Major Banks Implicated in Rs. 117 Billion Solar Panel Over-Invoicing Scandal

Islamabad: The Federal Board of Revenue (FBR) has exposed a large-scale financial scandal involving major commercial banks, which facilitated over-invoicing worth Rs. 117 billion in solar panel imports. The revelation was made during a briefing to the Senate Standing Sub-Committee on Finance and Revenue.

According to FBR officials, an investigation uncovered over-invoicing of Rs. 69.5 billion between 2017 and 2022, leading to significant capital flight instead of legitimate trade transactions. The scandal involved 63 importer companies, many of which had alarmingly low paid-up capital but managed transactions worth billions.

The committee expressed serious concerns over how companies with minimal financial backing conducted business on such a massive scale. One company with just Rs. 2 million in capital executed transactions worth Rs. 50 billion, while another with Rs. 10 million capital facilitated trade worth Rs. 40 billion.

Banks Under Scrutiny for Their Role

The inquiry also examined the role of commercial banks in enabling these transactions. The State Bank of Pakistan (SBP) imposed fines exceeding Rs. 200 million on banks involved, but committee members questioned why only minor penalties were levied. A senator demanded a clearer explanation of the central bank’s actions against financial institutions aiding illicit transactions.

Officials confirmed that funds were transferred to multiple countries, including the UAE, Singapore, Switzerland, the US, Australia, Germany, Canada, South Korea, Sri Lanka, and the UK, raising concerns over global money laundering.

Delayed Action by Authorities Raises Eyebrows

The Financial Monitoring Unit (FMU) had flagged suspicious transactions as early as 2019 but only forwarded 28 Suspicious Transaction Reports (STRs) to the FBR. The Senate committee criticized the delayed response and called for a comprehensive report from the SBP, FMU, and FBR to determine accountability.

Bank officials disclosed that multiple private companies conducted these transactions, with one company, Bright Star, executing four transactions worth $185 million, while another, Moonlight, made two transactions worth $49 million. In total, $427 million in over-invoicing and money laundering was reported.

The Senate committee has vowed to pursue the investigation to ensure those responsible are held accountable, signaling possible legal action against banks and companies involved in the financial scandal.