The crushing season starts in November and non-crushing by Omni Group sugar mills will destroy the sugarcane farmers in Sindh, while National Bank of Pakistan (NBP) and other banks will not be able to recover advances except by selling the plants, machinery, buildings and land of Omni Group.
The NBP stated this in its petition filed Saturday in the apex court in a suo motu case regarding slackness in the progress of pending inquiries relating to fake bank accounts of various banks under Order V Rule 2(2) of Order XXXIII of Supreme Court Rules.
The NBP requested the Supreme Court to form a committee to operate sugar mills of Omni Group to ensure that defaults do not occur either for the farmers or the banks including NBP. It said the national economy has already slowed down and non-crushing in 8 sugar mills will aggravate the situation.
The petition sad that the Omni Group became a client of NBP in 2003 and since then it has been availing various financing facilities. The relationship with the Omni (Private) Limited started in 2012 and still continues. Mark-up was paid regularly till March 2018 after which the accounts of the company were debit blocked by FIA, vide its letter No FIA/SBC/K/FIR-04/2018/3321-25 dated July 31, 2018.
The principle outstanding against financing facilities of Omni (Private) Limited is Rs 67.99 million, revolving the facilities is secured against the pledge of rice/paddy valued at Rs 50.71 million and Rs 24.89 million revolving facility is secured by collateral of land, building, plant and machinery of Omni (Pvt) Ltd, valued at Rs 411.45 million.
In addition, the personal guarantees of Khawaja Anver Majid and Ali Kamal Majid have also been provided as additional collateral. Pak Ethanol (Pvt) Ltd, which has assumed the assets and liabilities of Pinnacle Distilleries (Pvt) Ltd initiated the relationship with NBP Main Branch, Karachi, availing financing facilities and later shifted to Corporate Bank, Karachi, in 2013. This relationship continues till date.
Mark-up and principal amount were paid regularly till March 2018, after which the accounts of the company were debit blocked by FIA vide its letter dated July 31, 2018. The principal outstanding against financing facilities of Pak Ethanol (Pvt) Ltd is Rs 1,064.78 million of which Rs 261.02 million revolving facility is secured against pledge of molasses and ethanol valued Rs 661.94 million, and Rs 803.76 million facility comprising revolving facilities and long-term loans repayable in quarterly installments are secured by collateral of land, building, plant and machinery of Pak Ethanol (Pvt) Ltd valued at Rs 1,905.50 million.
In addition, personal guarantees of Muhammad Tahir Mehmood and Majeed Ijaz have also been provided as additional collateral. Omni Polymer Packages (Pvt) Ltd initiated the relationship with NBP Main Branch and has been availing financing facilities from Corporate Branch, Karachi, since 2012. This relationship continues till date. In addition, personal guarantees of Khawaja Anver Majid and Ali Kamal Majid have also been provided additional collateral.
Pak Ethanol (Private) Ltd, which has assumed the assets liabilities of Pinnacle Distilleries (Private) Ltd, initiated the relationship with NBP Main Branch, Karachi, availing financing facilities and later shifted to Corporate Branch Karachi in the year 2013. This relationship continues till date.
Mark-up and principal amount were paid regularly till March 2018 after which the accounts of the company were debit blocked by FIA vide its Letter No FlA/SBC/K/FIR-04/2018/3321-25 dated July 31, 2018. The principal outstanding against financing facilities for Pak Ethanol (Pvt) Ltd is Rs 1,064.78 million, of which Rs 261.02 million revolving facility is secured against pledge of molasses and ethanol, valued at Rs 661.94 million and Rs 803.76 million facility comprising revolving facilities and long-term loans repayable in quarterly installments are secured by collateral of land, building, plant and machinery of Pak Ethanol (Pvt) Limited valued at Rs 1,905.50 million.
In addition, personal guarantees of Muhammad Tahir Mehmood and Majeed ljaz have also been provided as additional collateral. Omni Polymer Packages (Private) Limited, initiated the relationship with NBP Main Branch and has been availing financing facilities from Corporate Branch, Karachi since 2012. This relationship continues till date. All mark-ups were paid regularly and letter of credit obligations were duly settled till July 2018, after which the accounts of the company were debit blocked by FIA vide its letter No FIA/SBC/K/FIR-04/2018/3321-25 dated July 31, 2018.
The principal outstanding against financing facilities of Omni Polymer Packages (Private) Limited is Rs 95.19 million, which is in part secured by land, building, plant and machinery valued at Rs 566.74 million along with lien over import documents. In addition, personal guarantees of Khawaja Abdul Ghani Majid and Menahel Majid have also been provided as additional collateral.
Tando Allayar Sugar Mills (Private) Ltd initiated the relationship with NBP through Corporate Branch Karachi in 2011. This relationship continues till date. Mark-up and principal amount were paid regularly till March 2018 after which the accounts of the company were debit blocked by FIA vide its Letter No FIA/SBC/K/FIR-04/2018/3321-25 dated 31st July 2018. The principal outstanding against financing facilities of Tando Allayar Sugar Mills (Private) Limited is Rs 609.85 million of which Rs 500 million are revolving facilities. Rs 200 million portion of revolving facility is secured against pledge of white refined sugar valued at Rs 274.10 million and Rs 300 million portion of facility is secured by charge on overall current assets of the company.
The long-term loan repayable on semi-annual basis presently outstands at Rs 109.84 million secured by collateral of land, building, plant and machinery of Tando Allayar Sugar Mills (Private) Limited valued at Rs 4,355 million.
In addition, personal guarantees of Khawaja Abdul Ghani Majid and Menahel Majid have also been provided as additional collateral. Ansari Sugar Mills Limited initiated their relationship with NBP through Shaheed Mills Road Branch in the year 2009 with financing facilities, and shifted to Corporate Branch Karachi in 2011. This relationship continues till date. Mark-up and principal amount were paid regularly till March 2018, after which the accounts of the company were debit blocked by FIA vide Its Letter No FIA/SBC/K/FIR-04/2018/3321-25 dated 31st July, 2018.
The principal outstanding against financing facilities of Ansari Sugar Mills Limited is Rs 2,725.78 million, of which the revolving credit amount of Rs 1,365 million is secured through refined sugar valued to the tune of Rs 1,878.24 million ie Rs 1.8 billion.
This sugar is pledged with NBP and remains under the control of bank appointed Muqaddam, The long-term loan repayable in quarterly installments amounting to Rs 1,360.78 million is secured by land, building, plant and machinery as collateral security valuing Rs 4535.97 million.
Bawany Sugar Mills Limited initiated its relationship with NBP through Corporate Branch Karachi in 2010. This relationship continues till dale. Mark-up and principal amount were paid regularly till June 2018. The amount advanced in total is Rs 1,154.55 million. The revolving credit amount of Rs 673 million is secured through refined sugar valuing Rs 1,001.35 million. This sugar is pledged with NBP and remains under the control of bank appointed Muqaddam. The long-term loan repayable in quarterly installments amounting to Rs 481.55 million is secured by land, building, plant and machinery as collateral security valued to the tune of Rs 4,315.43 million. In addition, personal guarantee of Khawaja Anver Majid has also been provided as additional collateral.
Khosk Sugar Mills (Private) Limited initiated its relationship with NBP through Corporate Branch Karachi in 2011. This relationship continues till date, Mark-up and Principal amount have been paid regularly till June 2018. The amount advanced in total is Rs 1,397.74 million. The revolving credit amount of Rs 805 million is secured through white refined sugar valued at Rs 1,129.78 million. This sugar is pledged with NBP and remains under the control or bank appointed Muqaddam. The long-term loan repayable in quarterly installments amounting to Rs 592.74 million is secured by land, building, plant and machinery as collateral security valued at Rs 4,154.18 million. In addition, personal guarantees of Khawaja Abdul Ghani Majid and Menahel Majid have also been provided as additional collateral.
Naudero Sugar Mills (Private) Limited opened an account in the NBP Avari Tower Branch and financing facilities were obtained. These facilities were shifted to the Corporate Branch Karachi in 2012. This relationship continues till date. Mark-up and principal amount have been paid regularly. The amount advanced in total is Rs 1,646.28 million. The revolving credit amount of Rs 930 million is secured through white refined sugar valued at Rs 1,306.49 million. This sugar is pledged with NBP and remains under the control of bank appointed Muqaddam. The long-term loan repayable in quarterly installments amounting to Rs 716.28 million is secured by land, building, plant and machinery as collateral security valued to the tune of Rs 3,010.20 million. In addition, personal guarantee of Mustafa Z Majid and Salma Majid have also been provided as additional collateral.
New Dadu Sugar Mills (Private) limited opened an account in the NBP Avari Tower Branch and financing facilities were obtained and financing facilities were shifted to Corporate Branch Karachi in 2012. This relationship continues till date. Mark-up and principal amount have been paid regularly. The amount advanced in total is Rs 1490.08 million. The revolving credit amount of Rs 1015 million is secured through while refined sugar valued at Rs 1,397.58 million. This sugar is pledged with NBP and remains under the control of bank appointed Muqaddam.
The long-term loan repayable in quarterly installments amounting to Rs 476.08 million is secured by land, building, plant and machinery as collateral security valuing Rs 4134.96 million. In addition, personal guarantees or Nimr Majid and Noor Nimr Majid have also been provided as additional collateral.
Shikarpur Power (Private) Limited opened an account in the NBP Corporate Branch Karachi in 2011 and financing facilities were obtained. This relationship continues till date. Mark-up and principal amount have been paid regularly. The amount advanced in total is Rs 210.33 million. The revolving credit amount of Rs 170 million and long-term loan repayable in quarterly installments amounting to Rs 40.33 million are secured by land, building, plant and machinery as collateral security valued to the tune of Rs 1,204.47 million. In addition, personal guarantee of Khawaja Anver Majid and Khawaja Ali Kamal Majid have also been provided as additional collateral.
Omni Power (Private) Limited opened an account in the NBP Corporate Branch Karachi in 2011 and financing facilities were obtained. This relationship continues till date. Mark-up and principal amount have been paid regularly. The amount advanced in total is Rs 182.39 million.
The revolving credit amount of Rs 178.02 million and long-term loan repayable in quarterly installments Rs 4.37 million are secured by land, building, plant and machinery as collateral security valued to the tune of Rs 1,438.01 million. In addition, personal guarantee of Khawaja Abdul Ghani Majid and Menahel Majid have also been provided as additional collateral.
Dadu Energy (Private) Limited opened an account in the NBP Corporate Branch Karachi in 2011 and financing facilities were obtained. This relationship continues till date.
Mark-up and principal amount have been paid regularly. The amount advanced in total is Rs 228.56 million. The revolving credit amount of Rs 198.23 million and long-term loan repayable in quarterly installments amounting to Rs 30.33 million are secured by land building, plant and machinery as collateral security valued to Rs 1,933.91 million. In addition, personal guarantees of Khawaja Nimr Majid and Noor Nimr Majid, have also been provided as additional collateral.
Larr Sugar Mills (Private) Limited had under its pervious shareholders obtained financing facilities from NBP Corporate Branch Karachi during the year 2009, which were transferred to the Assets Recovery Group of NBP in the year 2012.
Ownership from previous management was shifted to Omni Group in the year 2014. This relationship continues till date. Mark-up and principal amount have been paid regularly. Initially a loan of Rs 331.09 million was advanced of which Rs 50.68 million presently remains outstanding.
The loan is secured by land, building, plant and machinery as collateral security valued at Rs 2,906.28 million. Chambar Sugar Mills (Private) Limited, formerly known as Bachani Sugar Mills (Private) Limited, had under its previous shareholders obtained financing facilities from National Development Finance Corporation (NDFC) which were acquired by NBP and transferred to Assets Recovery Group of NBP.
Ownership from previous management was shifted to Omni Group in the year 2011. This relationship continues till date. Mark-up and principal amount have been paid regularly. Initially the loan of Rs 97.30 million was advanced of which Rs 7.42 million presently remains outstanding. The loan is secured by land, building, plant and machinery as collateral security valued to the tune of Rs 3,718.86 million.
Between 2003 and 2018, NBP has earned approximately Rs 7 billion as mark-up from the Omni Group; with not a single default or write-off. In the accounts of the Omni Group, there were regular withdrawals and deposits, in the normal course of business. The withdrawals related to general working capital requirements or the companies.
Letter dated 31.07.2018, was received by NBP Compliance Group on 03.08.2018, at the Head Office, which was a Friday. The directive of FIA was handed over to Afzal Sadiq, Assistant Vice President, for implementation and dissemination to the branches where accounts were maintained.
Afzal Sadiq had a cardiac issue, where after on account of his illness he forgot to implement the instructions for dissemination of the FIA letter to the relevant branches. This duty was recalled by Afzal Sadiq on 09.08.2018, and emails were sent to the relevant branches at 6:39pm by email for compliance after working hours.
The Corporate Branches in Karachi implemented the FIA directives on 09.08.2018, while the branches in interior Sindh implemented the directive on 10.08.2018. However, in the interregnum, between the 4th and 10th, there were a number of transactions including but not limited to the Corporate Branch Karachi and four branches, namely Chambar Branch, Matli Branch. Ansari Sugar Branch and Avari Towers Branch.
The total withdrawal/outflow was Rs 188.837 million while the inflow deposits receipts between 4th & 10th August amounted to Rs 307 258 million, which is more than the outflow by Rs 118.421 million. The money continued to be deposited and by 19.10.2018 the total deposits in the Omni Group's 6 blocked accounts have increased to Rs 222.19 million from Rs 118.421 million.
Upon realizing the immediate non-implementation of the FIA's directive Afzal Sadiq was suspended and an inquiry was initiated. However, FIA was informed verbally on 10.08.2018 about the lapse on the part of an official of NBP. Subsequently letter dated 17.08.2018 was written to Mohammad Ali Abro, Assistant Director FIA, State Bank Circle, Karachi.
The lapse was totally inadvertent and on account of sickness of the officer entrusted and instructed for compliance no loss has accrued to NBP as a consequence of the lapse. Rather the inflows and deposits have now reached Rs 222.19 million. The NBP was obliged to honour the claims arising out of the letters of credits which were claimed by foreign banks, in order that NBP does not default on its commitments arising out of letter of credits issued by NBP. The claims of the foreign banks have been honoured from NBP's own resources.
Since the accounts have been blocked, FIA has been writing to permit NBP to realise its outflow from the amounts available in the blocked accounts.
Permission for this has been sought under section 5(5) or FIA Act 1974. As a national government-owned institution, the NBP has felt compelled to bring these essential facts to the notice of the apex court.