Financial Frauds in Pakistan’s Corporate and Banking Sector

Abstract

The fraud of BAFL has been presented with detailed information regarding the usage of funds. BAFL has lost market share and has financial ratios below the industry average. There is a need to overcome this to get its reputation and people’s trust. Eron scandal in US, WorldCom in US and Satyam Scandal in India are important scandals in history. Corporate governance frameworks encourage the implementation of whistleblower programs and ethical codes of conduct. BAFL was fined Rs125.2 million. Unauthorized personal trading with business funds and financial statement manipulation to hide losses were among the fraudulent practices. This was due to poor corporate governance implemented at BAFL. In comparison, ABL has a strong I/E Audit committee, integrates effective CMS, has a strong KYC system and branch wise ranking system which improves the productivity branch wise. It has been recommended to implement internal and external audits, integrate CMS system for cash management, grant whistle blowing rewards, confidentiality for whistle blowers, retain senior employees, hire females, increasing sales department and individual ranking system, the internal control will be improved, which will minimize the risk of frauds. In this way, the bank will get back its lost share and improve its performance.