(a) Are there instances of fraud in relation to a corporate debtor in this economy?

 

Yes.

(b) If so, is it usual that instances of such fraud will be revealed when a corporate debtor is in financial difficulty or becomes insolvent?

 

Yes.

(c) What is the attitude that is normally taken to such fraud in this economy?

 

There has been so much corporate fraud by well placed political personalities that a certain cover is given to the fraud in the name of political victimisation by the parties in opposition and because of political pressure particularly on the public sector banks and DFIs, it is considered natural for such fraud to be overlooked and covered up.

(d) Is it the case, for example, that 'soft' fraud may be overlooked (or not pursued) and 'hard' fraud may more likely be pursued in this economy?

 

In fact the reverse is more likely as "hard" fraud is protected by political influence and "soft" fraud when detected is allowed to be pursued as it does not attract serious penalties.

If there have been instances of fraud:

(i) does the insolvency law (or other civil law) provide for possible recovery of the proceeds of (or damage caused by) the fraud;

 

The Ordinance provides for recovery of proceeds or damages caused by fraud (Sec.412).

(ii) does the criminal law provide for possible sanctions;

 

Under the Pakistan Penal Code theft and fraud are punishable with imprisonment and/or fine.

(iii) how effective is the application of these laws in practice?

 

The application is fairly effective where the cases are pursued in earnest and not made the subject of political influence and pressure.

(e) Would it be common or usual that instances of fraud would:

(i) be largely ignored;

(ii) settled by negotiation; or

(iii) pursued through either civil or criminal law sanctions?