FIA initiates probe against Chaudhrys for bank fraud

ISLAMABAD: The Federal Investigation Agency, upon the request of the Bank of Punjab, has initiated an inquiry against the Chaudhrys of Gujrat and the famous Colony Group for getting illegal loans of Rs5.667 billion from the BoP to buy two sugar mills, documents available with The News reveal. It has been suggested to the FIA that the names of Chaudhry Pervaiz Elahi, Chaudhry Moonis Elahi and Chaudhry Wajahat Hussain be put on the Exit Control List and their accounts be frozen and their properties be attached. However, FIA is yet to take any further action.
Director FIA, Lahore, has directed the Economic Crime Wing of FIA, Islamabad, to lodge a regular inquiry against the Colony Group and Chaudhry Pervaiz Elahi, Chaudhry Moonis Elahi and Chaudhry Wajahat Hussain and the wing has been ordered to compile the progress reports on a fortnightly basis, documents say. The complaint says that the details provided to the FIA were just a tip of the iceberg.
The News contacted Kamil Ali Agha, who was sitting with Chaudhry Shujaat Hussain, and after listening to the questions Agha discussed everything with Chaudhry Shujaat (conversation could easily be heard on the cell phone) and then replied that it was a dirty tactic of the PML-N that it had reopened a previous and closed transaction in which nothing was proved against Ch Pervaiz Elahi or anyone from the Chaudhrys of Gujrat. He said he was sitting with Ch Shujaat Hussain who says they have never defaulted on loan payments like the ruling Sharifs. He maintained that the owners of the Colony Group were arrested and probed and interrogated but they never spoke anything against the Chaudhry brothers. Agha, after discussion with Ch Shujaat, said that the PML-N was ruling the Centre thus controlling the FIA while the Bank of Punjab comes under the Punjab government and the entire energy was being wasted upon things that were investigated by the PML-N in the past and it could not bring anything against the Chaudhrys. He

termed the FIA’s new inquiry as a political gimmick, which will fail again.
Details reveal that on May 22, 2014, the Bank of Punjab wrote a detailed complaint to the director general, FIA, stating that in 2007, a key member of the Colony Group, Fareed Mughis Sheikh, was appointed as Director of the Bank of Punjab who ‘obtained undue pecuniary advantages with active support of the then management. The group obtained financing of over Rs5.667 billion during the directorship of Mr Fareed Mughis from 31-03-2007 to 26-05-2008.
“Besides the statutory violations, the Colony Group in utter violation of its undertakings and representations diverted major portion of funds obtained from the BoP with the influence of the ex-chief minister Ch Pervaiz Elahi for acquisition of his family-owned sugar units at Phalia and Mian Channu,” the documents state.
The complaint says that on papers the Colony Group purchased the Phalia Sugar Mills from Ch Moonis Elahi and Ch Wajahat Hussain for Rs838.514 million, ‘however, aggregate purchase price of the unit is reported at Rs2.29 billion as per the balance sheet of Colony Group dated 30-09-2007. The difference needs to be probed.
“Later on, the Colony Mills Ltd purchased another sugar unit located in Mian Channu from the Phalia Sugar Mills Ltd in November 2007, which was later on purchased by the Colony Sugar Mills Ltd on January 1, 2008. The purchase price was settled at Rs1.48 billion as per the Audited Financial Statements of Colony Sugar Mills for the period ending September 30, 2008,” the documents add.
Financial statements of all the three groups concerns for the relevant periods reveal that a sum of about Rs2.434 billion was directly raised from two other group concerns, the complaint adds.
Regarding the wilful default, the complaint of BoP says: “Later, the delinquents tactfully managed to dilute shareholding of Colony Mills Ltd in return enabled them to dissociate Colony Mills Ltd and Colony Industries (Pvt) Ltd having burden of unsustainable debts from the Colony Sugar Mills to free it from the responsibility of returning the debts illegally obtained by the Group from BOP. Colony Mills Ltd (CML) had provided a sum of PKR636 million to Colony Sugar Mills Ltd (CSML) as deposit against issue of shares (for purchase of Phalia unit) apart from PKR350 million as equity contribution (for purchase of Mian Channu unit) in shape of 35m ordinary shares of PKR10 each. The group declared an interim dividend of 21.50% on the basis of half yearly results for the period ending December 31, 2007 against the above-mentioned share deposit money of PKR636 million and accordingly, it was decided that shares as in specie dividend be issued by CSML directly to the member of the CML against the proposed dividend. Resultantly, shareholding of CML diluted from 99.59% to 46.57%. Subsequent to this, CIVIL further diluted its shareholding from 46.57% as of June 30, 2008 to 26.77% as of June 30, 2010 and further to only 16% as of June 30, 2012.”
The complaint recommends: “It is further requested that the accounts of accused persons/delinquents be investigated/freezed under the law, as there are reasonable grounds to believe that the accused persons/delinquents have been siphoning money for their personal gains. In addition, it is further requested that the names of all the accused must immediately included in the Exit Control List (ECL), and all their assets and properties, movable or immovable, or parts thereof, whether in their possession or in the possession of any relative, associate or person on their behalf be freezed. The fraud perpetrated by the accused and their accomplices against BOP is merely the tip of the iceberg where the top lies in plain sight, but a lot more hides beneath the surface. It is further requested that FIA, under the law take action regarding the criminality unearthed by Mr. Aftab Sultan, head investigation, and appropriate legal action may kindly be initiated against all delinquents in accordance with the law,” it concludes.
Mughis A Sheikh could not be contacted for comments and was sent a questionnaire to which he did not respond till the filing of this report.