This paper illustrates one of the worst financial scams of 1990s, the Mehrangate Scandal. It shows how a senior army official withdrew a substantial amount of public money from Mehran Bank and directed it towards an ‘intelligence fund’. The scandal subsequently broke out after the new senior army management decided to transfer the intelligence fund back to state-owned bank as per official rules. It was discovered that large sums of money had been siphoned off to 39 fictitious parties/people. Mehran Bank was unable to return the money to the depositors due to its poor financial state and thus collapsed. This paper offers scope for a compelling discussion on the usual causes, events, and possible solutions of such failures of corporate governance in the context of the misuse of public money by influential people with political motivations as at the scandalous Mehran Bank.