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Crescent Investment Bank fails to submit audited accounts

KARACHI (August 25 2006): The Crescent Standard Investment Bank Limited (CSIBL) will go down in record books as the bank has circulated “un-approved and un-audited” annual accounts for the year ended December 31, 2005 to its shareholders and that too after eight and a half months.

The accounts show a loss of Rs 2,118,546,000 or loss per share (Rs 16.85) which means the entire equity stands eroded and the share value is a negative Rs 6.85 per share.

CSIBL had forwarded these accounts on August 18 to the Karachi, Lahore and Islamabad stock exchanges stating clearly in its letter that “these accounts have neither been approved by the Board of Directors of the Company nor audited by its statutory auditors.” A copy of the un-approved and un-audited annual accounts has also been sent to the Securities and Exchange Commission of Pakistan (SECP). The CSIBL Board had resolved in its meeting held on August 17 that these accounts be disseminated “only for the information of the shareholders.”

The one page profit and loss account for the year ended December 31, 2005, neither bears the signature of the Managing Director of CSIBL nor the chartered accountant. Even Anjum Salim, Chief Executive Officer did not sign the accounts. The unsigned statement of account means that nobody owns this financial document.

According to law the audited accounts duly approved by the Board of Directors are to be presented to the shareholders after three months of the closure of the books. CSIBL failed to give accounts in spite of repeated reminders of stock exchanges, shareholders and other concerned parties.

The un-approved, un-audited accounts were sent after eight and a half months. The auditors may have had objection to the accounts but the directors have also not approved the accounts though they held a meeting on August 17 in this connection.

Needless to mention that M/s A Ferguson & Co had investigated the accounts of the company and had found double books of accounts. They had submitted 177-page report to SECP indicating serious irregularities in February 2006 on the basis of which SECP had issued show cause notice to CSIBL in April 2006.

On the basis of un-approved, un-audited accounts by the Board of Directors/auditors, the annual general meeting of the shareholders has been called on September 22 at Lahore. Under the SECP law accounts should be first audited and then approved by the Board of Directors and only then should be sent to the shareholders. This is a unique case where un-approved and un-audited annual accounts have been sent. The shareholders are watching with anxiety as to what action SECP takes on this serious default. It is not known whether SECP has initiated any action in this connection.

The inquiry against keeping double books and unaccountable Rs six billion is pending with SECP whereby, according to the Ferguson report, innumerable irregularities were reported by CSIBL. Off balance sheet assets were reported by Ferguson to the tune of Rs 1.9 billion and dues from sister companies Rs 2.76 billion apart from serious irregularities and financial facilities extended to companies of Crescent Group. The SECP has not yet published their report on this financial scandal.

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