Two companies in nexus with banks launder PKR 70 billion abroad

Two Pakistani companies, with the assistance of banks, laundered approximately PKR 70 billion through the import of solar panels, a Parliamentary Committee meeting disclosed on Monday.

The sub-committee of the Senate Standing Committee on Finance and Revenue, chaired by Senator Mohsin Aziz, discussed the issue of multi-billion over-invoicing in solar panel imports.

Officials informed the committee that Bright Star and Moonlight companies imported billions of rupees worth of solar panels between 2018 and 2023 without opening Letters of Credit (LCs).

Despite the suspicious nature of the transactions, banks did not report them to the State Bank of Pakistan's Financial Monitoring Unit (FMU), officials said. The committee was informed that the two companies collectively over-invoiced more than PKR 70 billion.

Bright Star executed transactions exceeding PKR 26 billion, and Moonlight Company processed transactions worth over PKR 18.5 billion through Askari Bank. Additionally, Bright Star and Moonlight transacted more than PKR 14.5 billion and PKR 8.5 billion, respectively, through Dubai Islamic Bank. Over 35% of these transactions were conducted in cash.

Bank officials revealed that penalties were imposed on 13 officers and employees for negligence. Customs officials stated that the total scandal amounts to PKR 106 billion, with PKR 42 billion in suspicious cash transactions. The audit wing of Pakistan Customs identified the scandal in September 2023, resulting in 13 FIRs for under-invoicing and tax fraud.

The committee recommended referring the case to the Federal Investigation Agency (FIA) and expressed serious concerns over the negligence of banks and the State Bank of Pakistan. The committee chair requested banks to provide details of the companies' accounts and directed the Securities and Exchange Commission of Pakistan (SECP) to furnish details of the companies' directors. The State Bank of Pakistan was also instructed to provide information on the countries to which the money was sent.