National Accountability Bureau (NAB), which is probing some brokerage houses for allegedly embezzling over a billion rupees of the investors at Karachi Stock Exchange (KSE), would seize and auction the private properties of the directors of the defaulting firms, if need be.
Also, Profit has learnt that a majority of some 15 directors of the five companies, who were issued notices by NAB, were presently hiding either in or outside the country.
NAB would act against the brokerage houses, named Eastern Capital Limited, Clicktrade Limited, Capital One Equities, MKA Securities and Prudential Securities Limited, and their accused directors under a two-pronged strategy to recover the embezzled amount. According to NAB officials, the said firms defrauded some 3,846 investors and deprived them of around Rs1.359 billion in wake of 2008 stock market crisis. “We would recover the investors’ money either through the regulators (KSE) or criminal investigation; the scope of which is wider, Director General (Sindh) Major (R) Shabbir Ahmed told Profit Friday. Under the criminal inquiries, Ahmed said, NAB was authorised to go after the private properties of the accused directors and other sources of compensation, like auctioning of their membership cards, offices and Investor Protection Fund (IPF), did not prove sufficient to compensate the losses of the affected investors. Demonstrating somewhat a balanced approach, NAB also intends to recover the receivables of the defaulted companies besides clearing their payables.
“We call upon the accused directors, majority of which are presently in hiding, to join the investigations that would help them recover their receivables too,” the director general NAB said. If the defaulting directors failed to appear before the investigators, NAB would be left with no option, but to compensate the affectees through auction of their assets, warned Ahmed adding Chairman NAB Admiral (R) Fasih Bukhari had taken special cognisance of the small investors defrauded at the hands of the five brokerage houses after 2008 crisis.
“If a shortfall (of compensation money) arose, it would be fulfilled on what they call pro rate basis, through (the auction of) their private properties,” he said. DG NAB said 100 per cent compensation would be given to the investors who had filed claims worth Rs5 lac. “This limit may be enhanced to Rs1 million and the compensation amount would be distributed through mutual efforts of NAB and KSE,” he said. Ahmed called upon other investors to lodge their complaints with the front regulators at KSE who would then forward the same to NAB for recovery of the investors’ embezzled money. Asked if NAB was also interrogating the former and current managements of the KSE Board, the DG clarified that the bureau’s contact with the exchange’s officials was to get abreast on the issues. “The KSE managements could, however, be made accountable if the directors under inquiry attributed their default to the policies of the respective (KSE) Board,” the director general said. A NAB team on Thursday initiated their criminal inquiries against the five brokerage houses at the KSE reportedly on the directives of Supreme Court where Aman Siddiqui, an official of the Bank of America in Pakistan, petitioned to have lost around Rs1.5 to Rs20 million to the fraud of Munir M Ladha of the Eastern Capital. Though not confirmed by DG NAB, there are some reports suggesting that NAB was also investigating former KSE managing directors, Adnan Afridi and Kamran Mirza as well as elected directors like Suhail Diyala, Shoaib Memon and Shehzad Chaira.