ISLAMABAD: Energy Global International, a UAE-based trading and investment firm has filed a Rs74 billion damage suit against the State Bank of Pakistan (SBP) and a private bank for freezing its bank accounts.
Energy Global International FZE filed the damages suit against the central bank on account of “unlawful” action of freezing the bank accounts and illegally converting the foreign currency account into a rupee account in December 2012.
A private commercial bank has also been made party to the suit, filed in the Sindh High Court (SHC), for not releasing the funds.
Sindh High Court has summoned representatives of the SBP and BankIslami to appear before the additional registrar of the court on Feb 15, 2022 to respond to the damages claim, showed the court documents.
The accounts had originally been operated by the defunct KASB Bank, but after its merger with BankIslami in May 2015, its all assets, liabilities and accounts were transferred to BankIslami, Tribune.com reported today.
Energy Global is incorporated under the laws of Sharjah, the UAE, but its investors are of Iranian origin. In December 2012, the central bank froze the company’s accounts – six months before the United States imposed sanctions on the company and despite the fact that Pakistani laws do not accept US sanctions.
“The action of the SBP was contrary to the Bilateral Investment Treaty and the circulars issued to give protection to foreign investors,” said the court filing. The company was never intimated before freezing the bank accounts.
Energy Global has requested the court to declare the central bank’s act to freeze its bank accounts and convert them into rupee accounts as illegal. It has also pleaded to unfreeze the bank accounts and release the withheld balance.
The UAE-based company has taken the plea that the defunct KASB Bank was “coerced” by the central bank to transfer its four bank accounts to BankIslami and then convert those into Special Convertible Rupee Accounts (SCRA).
The company had opened a bank account to operate in euro and Japanese yen currencies.
However, the central bank took the action on the basis of a letter from the Office of Foreign Asset Control (OFAC) of the US. The petitioner is of the view that neither the company was dealing in US currency nor it was facing any kind of sanctions by the United Nations or the US at the time of the adverse action.
At the time of freezing the accounts, KASB Bank had calculated the balance at Rs19.6 billion at prevailing rates of the euro and the yen.