, the City of London Police and the Cheshire Constabulary.

Serious Fraud Office New Zealand (SFO NZ News) (www.govt.nz)

Third person charged in connection with Crafar farms bid
A third person associated with an attempt to purchase the farm assets of the Crafar family (the Crafar farms) has been charged in Hong Kong and appeared in court yesterday. Yee Wenjye (40, also known as Eric Yee), a Singaporean national and New Zealand resident, was charged with one count of conspiracy to defraud by the Independent Commission Against Corruption (ICAC) in Hong Kong. Mr. Yee is accused of conspiring to defraud Natural Dairy (NZ) Holdings Limited, its directors and shareholders by falsely representing that the 22 farms owned by the CraFarms Group had made a profit of NZ$18.5 million for the year ending May 2009. It is alleged that the company had in fact made a significant


accounting loss for the year of around NZ$30 million. SFO Chief Executive Adam Feeley said that the further charge by Hong Kong authorities was consistent with the evidence SFO investigations had uncovered. The further charge reinforces our initial view as to the best options for law enforcement. We concur with the additional action being taken by ICAC, and believe that our law enforcement efforts can be most effectively applied to supporting the ICAC case through the evidence of SFO forensic accountants involved with the investigation. On 17 October 2011, May Hao (formerly known as May Wang), the former operator of UBNZ Assets Holdings Limited (UBAH), was charged by ICAC with one count of conspiracy to offer advantages to an agent and two counts of dealing with property known or reasonably believed to represent proceeds of a crime. Chen Keen (also known as Jack Chen) was charged in Hong Kong on 21 October 2011 with one count of conspiracy to offer advantages to an agent and one count of dealing with property known or reasonably believed to represent proceeds of a crime. May Hao and Chen Keen also re-appeared in court yesterday. Mr. Yee is alleged to have conspired with May Hao and Chen Keen in misrepresenting the financial strength of the Crafar farms. Natural Dairy is listed on the Main Board of the Stock Exchange of Hong Kong but trading has been suspended since 7 September 2010. The charges follow a joint investigation into the company undertaken by the Serious Fraud Office (SFO) in New Zealand and ICAC in Hong Kong. The SFO commenced its investigation in September 2010 when the Natural Dairy bid to purchase the Crafar farms in 2010 was being assessed by the Overseas Investment Office (OIO). ICAC opened a separate investigation into Natural Dairy after receiving an allegation of corruption. Mr. Feeley said that the case underscored the increasing importance of sharing evidence and resources with overseas law enforcement agencies. I think it is unlikely either agency would have progressed this case as effectively without the joint investigative efforts which occurred, and it is likely to become an increasing feature of our cases in the coming years. Mr. Feeley said that the SFO had preliminary discussions with a number of specialist overseas financial crime agencies last year, and hoped to advance those discussions into formal intelligence and information sharing arrangements in 2012. The case against Mr. Yee has been adjourned to 18 April 2012. The case against May Hao and Chen Keen has also been adjourned to 18 April 2012.

FMA and SFO sign Memorandum of Understanding

The Financial Markets Authority (FMA) and the Serious Fraud Office (SFO) have signed a Memorandum of Understanding (MOU) which will enhance their already close working relationship and drive greater efficiencies between the two agencies. The initiative, announced by FMA Chief Executive Sean Hughes and SFO Chief Executive Adam Feeley, provides a framework within which the organizations can coordinate their activities, exchange information and share expertise and resources. The FMA and SFO share an objective of improving confidence in New Zealands financial markets. Greater co-ordination between them will enable efficient allocation of their investigation and prosecution resources. FMA and the SFO have already shared resource and intelligence on a number of finance company investigations, including Dominion Finance, Belgrave Finance, and Hanover Finance. Last month it was announced FMA would support the SFOs case against five individuals involved with the affairs of South Canterbury Finance.

Guilty plea in SFO $2.3 million farming fraud

Peter Joseph Nitschke (32) today pleaded guilty to seven charges under the Crimes Act relating to dishonestly using a document and obtaining by deception. The charges followed a Serious Fraud Office (SFO) investigation into agri-business, Capehorn Farming Company Limited (Capehorn). Capehorn operated a beef cattle fattening farming business in the central and lower regions of the North Island, in which cattle purchases were generally financed through specialist livestock finance companies. In late 2009 Capehorn fell into financial difficulty as a result of falling beef prices. The SFO alleged that, in early 2010, Mr. Nitschke obtained over $880,000 worth of finance from lenders for cattle that did not exist. The SFO further alleged that he fraudulently sought $1.5 million in refinancing from the BNZ in order to repay loans for the non-existent cattle and for cattle that had already been sold. Capehorn was placed into receivership by the BNZ in December 2010 at which time PwC were appointed as receivers. The matter


was subsequently referred to the SFO in March 2011. Mr. Nitschke will reappear in the Feilding District Court for sentencing on 20 February 2012.

IFAC News (www.ifac.org)

IFAC Invites Nominations for IFAC International Gold Service Award in 2012
The International Federation of Accountants (IFAC), the global organization for the accountancy profession with members and associates in 127 countries, has opened nominations for the 2012 IFAC International Gold Service Award. The IFAC International Gold Service Award was established in 2010 to recognize outstanding individual contributions to the accountancy profession, including protecting the public interest; exemplifying professional conduct and ethics; exceptional quality of work; and/or, contributions to a particular project or initiative. Candidates may or may not be members of the accountancy profession, and contributions may or may not be made through IFAC. The recipients of the IFAC International Gold Service Award in 2011 were Sir David Tweedie (United Kingdom) and Professor Stephen Zeff (United States).The awards were presented on November 16, 2011, at IFACs annual Council Meeting in Berlin, Germany, by Gran Tidstrm, president of IFAC. Nominations from IFAC member bodies must be submitted to the chief executive officer of IFAC by March 15, 2012. The nomination should consist of a completed nomination form, available on the IFAC website, and a cover letter. The cover letter should include reasons why the member body believes that the individual should receive an award and must be signed by the president and/or chief executive, or their equivalents, of the member body. If a member body wishes to include other supporting material, it should not exceed two pages. Nominations received in a format other than the stipulated form will not be considered. In addition to nominations from IFAC member bodies, IFACs Nominating Committee will identify and recommend candidate(s) for this award. The Nominating Committee will review the nominations, make the necessary inquiries, and recommend candidate(s), if appropriate, to the IFAC Board, which will make the final selection(s), if any, during its meeting in June 2012. The chief executive officer of IFAC will notify the selected candidate(s) in writing, and the president of IFAC will present the award(s) at the annual IFAC Council Meeting, to be held November 14-15, 2012.

IFAC Posts Call for Nominations for Boards and Committees in 2013
The International Federation of Accountants (IFAC), the global organization for the accountancy profession with members and associates in 127 countries, has issued an announcement to alert its members, Forum of Firms, other international organizations and the general public of its Call for Nominations for IFAC Boards and Committees in 2013. For the first time, all vacancies on the public interest activity standard-setting boards* are open for nominations by the public. This change is due to IFACs determination to ensure a transparent approach to filling available positions, while also achieving gender, regional, and professional balance, and is in response to the Monitoring Groups 2010 effectiveness review of the IFAC Reforms. The caliber of the volunteer members on our boards and committees is what makes these groups so effective. That is why seeking high-quality nominations is at the core of our nominations processes, said IFAC President Gran Tidstrm. We aim to attract a wide variety of high-quality nominations, to ensure that we have a rich pool from which to find the right candidate for each position. We thank our member bodies and the public in advance for the thoughtful and valuable nominations we anticipate receiving this year. Both the Call for Nominations and its companion guide Developing a Nominations Strategy are designed to help IFAC stakeholders identify the most qualified person for nomination to each available position on the boards and committees. These in-depth documents, located on the IFAC website, contain strategic and practical advice for nominating organizations and other individuals that allows them to make more informed decisions in their selections and decisions, and to understand the requirements of the various positions. Each year, approximately one-third of the 155 positions on the boards and committees have openings, though, for some of those positions, serving members may be reappointed. In addition, this year, the position of the IFAC Deputy President is open for nominations from member bodies. For more information about the Nominating Committee, its due process, or for guidance in selecting the best candidate, please visit the


IFAC website. All applications should be submitted before March 15, 2012 electronically via IFACs nominations database; instructions are provided on page six of the Call for Nominations.

IAASB Disclosures Feedback Statement; Collaboration and Cooperation


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The International Auditing and Assurance Standards Board (IAASB) today released a Feedback Statement on the responses to its January 2011 Discussion Paper, The Evolving Nature of Financial Reporting: Disclosure and Its Audit Implications. The Discussion Paper solicited views and perspectives of different stakeholder groups on the challenges arising as financial reporting continues to evolve to meet the changing needs of users. Respondents from across the world, including regulators and oversight authorities, users and preparers, audit firms, and professional bodies provided thoughtful and informative input on issues around disclosures. The Feedback Statement provides an overview of the key messages heard and provides thoughts and recommendations on what can be done to address them. Disclosures have always been a critical component of financial reporting, but have become more so today as reporting increasingly incorporates fair value information, estimates involving judgment and complex measurements, and narrative disclosures of some of the risks and characteristics of companies and groups. Accordingly, investors and others look to disclosures for vital insights when making investment decisions, said Prof. Arnold Schilder, Chairman of the IAASB. This underscores the importance of the IAASBs initiative to gain further knowledge and understanding of the issues and share what it has heard to stimulate further thinking and exploration in this area. The Feedback Statement presents a summary of the range of views on some of the more significant challenges faced by participants across the entire financial reporting supply chain, including the impact of trends in financial reporting, applying materiality to disclosures, evaluating misstatements generated by disclosures, the availability of audit evidence to support disclosures, and work effort. To address some of the issues identified respondents have called for more auditing guidance in certain identified areas. However, the majority of the respondents were of the view that some of the more important issues could not be addressed by the IAASB on its own, but would require international collaboration and cooperation, particularly with both the accounting standard settersincluding the International Accounting Standards Board (IASB) and US Financial Accounting Standards Board (FASB)and regulators. Financial information that is reliable, understandable, and relevant is essential, as is the assurance on that information that auditors provide. We wholeheartedly agree with the respondents regarding the need for international collaboration and cooperation among standard setters; securities, audit, and prudential regulators; and other stakeholders. We must work together to develop effective responses to the issues being faced today, notes James Gunn, IAASB Technical Director. Like others, the IAASB has a role in enhancing the publics confidence in disclosures as a priorityrecognizing that individual initiatives must be towards finding a collective solution.

IFRS News (www.ifrs.org)

IASB and FASB seek to reduce differences in classification and measurement models for financial instruments
The International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) today agreed to work together to seek to reduce differences in their respective classification and measurement models for financial instruments. The discussions will form part of the FASBs ongoing redeliberation of a proposed Accounting Standards Update on financial instruments, which was originally issued in May 2010. The IASB will consider these discussions as part of its project to undertake limitedscope changes to IFRS 9, Financial Instruments, issued in November 2009 and amended in October 2010, resulting from its ongoing work to develop a new IFRS on insurance contracts and the feedback received on application of IFRS 9 to particular instruments. The boards will work together with the objective of more closely aligning key aspects of their classification and measurement models. The boards will explore these key aspects jointly, and then decide whether to issue proposed amendments to IFRS 9 and US Generally Accepted Accounting Principles (US GAAP), respectively. IASB Chairman Hans


Hoogervorst said: When IFRS 9 was introduced in 2009 we said that further amendments might be required once the direction of travel on insurance contracts became clear. We are now at that point. At the same time, this limited-scope review now presents an ideal opportunity to align IFRS and US GAAP more closely, in this important area of financial reporting. We will proceed with caution, recognizing the investment that many jurisdictions have made in preparing for the introduction of IFRS 9 in 2015. FASB Chairman Leslie F. Seidman said: The boards have been urged to converge their standards on financial instruments. Today's decision to work together on key differenceswhich represent the most significant remaining differences between the decisions reached to dateis responsive to stakeholders in the US and abroad. The boards will share the feedback they have received on their respective decisions and strive to develop a more closely converged approach that addresses those concerns. The boards will continue to develop a common approach on impairment of financial assets, which is being handled as a separate work stream. As part of their project on financial instruments, the FASB is proposing enhanced disclosures about interest rate risk and liquidity, which under IFRS are covered by IFRS 7, Financial Instruments: Disclosures.

Trustees reappoint three members of the IASB

The Trustees of the IFRS Foundation, responsible for the governance and oversight of the International Accounting Standards Board (IASB), announced today the reappointment of three existing members of the IASB. Stephen Cooper (UK) and Wei-Guo Zhang (China) were each reappointed to serve a second, five-year term. Their terms will now expire on 1 August and 30 June 2017 respectively. Paul Pacter (US) had previously indicated his intention to serve just one, two-year term. However, he has agreed to be reappointed for a further six months to allow sufficient time for the appointment of his successor to be confirmed. His term will expire on 31 December 2012. The Trustees are continuing their search for three further members of the IASB, to fill existing and forthcoming vacancies. Elke Knig stepped down from the IASB in December 2011 to become President of the German Federal Financial Supervisory Authority. John Smith will step down in June 2012, having served the maximum two, five-year terms. A further Board position is available due to the constitutional amendment to expand membership of the IASB to 16 members by July 2012. Commenting on the reappointments, Robert Glauber, Chairman of the Trustees Nominating Committee said: Stephen and Wei-Guo are outstanding Board members who have served the IASB well during their first terms. The Trustees had no hesitation in confirming their reappointments for a second term. We are also grateful to Paul Pacter for agreeing to be reappointed until the search for his successor is concluded. For more information about the search process visit http://go.ifrs.org/IASB+member.

Yael Almog appointed as Executive Director of the IFRS Foundation

The Trustees of the IFRS Foundation, the oversight body of the International Accounting Standards Board, today announced the appointment of Yael Almog as Executive Director of the IFRS Foundation. Ms Almog will be responsible for the management of the day-to-day operations of the organization and provide executive leadership in support of the work of the Trustees. Ms. Almog currently serves as Director of the Department of International Affairs of the Israel Securities Authority (ISA), the Israeli market regulator. She has significant experience in dealing with international organizations and financial regulators on matters related to International Financial Reporting Standards (IFRSs) and was closely involved in the implementation of IFRSs in Israel, where IFRSs are required in full for publicly traded companies. She is a former senior adviser to the ISA Chairman, former Chair of the International Organization of Securities Commissions (IOSCO) Monitoring Group, led the ISA role in Israels accession to the Organization of Economic Cooperation and Development (OECD) and managed the mutual securities recognition arrangements between Israel and the European Securities and Markets Authority (ESMA). As a lawyer, Ms Almogs early career was spent as a senior prosecutor in criminal securities litigation and as an Adjunct Law Professor at Haifa University. She studied at both the Tel Aviv University Faculty of Law and the Columbia University School of Law, New York. She was called to the Israeli Bar in 1994. Her appointment follows the departure of Tom Seidenstein, Chief Operating Officer, who after more than 10 years of service left the Foundation to return to the United States. She will report to both the


Chairman of the Trustees and the Chairman of the IASB. Commenting on the appointment, Michel Prada, Chairman of the Trustees said: Yaels track record speaks for itself. Her extensive international contacts and deep knowledge of matters related to IFRSs means that she will be able to hit the ground running. Hans Hoogervorst, Chairman of the IASB said; I worked with Yael during our time at IOSCO and was impressed with her ability to work well with her international colleagues and achieve results. She will be a tremendous asset to the organization. Yael Almog said: This is an exciting challenge for me both professionally and personally. I have always strongly supported the mission of the IFRS Foundation and I am honored and proud to join the organization and to contribute my share to achieving its goals.

IFRS Foundation Trustees and representatives from the Singapore Accounting Standards Council and local business community meet to discuss financial reporting matters
The Trustees of the IFRS Foundation, responsible for the governance and oversight of the International Accounting Standards Board (IASB), met with representatives of the Singapore Accounting Standards Council (ASC) and the local business community on 12 January 2012. The participants exchanged views on the work of the Trustees and the IASB to establish International Financial Reporting Standards (IFRSs) as the globally accepted language for financial reporting, as well the practical challenges faced by Singapore companies in implementing IFRSs. IFRSs are required or permitted for use by companies in more than 100 countries, including most of the G20. Singapore has been a long-term supporter of the development of a single set of global accounting standards. Singapore Financial Reporting Standards (SFRSs) are already substantially aligned with IFRSs and the ASC is working towards full convergence of those standards. The Trustees and the leadership of the IASB expressed a commitment to support this work. The meeting was jointly led by Mr. Michael Lim, Chairman of the ASC and Mr. Michel Prada, the newly appointed Chairman of the IFRS Foundation Trustees. Commenting on the meeting, Mr. Michael Lim said: Singapore is committed to full convergence, and will continue to actively contribute and collaborate with the Foundation and IASB to develop global accounting standards. In completing our review of the status of convergence implementation, the ASC concluded that Singapore remains on track for full convergence of the SFRSs with the IFRSs, taking into consideration the progress of the IASBs priority projects. Mr. Michel Prada said: On behalf of the Trustees, I would like to thank the Singapore Accounting Standards Council for organizing a very productive meeting with senior representatives of the Singapore business community. Singapore is a major financial centre and an important stakeholder in our work to establish IFRSs as a global financial reporting language. The meeting follows a separate two-day meeting of the Trustees in Singapore on 11 and 12 January 2012. A summary of the conclusions of the Trustees meeting will be published shortly on the IFRS Foundation website (www.ifrs.org).

Trustees announce revised membership of IFRS Advisory Council

The Trustees of the International Financial Reporting Standards (IFRS) Foundation, responsible for the governance and oversight of the International Accounting Standards Board (IASB), have announced today the appointments and reappointments to the IFRS Advisory Council following the expiration of membership periods at the end of 2011. The Advisory Council is the formal advisory body to the Trustees and the IASB. In 2009, the Trustees revised the membership structure of the Advisory Council so that members now serve primarily as representatives of organizations. The terms of the new appointments and reappointments published today begun on 1 January 2012 and range between one and three years to enhance continuity and achieve an orderly rotation in membership. Paul Cherry, Chairman of the Advisory Council, has been reappointed for a further two years. Patrice Marteau and Charles Macek, Vice-Chairmen of the Advisory Council, have been reappointed for one and three years respectively. Commenting on the announcement, Paul Cherry, Chairman of the IFRS Advisory Council said; The Advisory Council provides an important sounding board for the Trustees and members of the IASB. I am grateful to the previous members for their contribution to our work and thank the incoming members for agreeing to participate in the important work of the Council. A list of the appointments and reappointments is available by clicking here.


Yong Li and Marco Onado appointed as Trustees of the IFRS Foundation

The Trustees of the IFRS Foundation, responsible for the governance and oversight of the International Accounting Standards Board (IASB), today announced the appointment of Yong Li and Marco Onado as Trustees. The appointments, approved by the IFRS Foundation Monitoring Board, begin immediately and will expire on 31 December 2014. The terms are renewable once. Yong Li, Yong Li is President of the Chinese Institute of Certified Public Accountants and a Vice Minister to the Ministry of Finance of the Peoples Republic of China. He is responsible for leading the Ministrys involvement in international matters including regional and bilateral economic issues, as well as co-ordination with the G20 and financial sector supervision in China. President Li is a former Executive Director of the World Bank and a former First Secretary of the Chinese delegation to the United Nations. Marco Onado, Marco Onado is a Senior Professor of Financial Institutions at the Bocconi University in Milan, Italy. He is also Chairman of Pioneer Global Asset Management, a global investment manager with a presence in 27 countries and more than 165bn of assets under management. Professor Onado is a former Commissioner of the Commissione Nazionale per le Societ e la Borsa (CONSOB), the Italian securities and markets regulator. Commenting on the appointments, Robert Glauber, Chairman of the Trustees Nominating Committee said: President Li and Professor Onado are highly respected authorities on international financial matters as well as prolific writers and commentators. They are outstanding appointments to the Trustees.

Financial Accounting Standards Board News (www.fasb.org)

Summary of Board decisions are provided for the information and convenience of constituents who want to follow the Boards deliberations. All of the conclusions reported are tentative and may be changed at future Board meetings. Decisions are included in an Exposure Draft for formal comment only after a formal written ballot. Decisions in an Exposure Draft may be (and often are) changed in re-deliberations based on information provided to the Board in comment letters, at public roundtable discussions, and through other communication channels. Decisions become final only after a formal written ballot to issue an Accounting Standards Update.

IASB and FASB Seek to Reduce Differences in Classification and Measurement Models for Financial Instruments
The International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) today agreed to work together to seek to reduce differences in their respective classification and measurement models for financial instruments. The discussions will form part of the FASBs ongoing redeliberation of a proposed Accounting Standards Update on financial instruments, which was originally issued in May 2010. The IASB will consider these discussions as part of its project to undertake limitedscope changes to IFRS 9, Financial Instruments, issued in November 2009 and amended in October 2010, resulting from its ongoing work to develop a new IFRS on insurance contracts and the feedback received on application of IFRS 9 to particular instruments.

FASB Publishes Proposal for Impairment of Indefinite-Lived Intangible Assets

The Financial Accounting Standards Board (FASB) today issued for public comment a proposed Accounting Standards Update on indefinite-lived intangible asset impairment testing that is intended to simplify impairment assessment and reduce the recurring costs to comply with existing guidance while improving the consistency of testing methods among long-lived asset categories for preparers. Examples of intangible assets subject to the proposal would include indefinite-lived trademarks, licenses, and distribution rights. The standard would apply to all public, private, and not-for-profit organizations. The amendments would allow an organization the option to first assess qualitative factors to determine whether it is necessary to perform the quantitative impairment test. An organization electing to perform a qualitative assessment no longer would be required to calculate the fair value of an indefinite-lived


intangible asset unless the organization determines, based on a qualitative assessment, that it is more likely than not that the assets fair value is less than its carrying amount.

U.S. GAAP Financial Reporting Taxonomy Now Available

The Financial Accounting Standards Board (FASB) today announced the availability of the 2012 U.S. GAAP Financial Reporting Taxonomy pending final acceptance by the U.S. Securities and Exchange Commission (SEC). The FASB is responsible for the ongoing development and maintenance of the taxonomy applicable to public issuers registered with the SEC. The 2012 U.S. GAAP Financial Reporting Taxonomy contains updates for accounting standards and other improvements to the 2011 taxonomy currently used by SEC issuers. The FASB issued proposed improvements to the taxonomy in the fall, allowing users of the taxonomy to provide feedback on the updates and to provide SEC filers, service providers, software vendors, and other interested parties the opportunity to become familiar with and incorporate new element names for their filings.


Summary of Board decisions are provided for the information and convenience of constituents who want to follow the Boards deliberations. All of the conclusions reported are tentative and may be changed at future Board meetings. Decisions are included in an Exposure Draft for formal comment only after a formal written ballot. Decisions in an Exposure Draft may be (and often are) changed in re-deliberations based on information provided to the Board in comment letters, at public roundtable discussions, and through other communication channels. Decisions become final only after a formal written ballot to issue an Accounting Standards Update. Disclosures about risks and uncertainties and the liquidation basis of accounting. The Board decided not to require that management of an entity assess whether there is substantial doubt about the entitys ability to continue as a going concern. A majority of Board members observed that such a requirement would be difficult to apply and that users of financial statements would benefit to a greater extent from ongoing disclosures about risks and uncertainties than they would from disclosures that would be made only after management concludes that there is substantial doubt about an entitys ability to continue as a going concern. As a next step in this project, the Board directed the staff to develop a principle for an entity to assess the adequacy of its disclosures about risks and uncertainties and to evaluate how the content of such disclosures could be improved. Open discussionImpairment of indefinite-lived intangible assets. The Board affirmed its plan that the comment period for the Exposure Draft would close at the end of April 2012, providing constituents with a 90-day period to submit their responses.

AICPA News (www.aicpa.org)

Top AICPA Tax Expert Available to Comment on Tax Changes Proposed by President Obama in State of the Union Message
President Obama is expected to mention a number of highly-charged income tax changes in his State of the Union Address tonight. Edward Karl, vice president of taxation of the American Institute of Certified Public Accountants and one of the foremost federal tax analysts in Washington, will be available following the delivery of the State of the Union Address to discuss the presidents tax proposals. As AICPAs senior tax professional, Karl will be able to describe the Obama proposals in a completely nonpartisan way and be able to explain their effect on the average taxpayer.

NASBA and AICPA Give Final Approval to Revisions to Continuing Professional Education (CPE) Provider Standards
The Boards of Directors for both the National Association of State Boards of Accountancy (NASBA) and the American Institute of Certified Public Accountants (AICPA) today announced final approval of the proposed revisions to the Statement on Standards for Continuing Professional Education (CPE) Programs (Standards), the framework for the development, presentation, measurement and reporting of CPE programs. The approval comes following a collaborative analysis of the Standards by a joint


AICPA/NASBA CPE Standards Committee and an extended public comment period of the Standards exposure draft. Overall, the submitted comments did not result in major changes or revisions to the Exposure Draft of the Standards. The most significant change to the Exposure Draft was to provide additional time on the front end for the implementation of the revised Standards.

New Conference Offers Strategies for Dealing with Stepped-Up IRS Scrutiny
Recent government statistics show that the Internal Revenue Service has increased its scrutiny of tax returns and tax professionals, particularly where small business owners or high-wealth individuals are concerned. One IRS priority is to ferret out undeclared interests in foreign financial accounts and assets, which can lead to civil or criminal penalties for taxpayersnot to mention sanctions for practitioners who either fail to report these matters fully or are negligently ignorant of their existence. The bottom line: Tax enforcement is evolving and CPAs and finance professionals must be prepared for a new generation of enforcement tools and techniques. To help meet that goal, the American Institute of Certified Public Accountants is sponsoring a new event this spring, AICPA Conference on Tax Controversy, which will offer strategies for practitioners whose clients face questions or challenges from the IRS.

AICPA Launches eBook Versions of Popular Titles for the Accounting Profession
Audit and accounting guides from the American Institute of Certified Public Accountants have been popular desk reference tools for decades. With many now available as eBooks, theyre perfect for CPAs and finance professionals on the go, too. Digital versions of more than 30 of the AICPAs top-selling titles on accounting and audit guidance and practice management strategies are available for download from the organizations online storefront, www.cpa2biz.com/ebooks. The eBooks are easily navigable, with text that can be searched for key terms or annotated. Best of all, CPAs can assemble an entire reference library in a single, portable device.

AICPA, FOX Financial Planning Network Partner to Help CPAs Expand Offerings
The American Institute of Certified Public Accountants today announced a partnership with Fox Financial Planning Network, a financial services consulting firm in San Diego, to help CPAs add financial planning to their practices. The partnership comes as clients increasingly look to CPAs for broader financial advice. The new program, available through the AICPAs Personal Financial Planning section, provides discounted and customized versions of tools and training for CPA practitioners. CPA firms of all sizes can access on-demand training sessions, a fully documented workflow system and coaching sessions to effectively manage a financial planning practice and guide clients toward their savings, retirement, education and other goals.

Karen Goodfriend Receives AICPAs 2011 PFP Distinguished Service Award

The American Institute of Certified Public Accountants is pleased to announce Karen Goodfriend, CPA/PFS, of KK Wealth Advisors in Los Alto, Calif., as the recipient of the 2011 Personal Financial Planning Distinguished Service Award. Goodfriend received the award earlier today at the Institutes 2012 Advanced Personal Financial Planning Conference in Las Vegas. The AICPA gives the PFP Distinguished Service Award annually to an AICPA volunteer who significantly contributes to the advancement of personal financial planning as a practice discipline.

Robert Chenhall, Ph.D., Receives Lifetime Contribution Award from AAA

The American Institute of Certified Public Accountants (AICPA) and the Management Accounting Section of the American Accounting Association are pleased to announce that Robert Chenall, Ph.D., has been awarded the 2012 Lifetime Contribution Award. Anne Farrell, member of the AICPAs Business & Industry Executive committee, and Leslie Eldenburg, chair of the Lifetime Contribution Committee, presented the award at the 2012 AAA Management Accounting Sections mid-year meeting. Sponsored by the AICPA, the Lifetime Contribution Award recognizes individuals who have made an important mark on management accounting education, research and practice. Professor Chenall was honored for his research and teachings in the areas of management accounting.


Alexander Bruggen, Scott Jackson, Ranjani Krishhnan and Karen Sedatole Receive AAAs Greatest Potential Impact on Management Accounting Practice Award
The American Institute of Certified Public Accountants (AICPA), Chartered Institute of Management Accountants (CIMA) and the Society of Management Accountants of Canada (CMA Canada) are pleased to announce the recipients of the Greatest Potential Impact on Management Accounting Practice Award for 2012. The first award goes to Alexander Bruggen, Ranjani Krishhnan and Karen Sedatole for their paper, Drivers and Consequences of Short-Term Production Decisions: Evidence from the Auto Industry, published in Contemporary Accounting Research. The second goes Scott Jackson for his paper The Effect of Firms' Depreciation Method Choice on Managers' Capital Investment Decisions, published in the Accounting Review.

AICPA Announces Carey Award Winners

The American Institute of CPAs today announced ten recipients of the John L. Carey Scholarship, which are awarded annually to students with little or no previous accounting education who intend to pursue graduate accounting degrees and become CPAs.

New Survey: Saving Takes Priority for Young Adults This Year
Young adults have made saving a priority this year ahead of losing weight, living healthier and other typical New Years resolutions as financial concerns take a toll on their friendships and personal lives, according to a new survey by the American Institute of Certified Public Accountants and the Ad Council. The organizations released the results today to coincide with the launch of a new series of public service advertisements on behalf of their national Feed the Pig financial literacy campaign, which helps 25- to 34-year-olds take control of their finances and add saving to their daily lives. According to the survey, nearly three in four young adults in the Feed the Pig demographic are worried more about personal finances because of todays economy. Asked how those concerns are affecting them, almost half, or 48 percent, said they are socializing less with friends; 38 percent said they are losing sleep; 34 percent said they are distracted at work; and 31 percent said they are short-tempered with family and friends.

ICAEW NEWS (www.icaew.com)

ICAEW: We need a coherent reporting framework for all sizes of UK businesses
Responding to the proposals from the Accounting Standards Board (ASB) contained in the paper The Future of Financial Reporting, Dr. Nigel Sleigh-Johnson, head of ICAEWs Financial Reporting Faculty, said: Fundamental change to UK accounting is long overdue, as the current UK rules are neither comprehensive nor coherent, and sit uncomfortably alongside the parallel regime of International Financial Reporting Standards. The proposals published today represent a second attempt by the ASB to get the new standards just right, following feedback on the previous proposals, published in October 2010.

Financial Services Bill published: ICAEW responds

Responding to todays publication of the Government Bill, Iain Coke, head of ICAEWs Financial Services Faculty, said: The splitting of responsibilities between the PRA and the FCA will not in itself ensure a better system. There is a limit to how far any regulator can be expected to control market behavior. For example, the new conduct regulator will need to be more pro-active and more interventionist. But firms and consumers must also behave responsibly, and this means the regulator must drive culture change as well. The government also needs to make the Bank of England more transparent. This Bill will gift it more powers at both a policy and supervision level. This must be accompanied by greater openness, scrutiny and accountability.


Tax deadline extended due to strike action

HMRC has extended the online deadline for self-assessment tax returns as planned strike action is expected to cause last minute disruption. The Public and Commercial Services Union is planning strikes at call centres and inquiry offices on Tuesday 31st January, which is the original deadline for online selfassessment tax returns. However, HMRC today announced that no fines will be handed out to anyone who submits their tax return online in the first two days of February - effectively extending the deadline by two days. Commenting on the extension, Frank Haskew, ICAEW Head of Tax Faculty, said: The extension will bring a great deal of relief to those who leave their online self-assessment tax returns to the last minute. Anyone calling for help and advice could have been disadvantaged by the planned strike action on 31 January. However, this extension means that taxpayers now have two extra days to file their tax return online. This announcement by HMRC is to be welcomed and should help to reduce the number of taxpayers fined for submitting a late return."

ICAEW has been granted accredited body status by the FSA

The Financial Services Authority (FSA) has granted ICAEW accredited body status under the FSA Retail Distribution Review (RDR). The RDR requires all retail financial advisors to obtain a statement of professional standing (SPS) from an accredited body by 1 January 2013 to continue to advise clients. ICAEW will now be able to issue SPS to retail financial advisors who have met the FSAs new qualification standards and also monitor their continuous professional development. This recognizes ICAEWs experience as a professional body and regulator of the accountancy profession. Vernon Soare, ICAEW Executive Director, Professional Standards commented, We are very pleased to be the first accountancy body to be granted accredited body status by the FSA. The Retail Distribution Review represents a significant change for retail financial markets and financial advisors and ICAEW will now play a part in delivering an enhanced regime for consumers.

ICAEW Chief Exec on executive pay reform

ICAEW Chief Executive, Michael Izza has said that greater transparency and the ability to see and understand quickly the basis on which company executives are rewarded will be key to rebuilding trust. In advance of the publication of plans to reform executive pay, he said: The ability of UK companies to attract talented leaders and to reward their success underpins the market system. Yet rewarding their failure undermines it and is clearly no longer acceptable to the public, politicians and the owners of those companies. Introducing reforms that increase transparency and which effectively reduce some of the complexity around executive pay packages will help. Giving shareholders a greater say over executive rewards will also put the recommendations of remuneration committees under greater scrutiny. Boards who choose to ignore a shareholder vote on these issues will be living on borrowed time.

ICAEW helps companies meet new auditor remuneration reporting requirements

On 1 October 2011 new regulations for how companies report the fees they have paid their auditor came into force. To help businesses of all sizes disclose the right sums, ICAEW has published detailed guidance. Companies are legally required to disclose the amount of fees they pay auditors, with large companies and groups also being required to provide detailed break-downs of the amount of money spent on audit and non-audit services. Dr. Nigel Sleigh-Johnson, Head of ICAEWs Financial Reporting Faculty, said: All UK companies are legally required to disclose the amount of money they have paid their auditor in their annual reports, with large companies also being required to provide a detailed breakdown of the amount paid by the type of service bought.

ICAEW warns of imminent bank reporting challenges

ICAEW has published a report setting out the main challenges in relation to the 2011 year-end bank reporting season. Exposure to sovereign debt, risks taken to secure returns and liquidity management are


among the areas requiring special attention. Iain Coke, head of ICAEWs Financial Services Faculty, said: The volatile economic environment means financial institutions their auditors and users of the financial reports need to be alert. It will be critical to make sure the financial position of banks is explained properly and understood correctly to maintain confidence in reported information. This year will be particularly difficult. It is impossible to predict the nature, timing or impact of future economic shocks, and it is not the job of accounting to do so. However, clear explanations will mean less nasty surprises for readers of financial reports, which why it is so important it is done properly and scrutinized carefully.

Last call for entries to Finance for the Future Awards

There are only three weeks left to enter the Finance for the Future Awards and show how financial leadership has driven business sustainability. The Awards, open to all businesses and organizations operating in the UK, are to recognize the importance of leadership in the finance function and how new ways of doing business or creating an innovative business model have resulted in long term sustainable value. Businesses and organizations are being encouraged to enter the awards if they can demonstrate a shift in corporate behavior and organizational practice. The deadline for entries is Friday 3 February 2012.

Is self-assessment giving you the January blues?

As HMRC issues its final reminder urging people to file their tax returns online, ICAEW is warning taxpayers that those who fail to meet the 31 January deadline will incur a penalty even if they dont owe any tax. So, to help taxpayers avoid the January blues ICAEW has some tips for filing online. Anita Monteith, ICAEW Tax Manager - SME and Personal Tax, said: Taxpayers who miss the 31 January deadline will face penalties, which are completely avoidable if they file online and on-time. Those filing after this date will incur a fixed 100 penalty regardless of how much tax they owe. In addition, if the tax return is over three months late there is now a 10 daily charge which will be added for every further day it isnt filed. This can mean a further penalty of up to 900. A paper tax return filed after 31 January will already be more than three months late, so file online instead.

New Year perfect time for new start-ups, says ICAEW

In the current economic climate setting up a business can be daunting. With the start of a new year, ICAEW is encouraging budding entrepreneurs to get their new ventures up and running. This comes as government currently conducts an enquiry into entrepreneurship, which ICAEW has responded to. Clive Lewis, ICAEWs Head of Enterprise, explains: SME growth is crucial to the UKs economic success. If entrepreneurs believe they have a strong business plan, the necessary resources and the determination to succeed, then the start of a new year is a good time to encourage new influxes of enterprise to help boost the economy. It can be hugely rewarding for start-ups to be their own boss and to build something from scratch in the community. A new business could well be the best way to earn an income, especially if they have saleable skills, an innovative idea or an interest that could be turned into a profitable business. It is also important to note that start-up businesses need to build a network of contacts for customer referrals, to help find potential suppliers and sub-contractors and to offer peer group advice.

Widening access to the accountancy profession makes good business sense

ICAEW has been congratulated by Deputy Prime Minister, Nick Clegg today as one of the leading companies in opening their doors to young people from all walks of life. ICAEW is named as one of the signatories to the Business Compact, the Deputy Prime Ministers flagship scheme to create fairer opportunities to getting the best jobs. Michael Izza, chief executive officer, ICAEW said: ICAEW is committed to supporting social mobility as it encourages the diversification of talent and innovation within the accountancy profession. Encouraging students from any background has always been one of the strengths of our profession. Talent, ability and drive matter most and many in our profession came from relatively modest backgrounds but with hard work and determination rose to the very top.


Current executive pay framework could be improved says ICAEW

Michael Izza, chief executive officer of ICAEW, will tell business leaders that they need to be more sensitive to the widening pay gap in the UK, and that executive pay should reward long term success, not failure. Introducing shadow business secretary Chuka Umunna MP who will deliver a keynote speech on executive pay at Chartered Accountants Hall on Thursday 12 January, Izza will say: High pay is not bad in itself its necessary for top UK businesses to attract the best talent, keeping us competitive in a rapidly changing world. As long as high earners pay their fair share, higher earnings also mean bigger tax revenues, which are vital to tackling the deficit. But rapidly rising pay levels and the consequences of the financial crisis suggest that pay isnt always directly linked to performance. Now, we need a constructive debate on what responsible business actually looks like. This will help businesses and government to strengthen their policies on executive pay and other crucial governance issues.

Double success for accountancy student

Over seventeen hundred finance professionals have taken the final step towards their qualifications for business leadership with the latest round of ICAEW Advanced Stage examinations. Commenting on the results, Mark Protherough, ICAEWs Executive Director, Learning and Professional Development, said: The skills that our students have acquired over their challenging and wide-ranging training period are in everincreasing demand. The worlds economy has vital need of business leaders who can apply their knowledge and financial acumen in practical and innovative ways and our students are taught not just how handle technicalities but how to think above and beyond the figures. I congratulate all our successful students and wish them every success in their future careers.

New website explains audit

ICAEW has launched a new website for non-accountants to explain the purpose of audit and the role of auditors. The site www.trueandfair.org.uk describes the processes that auditors go through to give their opinion on companies financial reports. It also has an interactive section where questions can be posted and answers will be provided. The website has been set up to help improve understanding of audit, a service which is relied upon by investors and the wider business community, but which is often misunderstood or overlooked. With reforms to statutory audit currently being considered by the European Union, ICAEW hopes that www.trueandfair.org.uk will provide unbiased, objective information for anyone interested in finding out more about audit.

TED talk on assessing the value of the Earth's assets

Mr. Sukhdev mentions ICAEW and our TEEB for Business Coalition in this excellent TED talk on assessing the value of the Earth's assets. Eye-opening charts will make you think differently about the cost of air, water, trees.

ACCA NEWS (www.accaglobal.com)

Cable takes important first step on board pay
The Government is heading in the right direction on board pay, says ACCA (the Association of Chartered Certified Accountants). Setting private sector board pay should remain a decision for companies themselves, but pay should always be balanced with shareholder value and company performance. Vince Cables intervention comes at the right time, but it should be the first step in wider efforts to promote active shareholder engagement. Remuneration decisions are fundamentally a matter for companies to decide for themselves, says John Davies, head of technical at ACCA. Decisions need to take into account the specific financial context in which a company operates their goals, and their performance against targets. But, pay decisions need to be consistent with the best interests of the company and its shareholders, and in line with the stewardship and fiduciary responsibilities of the directors making the decisions on pay.


IIRC and ACCA sharing premises

The International Integrated Reporting Council (IIRC) has moved into ACCAs (the Association of Chartered Certified Accountants) offices in London, UK. The organization will be there for two years. Paul Druckman, Chief Executive Officer of IIRC and the UK located team members of approximately 10 people will be based there. Helen Brand, ACCAs chief executive, says: 'We are delighted to be able to offer the IIRC accommodation at ACCAs London premises. We already co-operate extensively, and ACCA is committed to the aims of the IIRC. We are part of the pilot program for Integrated Reporting and will be working on this throughout 2012.' Paul Druckman from the IIRC says: 'We are grateful to ACCA for allowing us to occupy a floor of such prestigious offices in Lincoln's Inn Fields. ACCA has been involved for so long in corporate responsibility and sustainability, their deep connection to integrated reporting is only reinforced by this generous gesture.'

Global trade drying up, says largest ever economic survey of finance professionals
Leading accountancy bodies join forces to provide powerful insight into challenges facing business; Confidence in the UK is low but higher than in the rest of Western Europe. Finance professionals believe there will be a renewed global economic downturn in 2012 as the largest ever quarterly survey of professional accountants shows that international trade continued to dry up at the end of last year. The latest survey of 3,775 professional accountants, including 1,414 senior executives, from around the world, is the result of the collaboration between two major professional bodies. ACCA (the Association of Chartered Certified Accountants), is the global body for professional accountants and has run the Global Economic Conditions Survey since 2009. It has now joined forces with the Institute of Management Accountants (IMA), the world's largest and most respected US-based association focused exclusively on the management accounting profession, to develop an even more robust and powerful record of the state of the global economy.

Make understanding your taxes and finance a New Year's Resolution

The global body for professional accountants, ACCA (the Association of Chartered Certified Accountants), is suggesting simple ways to keep track of personal finances and taxes in the New Year. Chas Roy-Chowdhury, head of taxation at ACCA, said: After the festive season money may be tight and people are no doubt going to be feeling the pinch even more. So understanding how your finances and taxes work, and understanding what is coming out of your hard earned cash is essential, particularly now. 'People should take a look at their incomes and outgoing expenditure and make a list of it. They should also take an interest in the amount of tax and other deductions from their wages, especially when there are changes to salaries or financial circumstances. Not knowing the ins and outs of your own cash flow can catch people out when they are expecting more money to be in their bank accounts than there actually will be and that leads to debts occurring.'

CIMA NEWS (www.cimaglobal.com)

CIMA publishes November 2011 exam results
The Chartered Institute of Management Accountants (CIMA) has published its November 2011 results which mark the fourth session of exams of the 2010 syllabus. Robert Jelly, Executive Director of Education at CIMA, said: CIMA is pleased to note there were some strong student performances from around the world, which prove that dedication and study can produce exemplary results. It is also very pleasing to note the increasing proportion of students sitting the CIMA exams outside the UK, reflecting the fact that the CIMA qualification is truly global. While the global pass rates for paper P1, Performance Operations and paper P2, Performance Management have stabilized, there is still scope for improvement. The average range of pass rates was generally maintained for all other papers. Prize-winners and commendations in individual papers included students employed by Arcadia Group Ltd, Centrica plc, ICAP plc, Network Rail, and the UK NHS. Examination results letters will include a breakdown of marks by question. This, together with the post exam guides, will provide students and tutors with valuable


feedback. CIMA has continued to work with quality learning partners to expand CIMAs examination capacity and availability to provide stakeholders with greater choice and flexibility. All ten papers in the professional qualification will again be available in March 2012 in the UK to allow a re-sit opportunity for students, with T4 part B Case Study on PC being available globally for students sitting for the first time as well as for those re-sitting. Due to the continuing success of these additional exam sessions, CIMA is pleased to announce that the Strategic level papers will be available globally for the first time from March 2012. CIMA will continue to look to extend the scope of these exam sessions in the future to benefit all of our stakeholders in an increased number of markets. Students have access to a wide range of free study support resources through the CIMAglobal.com website along with e-magazine Velocity and online community CIMA sphere.

IFAP News (www.ifap.org.pk)

IFAP Recent Members/Admission of New Members
Mr. Jawad Saleem (FFA)
Director Finance M/s Levi Strauss Pakistan (Private) Limited, Prime Heights, 4 Saint Marys Park, Gulberg III, Lahore. Tel: (Office) +92 42 3586 2046 49, Cell: +92 300 849 9331

Mutual Recognition Agreements (MRAs)/Memorandum of Understandings (MOUs)/Reciprocal Arrangements (RAs)

The Institute of Forensic Accountants of Pakistan (IFAP) has Reciprocal Arrangements/Mutual Recognition Agreements (MRAs)/Memorandum of Understandings (MOUs) with the following International Professional Institutes/Bodies:1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. The Institute of Certified Forensic Accountants (ICFA USA & Canada). The Institute of Forensic Accounting and Investigative Audit (IFAIA) India. The Caribbean Institute of Forensic Accounting (CIFA West Indies). The Institute of Forensic Accountants (IFA Nigeria). The Faculty of Secretaries and Administrators (FSAN) Nigeria. The Institute of Professional Financial Managers (IPFM UK). The Oxford Association of Management (OXIM UK). The Chartered Institute of Professional Financial Managers (CIPFM USA). The Institute of Financial & Management Studies (IFMS USA). The Chartered Institute of Corporate Treasurers (CICT) USA. The Institute of Financial Consultants (IFC USA & Canada). The Institute of Certified Business Consultants (ICBC USA & Canada). The International Academy of Project Management (IAPM) Hong Kong. The Institute of Forensic Auditors (IFA) Zimbabwe. The Pebble Hills University.

The Associate and Fellow Members of the Institute of Forensic Accountants of Pakistan (IFAP) are entitled to get direct membership of these Fifteen Institutes on reciprocal arrangement basis subject to payment of requisite/transfer fee.


Objectives of IFAP
The Forensic Accounting (FA) Program offered by The Institute of Forensic Accountants of Pakistan (IFAP) is a Professional Program with the following broad objectives: To improve the ability to develop a framework for Forensic Accounting, Forensic Auditing, Forensic Investigation, Fraud Examination, Financial analysis and to rationally evaluate alternatives for purposes of decision making. To deepen insights into practical applications of Forensic Accounting, Auditing, Forensic Investigation and its allied subjects in a dynamic financial and investment environment. To encourage aspiring Forensic Accountants, Forensic Auditors, Fraud Examiners and Fraud Investigators equip themselves with the latest tools, techniques and mechanisms. To develop contemporary Body of Knowledge (BOK) and skill-set and make them available for those seeking rewarding careers in the financial and investment industry era of globalization.

About the IFAP

The Institute of Forensic Accountants of Pakistan (IFAP) was established in year 2009 at Islamabad, a license issued by the Registrar Joint Stock Companies under the Societies Registration Act of XXI of 1860, Federal Government of Pakistan. The Institute of Forensic Accountants of Pakistan (IFAP) is a first recognized Professional Accounting Institute/Body providing education and training in the fields of Forensic Accounting, Forensic Auditing, Forensic Investigation, Fraud Examination, Money Laundering, Corporate Governance, Financial Reporting, Risk Management, Criminology and its allied areas/subjects. The Institute of Forensic Accountants of Pakistan (IFAP) is a unique Pakistani venture to meet the global challenges of growing menace of frauds and white-collar crimes in business establishments. The Institute of Forensic Accountant of Pakistan (IFAP) was setup in the year 2009 by those, who have been in the field of Forensic Accounting, Forensic Investigative, Forensic Auditing, Fraud Examination and its allied areas/subjects and have themselves sniffed out investigated and prosecuted scores of frauds and whitecollar crimes. The Institute of Forensic Accountants of Pakistan (IFAP) is promoted with the objective to educate business establishments, to prevent, detect and investigate frauds and white-collar crimes and promote anti-fraud education to actively combat the growing menace. The Institute of Forensic Accountants of Pakistan (IFAP) also provides education on intricacies and practical aspects of Forensic Accounting, Forensic Investigative, Forensic Audit, Fraud Examination and imparting education on new emerging issues on aligning new business methods and technology with existing process, with primary objective to put in place the right and meaningful controls and practices to prevent any wrong. In nut shell The Institute of Forensic Accountants of Pakistan (IFAP) provides complete Anti Fraud Education to promote Fraud Risk Management Strategy for prevention, detection, investigation & prosecution of frauds and white-collar crimes at all corporate, as a single point destination.


Executive Council/Board of Governors of IFAP

Barrister Sohail Nawaz Emails: president@ifap.org.pk, snawaz50@hotmail.com

Vice President
Dr. Tahir Iqbal Emails: vicepresident@ifap.org.pk, ifap.fapakistan@gmail.com

Mr. MBT Khalid Emails: secretary@ifap.org.pk, mbt.khalid@gmail.com, mbt.khalid@ifap.org.pk

Member Executive Council

Mr. Muhammad Muazzam Ali Zahid Emails: career@ifap.org.pk

Member Executive Council

Mr. Faheem-ul-Haq Khan Emails: fahimulhaq9@hotmail.com

Member Executive Council

Dr. Shahzad Ali Khan Emails: exemption@ifap.org.pk, shahzad@hsa.edu.pk

Member Executive Council

Mr. Muhammad Tayyab Ansari Email: admissions@ifap.org.pk

Member Executive Council

Dr. Abdul Jaleel Email: abduljaleel@gmail.com

Member Executive Council

Barrister Umer Abdullah Email: abdullah.umer@gmail.com

Member Executive Council

Mr. Hameed Ullah Jan Afridi Email: chairman@ipo.gov.pk


Articles are welcome from any individual, whether an IFAP member or not. For inclusion on the next issue of The Forensic Accountant, fax or email us articles, case studies, papers, opinion, research or related material: Fax: +92 51 222 0872, or emails:ifap.fapakistan@gmail.com admissions@ifap.org.pk exemption@ifap.org.pk, career@ifap.org.pk, secretary@ifap.org.pk, president@ifap.org.pk, vicepresident@ifap.org.pk

Published By:The Institute of Forensic Accountants of Pakistan (IFAP)

Office # 21, First Floor, Capital Shopping Center, Markaz G-11, Islamabad-Pakistan Tel: +92 51 222 0872, 430 4525, Fax: +92 51 222 0872, Cell: +92 300 531 3597 Emails:ifap.fapakistan@gmail.com admissions@ifap.org.pk exemption@ifap.org.pk career@ifap.org.pk secretary@ifap.org.pk president@ifap.org.pk vicepresident@ifap.org.pk The contents of this Newsletter are the copyright of The Institute of Forensic Accountants of Pakistan (IFAP), whose permission is necessary for reproduction in whole or in part. The Institute reserves the right to refuse any matter of advertisement detrimental to the interest of the Institute. The decision of the Editor in this regard will be final.

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