The Department of Foreign Affairs last night rejected a call for a full investigation into the appointment of Ireland's honorary consul to Pakistan, Mr Hasib Ahsan.

Mr Ahsan was recommended for the post by Fianna Fail TD Mr John Ellis. It emerged yesterday that Mr Ellis was a director of the Karachi-based Indus Bank which last month had its banking licence cancelled for allegedly threatening depositors' money.

The inquiry into Mr Ahsan's appointment was demanded yesterday by the Fine Gael spokesman on Foreign Affairs, Mr Jim O'Keeffe. In the Dail, Mr O'Keeffe said that between June and August, Mr Ahsan had overcharged applicants for visas to Ireland.

Mr O'Keeffe said Mr Ahsan was a friend of the chairman of the Indus bank, Mr Khursid Sohail.

Mr O'Keeffe said in the Dail he did not want to go into detail as to why the bank's licence was cancelled. However, The Irish Times has learned that the State Bank of Pakistan governor, Dr Ishrat Hussain, gave seven reasons for the decision made on September 22nd last.

One of the reasons was that the placement of funds by Indus Bank amounted to "mismanagement of the affairs of IBL and misuse of the position by the directors concerned for their own benefit".

The State Bank Governor said he was of the opinion that the affairs of Indus Bank were conducted in a manner detrimental to the interest of its present and future depositors.

While Mr Ellis told The Irish Times yesterday he has not been a director of the bank since mid-August, it is understood the State Bank in Pakistan had been inquiring into the Indus Bank for some time.

Mr Ellis said he had been invited by Mr Sohail, whom he knew through business in the UK, to become a director of the bank eight years ago.

He told The Irish Times that he and his wife agreed to become non-executive directors. He said he never received any money in return for the position and never gained a penny from the bank. He said he resigned as director in August because he did not have the time or the energy to continue.

He confirmed he recommended Mr Ahsan for the position of honorary consul to Pakistan after being asked to do so by a number of members of the Pakistani community in Ireland. He said Mr Ahsan's CV showed him to be a director of American Express in Asia, which looked to him to be a first-class recommendation.

Mr Ellis said he was not aware of what friendship there was between Mr Sohail, the chairman of the Indus Bank, and Mr Ahsan.

The first he knew of the cancellation of the Indus Bank licence was when contacted by The Irish Times yesterday morning before the matter was raised by Mr O'Keeffe in the Dail. On RTE Radio, he said as far as he was concerned when he resigned the bank was still in good standing.

In a statement last night, the Department of Foreign Affairs said the consular service in Karachi was "operating satisfactorily and there was no cause for concern".

Immediately after setting up the consulate in June applicants for visas were charged courier fees in addition to regular visa fees. The courier fees should have been absorbed and claimed back from the Department. The total amount overcharged, involving 120 visa applications, was £3,000.

"This was an administrative error which involved no net gain for the honorary consul" the statement said.

The Department said the mistake was noticed by the Embassy in Tehran, which supervises the consulate. "The honorary consul was advised in late August that this practice should be discontinued and he complied immediately."

The Department said the consul had been asked to repay the courier charges to the applicants.