http://www.ivoryresearch.

com/marketing-dissertation-topics/

http://www.corp-research.org/RBS

http://www.friendsmania.net/forum/job-pakistan-careers-pakistan/72302.htm

http://e.thenews.com.pk/tp_details.asp?id=29093s
http://www.lawteacher.net/business-law/essays/shareholders-rights-and-punjab-scandalbusiness-law-essay.php

Royal Bank of Scotland: Corporate Rap Sheet

Royal Bank of Scotland
By Philip Mattera
The Royal Bank of Scotland has faced more controversy during the past five years than in the
previous 280 years of its existence. In 2008 RBS, which had gotten caught up in the mortgagebacked securities frenzy and had gone far out on a limb in the acquisition of the large Dutch bank
ABN AMRO, started posting massive losses and had to be bailed out by the British government,
which injected more than 45 billion ($71 billion) to keep it afloat.
Becoming more than 80 percent taxpayer-owned did not shield RBS from a series of legal
problems, including a $500 million settlement of charges that ABN AMRO repeatedly violated
U.S. economic sanctions against countries such as Iran and altered documents in an effort to
conceal its actions. More recently, RBS had to pay hundreds of millions of dollars to settle
charges relating to the manipulation of the LIBOR interest rate index.

Rising with North Sea Oil

Founded in 1727, RBS did most of its business during its first two centuries in Scotland, locked
in a perennial competition with its rival, the Bank of Scotland. It was not until 1971 that the

Bank of England eased restrictions on Scottish banks operating in England. That, plus the
economic boom generated by the rise of the North Sea oil industry, allowed RBS to blossom.
The company embarked on an aggressive plan of expansion and diversification, moving into
areas such as insurance. RBS also expanded its foreign banking activities. In the United States, it
acquired Rhode Island-based Citizens Financial Group in 1988 and went on to purchase a series
of other banks in the Northeast. In the UK, RBS won a takeover battle for National Westminster
Bank in 2000 and proceeded to eliminate more than 10,000 jobsa process that gave RBS CEO
Frederick Goodwin the nickname Fred the Shred.
This new posture began to get RBS in trouble with regulators. In 2002 the UKs Financial
Services Authority fined it 750,000 for employing weak controls against money laundering. In
2005 its Citizens Financial Group unit, facing criticism by officials in
Massachusetts, offeredrefunds to its elderly customers who had been persuaded to purchase
variable annuities that regulators said were inappropriate for seniors. In 2006 industry regulator
NASD (now FINRA)imposed a fine of $850,000 against CCO Investment Services, a securities
broker-dealer unit of Citizens Bank.
The Big Bailout
The problems of RBS grew much more severe in 2008. Already over-extended as a result of its
massive takeover of the Dutch bank ABN AMRO in 2007, RBS was further weakened by it
heavy exposure to rapidly deteriorating mortgage-backed securities (especially through its U.S.
investment banking arm RBS Greenwich Capital). As RBS began reporting unprecedented
losses, the British government had to provide a 20 billion bailout for the bank, as a result of
which the government became its majority shareholder and Goodwin was ousted (he was
laterstripped of his knighthood as well).
RBS also made use of the governments so-called asset protection plan, which allowed the bank
to offload toxic assets into a separate entity backed by taxpayers. RBS resisted pressure to sell
off Citizens Financial Group, but it agreed to divest its insurance unit and to close more than 300
branches in England and Wales. In 2009 RBS received another 25 billion capital infusion from
the British government, raising the public stake in the company to more than 80 percent.
Trading with the Enemy
Regulatory and legal problems escalated as well. In March 2010 RBS was fined 28.6 million by
the UK Office of Fair Trading for sharing confidential loan pricing data with rival bank Barclays.
In May 2010 the U.S. Justice Department announced that the former ABN AMRO would pay
$500 million to settle charges that it violated the Trading with the Enemy Act, the International
Economic Powers Act and the Bank Secrecy Act by altering documents to cover up the fact that
it was doing prohibited business with countries such as Iran and Libya that were covered by U.S.
economic sanctions. Over the course of a decade, ABN AMRO assisted sanctioned countries
and entities in evading U.S. laws by facilitating hundreds of millions of U.S. dollar transactions,
a U.S. attorney stated in a press release. The Financial Services Authority
subsequently fined RBS 5.6 million for failing to have adequate systems and controls in place
to prevent violations of UK financial sanctions.
In January 2011 the Financial Services Authority fined RBS and its National Westminster Bank
unit 2.8 million for multiple failings in the way they handled customer complaints, accusing
them of responding inadequately to more than half the complaints examined. In June 2011 the

National Credit Union Administration sued RBS Securities and J.P. Morgan Securities for
violating federal and state law by misrepresenting the quality of mortgage-backed securities sold
to U.S. credit unions. A second suit filed the following month by the agency against the two
firms asked for total damages of more than $1.5 billion. (The cases are pending.)
In September 2011 the Federal Housing Finance Agency sued RBS and other firms for abuses in
the sale of mortgage-backed securities to Fannie Mae and Freddie Mac (that case is also
pending). In November 2011 the Financial Services Authority fined Coutts & Company, the
private banking unit of RBS, 6.3 million for abuses relating to its marketing of an investment
fund linked to the failed U.S. insurer AIG.
In December 2011 the Financial Services Authority published a 450-page report on the failure of
RBS that blamed the crisis on poor management decisions such as over-reliance on risky shortterm wholesale funding and the failure to prevent a serious weakening of the banks capital
position and deterioration in the underlying quality of its assets. Also cited was the ABN AMRO
acquisition, which the report said RBS pursued without appropriate heed to the risks involved
and with inadequate due diligence. The FSA acknowledged that its own inadequate oversight
also played a role.
In March 2012 the Financial Services Authority fined Coutts 8.75 million for failing to
establish and maintain effective controls against money laundering by high-risk customers. The
agency said the failings at Coutts were serious, systemic and were allowed to persist for almost
three years. They resulted in an unacceptable risk of Coutts handling the proceeds of crime.
In April 2012 Citizens Bank agreed to pay $137.5 million to settle a class-action lawsuit alleging
that it manipulated the sequence in which it processed customer transactions in order to
maximize overdraft fees.
The LIBOR Scandal
In February 2013 RBS suffered a major blow to its reputation when U.S. and British
regulatorsannounced that the bank would pay a total of $612 million to settle charges that it was
involved in the manipulation of the LIBOR interest rate index. To resolve the criminal
component of the case, RBS paid penalties of $150 million and agreed to have a Japanese
subsidiary plead guilty to wire fraud and admit its role in the Japanese Yen portion of the LIBOR
scandal. The civil components included a $325 million penalty imposed by the U.S.
Commodities Futures Trading Commission and an 87.5 million fine imposed by the Financial
Services Authority.
The CFTC press release about the settlement included seven pages of transcripts of
communications among RBS currency traders in which they openly discussed the manipulations,
including one in which the banks volatile rate submissions were likened to a whores drawers.
The LIBOR settlement escalated criticism of RBS, including a call by the outgoing governor of
the Bank of England that the bank be broken up. There were more denunciations of the bank
after RBS admitted in March 2013 that more than 90 of its employees were paid 1 million or
above in 2012.
In December 2013 RBS was fined $530 million by the European Commission for LIBOR
abuses.That same month, it agreed to pay $100 million to settle New York State and federal
allegations relating to transactions with customers from countries subject to sanctions.
RBS has also faced criticism for its role in financing tar sands oil extraction and cluster
bombproduction.

Mortgage-backed Securities
In November 2013 the SEC announced that RBS would pay $153 million to settle charges that it
misled investors in a 2007 offering of subprime residential mortgage-back securities. The agency
had accused the bank of failing to carry out adequate due diligence about the loans on which the
securities were based.
Subsidies
In 2005 RBSs Greenwich Capital unit received up to $100 million in state tax credits from
Connecticut by agreeing to move its investment banking headquarters from New York to
Stamford.

Over Rs 17bn more loans revealed by Hamesh Khan

Names four Bank of Punjab directors who got benefits for themselves
By Ansar Abbasi
ISLAMABAD: Hamesh Khans stunning revelations
before the NAB investigators have taken the lid off a
unique scandal of the banking history in which the
Bank of Punjab offered loans worth billions of
rupees to the business concerns of its directors.
Sources said that all these directors were associated
with the Bank of Punjab during Pervez Elahis
tenure as chief minister Punjab, a point that might
lead NAB to look into the political aspects of the BoP scam.
The Bank of Punjab is proving to be Pakistans Enron, with every day new
discoveries are being made, a source said, adding that Hamesh Khan has revealed to
investigators that besides Salman Siddique, the incumbent federal secretary finance and
four other directors appointed by former chief minister Pervaiz Elahi took loans from the
BoP, while they were sitting BoD members.
One of these directors, Hamesh alleged, had purchased the Phalia Sugar
Mills from the Chaudhrys of Gujrat. The incumbent BoP, President Naeem Khan, when
approached confirmed that five directors of the BoP were recipient of huge BoP loans in
violation of the policy of good corporate governance. Khan said that the conditions set
in the good corporate governance principles were not followed while offering loans
worth billions of rupees to the business concerns or relatives of the then directors. He
said the BoP has issued notices for repayment of loan money to four of its ex-directors
and is also taking legal action against them.
Khan said the criminal side of these controversial loaning is being looked into by the

NAB, which has already obtained the relevant record from the BoP. Khan said the
corporate governance of the BoP was at its worst during the last several years but he
added during his tenure he has already got the law amendment to make sure that in
future no director of the bank or any of his relative could be offered loan in any case.
Even otherwise Section 19.4 of the Bank of Punjab Act 1988 envisages that the bank
shall not grant any person who has been elected or appointed as a director and for so
long as he continues to hold that office any advances, loan, credit limit, guarantee or
other facilities, or alter to his advantage, loan, credit limit, guarantee or other facility
granted before his election or appointment as a director.
The News has already reported the case of conflict of interest of the incumbent secretary
finance and the then director/acting chairman of the BoP as during his association with
the BoP, his father was offered a loan of Rs40 million. The said loan was, however,
returned in 2008.
But the case of other four ex-directors of the BoP is too serious as in their cases not only
the amount involved is big it has yet to be re-paid. The four BoD members, who took
loans against policy include Gohar Ejaz, Khurram Iftikhar, Fareed Mughees Sheikh and
Mian Muhammad Latif.
The sources said Gohar Ejaz was appointed BoD member in June 2003 by Ch Pervaiz
Elahi to represent the government of Punjab, and he remained on BoD till April 2008.
These sources said and the BoP documents show that he took loans worth Rs974 million
in the name of his companies Ejaz Spinning Mills Ltd and Ejaz Textile Mills Limited.
However, when contacted, Gohar Ejaz categorically denied this.
Khurram Iftikhar was made director in March 2007. The sources said that his companies
borrowed loans of Rs 5.6 billion in name of Amfort (Pvt) Ltd, Amtex Limited, and
Shama Exports (Pvt) Ltd. These loans, the BoP president confirms, have run into
problems following which the BoP has put the firms on notice. He continued as BoD
member of the BoP till April 2008.
Khurram Iftikhar told The News that major part of the reported Rs5.6 billion loan was
obtained by his companies before he became the bank director. He added that he never
got any of his loans rescheduled, did not get reduced mark-up rate or defaulted on any
loan. He said the things are proceeding just normally between his companies and the
BoP. Khurram Iftikhar also denied he is the director of all the three companies as
reflected in the documents made available to The News.
Fareed Mughees Sheikh (CEO Colony Group) was appointed director of BoP in March
2007. Colony Group took loans worth Rs10 billion, now most of these loans have been
labelled non-prudent loans and are included in the toxic and risky portfolio of BoP, and
the bank is rescheduling them. This Group, as revealed by Hamesh Khan, purchased the
Phalia Sugar Mills belonging to Ch Pervaiz Elahi, through loans taken out from the BoP
during BoD incumbency of Fareed Sheikh who was also CEO of Colony Group, which

purchased Chaudhrys Sugar Mill in 2007.

Fareed was contacted at his mobile number but it remained unanswered.
Mian Muhammad Latif of Chenab Limited (Popularly known as Chen-One) was
appointed director of BoP in October 2002. He got loan worth Rs1.24 billion from BoP.
He was also removed in 2008. Mian Latif when contacted said when the BoP opened its
branch in Faisalabad during his directorship, it was housed in his building for which he
never charged any rent. After one year, he said, the BoP approached him saying since
the said Faisalabad branch was not doing good business so he should get into business
with the Bank. Latif said that on this he agreed but tendered his resignation before
getting the loan facility/business limit from BoP BoD membership. He said he had
clearly told the BoD that he would not continue as director of the BOP if he gets into
business with the bank but his resignation was not accepted. Latif added that he was told
that the BoP had got it cleared from the State Bank that he could continue as BoP BoD
member. Mian Latif said the BoP loan given to his company is less than Rs1 billion.
The bank sources, however, insist that if not all majority of the loans offered to all the
above ex-directors of the BoP were extended to their respective companies/business
concerns during Hamesh Khans tenure and continued during their directorship.
This situation shows that almost half of the directors had taken loans from the bank in
violation of the banking policy and the corporate governance code. It is worth
mentioning that it was the BOD, which had approved rescheduling of the Harris Steel
fraudulent loan. None of the BoD members put the management on the mat for
fraudulent lending to the Harris Steel.
Over Rs 17bn more loans revealed by Hamesh Khan
Names four Bank of Punjab directors who got benefits for themselves
By Ansar Abbasi
ISLAMABAD: Hamesh Khans stunning revelations
before the NAB investigators have taken the lid off a
unique scandal of the banking history in which the
Bank of Punjab offered loans worth billions of
rupees to the business concerns of its directors.
Sources said that all these directors were associated
with the Bank of Punjab during Pervez Elahis
tenure as chief minister Punjab, a point that might
lead NAB to look into the political aspects of the BoP scam.
The Bank of Punjab is proving to be Pakistans Enron, with every day new
discoveries are being made, a source said, adding that Hamesh Khan has revealed to
investigators that besides Salman Siddique, the incumbent federal secretary finance and
four other directors appointed by former chief minister Pervaiz Elahi took loans from the

BoP, while they were sitting BoD members.

One of these directors, Hamesh alleged, had purchased the Phalia Sugar
Mills from the Chaudhrys of Gujrat. The incumbent BoP, President Naeem Khan, when
approached confirmed that five directors of the BoP were recipient of huge BoP loans in
violation of the policy of good corporate governance. Khan said that the conditions set
in the good corporate governance principles were not followed while offering loans
worth billions of rupees to the business concerns or relatives of the then directors. He
said the BoP has issued notices for repayment of loan money to four of its ex-directors
and is also taking legal action against them.
Khan said the criminal side of these controversial loaning is being looked into by the
NAB, which has already obtained the relevant record from the BoP. Khan said the
corporate governance of the BoP was at its worst during the last several years but he
added during his tenure he has already got the law amendment to make sure that in
future no director of the bank or any of his relative could be offered loan in any case.
Even otherwise Section 19.4 of the Bank of Punjab Act 1988 envisages that the bank
shall not grant any person who has been elected or appointed as a director and for so
long as he continues to hold that office any advances, loan, credit limit, guarantee or
other facilities, or alter to his advantage, loan, credit limit, guarantee or other facility
granted before his election or appointment as a director.
The News has already reported the case of conflict of interest of the incumbent secretary
finance and the then director/acting chairman of the BoP as during his association with
the BoP, his father was offered a loan of Rs40 million. The said loan was, however,
returned in 2008.
But the case of other four ex-directors of the BoP is too serious as in their cases not only
the amount involved is big it has yet to be re-paid. The four BoD members, who took
loans against policy include Gohar Ejaz, Khurram Iftikhar, Fareed Mughees Sheikh and
Mian Muhammad Latif.
The sources said Gohar Ejaz was appointed BoD member in June 2003 by Ch Pervaiz
Elahi to represent the government of Punjab, and he remained on BoD till April 2008.
These sources said and the BoP documents show that he took loans worth Rs974 million
in the name of his companies Ejaz Spinning Mills Ltd and Ejaz Textile Mills Limited.
However, when contacted, Gohar Ejaz categorically denied this.
Khurram Iftikhar was made director in March 2007. The sources said that his companies
borrowed loans of Rs 5.6 billion in name of Amfort (Pvt) Ltd, Amtex Limited, and
Shama Exports (Pvt) Ltd. These loans, the BoP president confirms, have run into
problems following which the BoP has put the firms on notice. He continued as BoD
member of the BoP till April 2008.

Khurram Iftikhar told The News that major part of the reported Rs5.6 billion loan was
obtained by his companies before he became the bank director. He added that he never
got any of his loans rescheduled, did not get reduced mark-up rate or defaulted on any
loan. He said the things are proceeding just normally between his companies and the
BoP. Khurram Iftikhar also denied he is the director of all the three companies as
reflected in the documents made available to The News.
Fareed Mughees Sheikh (CEO Colony Group) was appointed director of BoP in March
2007. Colony Group took loans worth Rs10 billion, now most of these loans have been
labelled non-prudent loans and are included in the toxic and risky portfolio of BoP, and
the bank is rescheduling them. This Group, as revealed by Hamesh Khan, purchased the
Phalia Sugar Mills belonging to Ch Pervaiz Elahi, through loans taken out from the BoP
during BoD incumbency of Fareed Sheikh who was also CEO of Colony Group, which
purchased Chaudhrys Sugar Mill in 2007.
Fareed was contacted at his mobile number but it remained unanswered.
Mian Muhammad Latif of Chenab Limited (Popularly known as Chen-One) was
appointed director of BoP in October 2002. He got loan worth Rs1.24 billion from BoP.
He was also removed in 2008. Mian Latif when contacted said when the BoP opened its
branch in Faisalabad during his directorship, it was housed in his building for which he
never charged any rent. After one year, he said, the BoP approached him saying since
the said Faisalabad branch was not doing good business so he should get into business
with the Bank. Latif said that on this he agreed but tendered his resignation before
getting the loan facility/business limit from BoP BoD membership. He said he had
clearly told the BoD that he would not continue as director of the BOP if he gets into
business with the bank but his resignation was not accepted. Latif added that he was told
that the BoP had got it cleared from the State Bank that he could continue as BoP BoD
member. Mian Latif said the BoP loan given to his company is less than Rs1 billion.
The bank sources, however, insist that if not all majority of the loans offered to all the
above ex-directors of the BoP were extended to their respective companies/business
concerns during Hamesh Khans tenure and continued during their directorship.
This situation shows that almost half of the directors had taken loans from the bank in
violation of the banking policy and the corporate governance code. It is worth
mentioning that it was the BOD, which had approved rescheduling of the Harris Steel
fraudulent loan. None of the BoD members put the management on the mat for
fraudulent lending to the Harris Steel.

3- Conflict of interest
The Punjab government was very kind with the directors because they were doing business with
the chief minister and his family. The choudrys wanted to sell their sugar mills and wanted cash.
They found buyers among some major groups and very conveniently, the bank of Punjab

extended a loan to them for the entire amount despite clear conflict of interest. Some of these
groups were representing on the banks board. In other words, the bank channeled money to its
controller via a third party. To make it more interesting, the third party was also on the board of
the bank and thus is lending money to itself. Everyone was happy; the buyer, the seller, but the
bank had an ugly frown on its face because the money was gone and it had little chance of ever
getting it back.
4- Excessive compensation
The bank management wants to hang on to plush and perhaps lucrative jobs. The board of
directors satisfies them with the well of the political masters for their advantage.
5- Undisclosed activities
Another very kind act done by Hamesh khan and his gang to the bank was that they were happy
to take on liabilities of other banks to make their old or new customers happy and continue
relations with them. This was done through a simple stratagem. Suppose you are a business
house and you have borrowed money from five banks. Since they are private, they are tough in
wanting their money back and dont give any concessions