National Accountability Bureau (NAB) has initiated criminal inquiries against unscrupulous brokers at Karachi Stock Exchange (KSE), said a joint statement issued here by NAB and KSE. According to sources, NAB had started to investigate on the directives of Supreme Court on the petition of Aman Siddiqui, an official of the Bank of America in Pakistan. Siddiqui is said to have filed financial claims of Rs1.5 to Rs20 million against Munir M Ladha of the Eastern Capital Limited. Also, the investigators are grilling the KSE managements who were in charge of the KSE Board in 2008, 2009 and 2012. Those under investigation are former managing directors, Adnan Afridi and Kamran Mirza, and elected directors like Suhail Diyala, Shoaib Memon, shehzad Chaira and others, said the sources.
However, a joint statement issued by NAB and KSE Thursday said the inquiries were to take immediate action against five former brokerage houses, including Eastern Capital Limited, Clicktrade Limited, Capital One Equities, MKA Securities, Prudential Securities Limited, and their accused directors on charges of cheating the public at large.
“DG NAB (Sindh) and his team also held a meeting with the former chairman and managing director of KSE for the year 2008,” said the statement.
In this regard, a NAB team, comprising Director General Sindh Major (R) Shabbir Ahmed, Ghulam Farooq, Director (FCIW), Ahmed Raza Tahir, Deputy Director, Qudsia Kadri, Consultant (FCIW) and Rizwan Shah, Investigation Officer, visited the KSE on Thursday and met the current management of the Exchange.
The KSE officials, who met the NAB team, included Chairman Muneer Kamal, Managing Director Nadeem Naqvi, Deputy Managing Director Haroon Askari, Directors Haji Ghani Haji Usman, Yasin Lakhani and others.
“The main focus of the meeting was problems being faced by investors and the claimants of Eastern Capital and its absconded directors namely, Munir M Ladha and others,” said the statement.
During the meeting, DG NAB said the above brokerage houses were alleged to be involved in embezzlement and fraud activities by cheating the public hard-earned money through misuse of their securities, held in trust with them.
He said Chairman NAB Admiral (R) Fasih Bukhari had taken a serious note of the misappropriation of funds of the people, who had invested their money with some unscrupulous brokers of KSE and directed the NAB (Sindh) to take immediate action against the said brokers and recover the embezzled amounts.
Ahmed clarified NAB was not aimed at disturbing and hurting overall business activities of KSE, but to deal with the actual culprits strongly.
He, in this regard, desired to have close contact with KSE to address the existing issues and to create deterrence for avoiding any such unfortunate situation in future.
Explaining in detail the structure, role and functioning of the Exchange, the KSE management assured the investigators of their full co-operation and also explained some of the reasons of 2008 market crisis.
The reasons, procedure and subsequent actions to satisfy the investors’ claims against defaulted and expelled members of the Exchange were also explained in detail.
It was also informed that the limit of per member Investors’ Protection Fund was first increased from Rs10 million to Rs25 million and was recently increased again to Rs75 million, the benefit of which would be passed on to all claimants against the members defaulted/expelled post 2008 crisis retrospectively. This includes the cases being investigated by NAB.
After detailed deliberations, the NAB officials and KSE Board jointly agreed to extend active coordination and support to each other to eradicate corruption and corrupt practices conducted by some of KSE former unscrupulous members.
The KSE Board also assured to keep NAB on board for any malpractices, which take place in the sector under their
purview as well as to help NAB in money recovery.
DG NAB appreciated the Board’s active cooperation and stated that such measures would help in improving the credibility of KSE as an institution and its members. He further recommended certain measures to be considered by KSE Board, with particular reference to exercising due caution while admitting someone as member of the Exchange and supporting NAB’s actions for future deterrence.
It was resolved by both the institutions to fully collaborate by utilising available synergies in addressing the grievances of aggrieved investors.
