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Three former Pakistani generals accused of fraud

October 30, 2009

ISLAMABAD – Three former Pakistani Army generals have been accused of causing a Rs.1.8 billion loss to the government by illegally trading on the volatile stock market despite a diktat against this by the prime minister.

A report submitted to parliament’s Public Accounts Committee (PAC) Thursday said the trio, which included two lieutenant generals and a major general of the National Logistics Cell (NLC), invested Rs.4 billion of its funds, including the pension fund of its employees, in stock markets, losing Rs.1.8 billion in the process.

This included Rs.2 billion that the generals “quietly borrowed” from four banks on commercial rates in the name of the NLC, The News reported Friday, adding that all this was in defiance of the orders of then prime minister Shaukat Aziz (2004-07).

The NLC’s website describes it as “a multifaceted organization where diversification guides growth. With business interests, both domestic and international, NLC’s development strategies exploit the strength of the core businesses while evolving challenging activities.

“Through infrastructure development, provision of freight services, management of border terminals and strategic inland dry ports, manufacturing and engineering excellence, enhancing energy resources; we endeavor growth towards a self reliant Pakistan,” the posting adds.

The PAC was informed through its inquiry report that NLC Lt General Azfal Muzaffar continued to make investments in the stock market till the last day of his service in 2008 even though the rest of the government departments and organizations had stopped this exercise in 2006.

The PAC was informed that after causing a loss of Rs.1.8 billion in cash to the NLC, which it would continue to pay as loan installments of the banks in the years to come, the three army generals were never questioned about their acts of omission and commission.

“The PAC members, suspecting some foul play in the multi-billion investment spree, sought the names of the brokers and directors of those firms through whom these billions were invested despite the orders of Aziz to stop investing in stocks,” The News said.

“The interesting part of this scam is that Aziz, as finance minister (1999-2007), had devised a policy to make public sector departments, organisations and corporation to invest their pension funds in the stock markets to show fake recovery and financial health of the country,” the newspaper added.

According to Ashraf Hayat, the secretary of the planning division, the three generals responsible for the scam were Lt. Gen. Khalid Munir Khan, who served in the NLC from Jan 15, 2004 to June 14, 2005, Lt. Gen. Afzal Muzaffar (June 15, 2005 to Oct 17, 2008) and Maj. Gen. Khalid Zahir Akhar (July 25, 2002 to Feb 27, 2008).

The “shocked” PAC members, however, “stopped short of ordering the recovery of these huge financial losses” from the three generals “even after it was established” that not only had they “defied” Aziz’s orders but the pension fund of NLC employees “was also thrown and lost in the stock markets”, The News said.

“The PAC decided to wait for two more weeks to get another review of the inquiry report before ordering the recovery of these losses from those top military men who made such silly investments in the stocks,” the newspaper added.

Alert India: Now that’s some use of American Aid to Pakistan.

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