WEB DESK: Khyber Pakhtunkhwa (KPK) Chief Minister Pervez Khattak has ordered an inquiry into an increasingly acrimonious public row between the provincial finance minister Muzaffar Said, from Jamaat-e-Islami – a coalition partner of the ruling Pakistan Tehreek-e-Insaf – and the management of the Bank of Khyber (BoK).
The inquiry would no doubt focus on whether the provincial finance minister interfered in the workings of the BoK and whether counter charges levelled against the bank management are valid.
BoK is one of three provincial banks – the other two being Bank of Punjab and Sindh Bank. The Bank of Punjab (BoP) was established in 1989 when the PML-N was in power in the province while Benazir Bhutto was the Prime Minister – an era when conflict between the PPP and the PML-N was at its peak; the ostensible objective of setting up the bank was to meet the financial needs of PML-N supporters in Punjab.
In this context, it is relevant to note that the President of BoP states on the website that “the Bank wholeheartedly supports the initiatives taken by the government of Punjab to uplift the under-privileged segments of society. Besides playing a pivotal role in wheat procurement for government of Punjab throughout the past several years, the bank stood shoulder to shoulder with the government of Punjab and dedicated its resources in prompt disbursement of financial assistance to the flood victims in a most transparent manner.”
In 2010, the Sindh Bank (SB) was established at a time when the PPP-led coalition government was in power in the centre as well as in the province and it was inaugurated by the then President Asif Ali Zardari with the inauguration picture uploaded on the website. The mission statement of SB states: “to develop as a leading commercial bank in the country by meeting its stated objectives of promoting economic development of the country in general and the province of Sindh in particular.” The list of products include Benazir zarai card, revival of sick units in Sindh and agri-credit scheme in Sindh.
The BoK was set up in 1991 through an Act passed by the KPK’s Legislative Assembly and was awarded the status of a scheduled bank in September 1994. In marked contrast to the BoP and SB, the mission statement of BoK does not focus on KPK and additionally specifies good governance as an objective: “to increase shareholders’ value and provide excellent service and innovative products to customers through effective corporate governance, friendly work environment and contributing towards an equitable socio-economic growth”.
And within the context of the mission statement the charge levelled against the JI finance minister by the Bank management in a recent advertisement that he does not have any understanding of corporate governance has great relevance. The advertisement points out that the provincial finance minister is not the supervisor of the BoK. It has claimed that the minister has no understanding or appreciation of working of a financial institution although he has been working as provincial finance minister for nearly two years! It has also accused him of failing to accept the fact that corporate governance does not allow the Bank management to hire staff in violation of merit and laid down procedures.
The minister however claimed that he had never used BoK for political objectives. The chairman of the BoK board is the additional chief secretary of KPK and secretary finance department of KPK is a non-executive member of the board while 5 members of the board are independent and the sixth member – Managing Director & CEO – is a professional banker. The board therefore must be left to decide matters relating to corporate governance.
State-owned enterprises that include these three provincial banks too have for far too long been viewed by politicians and bureaucrats as fair game for interference, perks, undue privileges and employment exchanges to park their relatives, friends and constituents. This has resulted in colossal losses to the country with some of the premier banks of the country being brought to the verge of insolvency. The exchequer had to dish out funds to plug the gaping holes before they were finally privatised.
The three provincial banks, under Section 13 of Companies Ordinance 1962, are required to maintain a minimum capital and reserve balance which is determined by State Bank of Pakistan (SBP) and conduct affairs in a manner not detrimental to the interest of depositors. It is therefore necessary that the inquiry set up by the KPK CM, who is no doubt labouring under pressure from the coalition partner, refers the matter to the State Bank which is the regulator for the banking sector as the lender of the last resort.
Source: Business Recorder