SECP leaves out names of 15 ‘guilty’ entities from criminal complaint

The Securities and Exchange Commission of Pakistan (SECP) sided with at least 15 entities declared as “guilty” by SECP investigators for insider trading in the shares of Azgard Nine Limited (ANL) during April 2007-2008 at Karachi Stock Exchange (KSE) by not naming them in the criminal complaint filed with the court. When contacted, SECP officials clarified that the 15 accused were left out of the case for the want of “strong evidence” that could substantiate the investigators’ findings against them.
The apex regulator is alleged to have favoured at least 15 organisations and/or individuals by removing their names from a recent criminal complaint the commission filed, on 17th April, in the Court of Session Judge Karachi (South) against a group of 23 persons, including some high profile corporate individuals, for manipulating the listed shares of ANL.
Interestingly, one of the regulator’s 15 alleged blue-eyed personnel was appointed as an SECP commissioner in August 2012.
The allegations came from Transparency International-Pakistan (TI-P) that claimed to have received complaints against the SECP as well as other parties allegedly involved in the 2008 brokerage house scam. “SECP in the criminal complaint… has excluded 15 companies and individuals reportedly involved in the inside(r) share trading of Azgard (Nine) in the SECP investigation report,” observed TI-P in a letter it dispatched to the commission on May 9.
The said inquiry report was filed by SECP investigators on April 15, 2009, according to the TI-P letter, a copy of which is available with Pakistan Today.
The 15 names not included by the SECP in its criminal complaint are: Crosby Dragon Fund, Jahangir Siddiqui Bank Limited, JS Aggressive Asset Allocation Fund, JS Income Fund, JS Capital Protected Fund, JS Capital Protected Fund II, JS Growth Fund, Begum Aftab Khatri, Zaibunnisa, Muhammad Ibrahim, Mashooq Ali Kalyar, Rubin Malkani, Khalid Rafi, Rashid Siddiqui and Muhammad Asif Mendha.
The TI-P, in its letter to SECP acting Chairman Tahir Mahmood, said the commission had removed the name of Zafar Abdullah, CEO of Crosby Dragon Fund, as an accused in the ANL scam. “Mr Zafar Abdullah was appointed as SECP commissioner on 17th August 2012,” the TI-P letter recalled.
Further, the TI-P said after April 2008, Term Finance Certificates (TFC) of ANL were sold to the Evacuee Trust by the JS Group at approximately Rs 1 billion, four times the market rate. Moreover, the anti-corruption watchdog said last year on February 24, JS Growth Fund and JS Large Capital Fund had sold over 1.606 million shares of Pakistan International Container Terminal (PICT) at Rs 101.59 to Bank Julius Baer & Company of Switzerland.
The Swiss bank in fact had bought the PICT shares for the JS Group, claimed the TI-P. “JSCL had a commercial relationship with them,” it added. “The above allegations are against (the) SECP itself, for not filing criminal case against 15 entities who have been proven guilty of insider trading in the 2008 SECP investigation report,” Transparency International said.
The TI-P asked the SECP to authenticate the complaints regarding trading of ANL’s TFCs at four times the market price. In addition, it wants the regulator to probe into the sale of PICT shares by the Bank Julius Baer & Company “if it has not already taken notice of these two issues”. The commission, the letter suggested, may contact the Evacuee Trust Property Board, Government of Pakistan and Bank Julius to find out the client for whom they had purchased the PICT shares.
“Transparency International-Pakistan requests to examine the complaint and beside criminal action which would be taken by the court, also requests action under the SECP Law and Companies Ordinance 1984,” reads the TI-P letter undersigned by Executive Director Saad Rashid. The SECP is said to have responded to the allegations through a letter to the TI-P on Tuesday.
“The investigators do a sort of fact-finding job that is largely based on happenings of the case,” said an SECP official requesting anonymity as he was not supposed to comment on the issue officially. The names of 15 entities, the official said, were excluded from the commission’s criminal complaint for lack of strong evidence that could substantiate SECP’s plea in the court. “You need strong evidence when you finalise the list of accused,” explained the official.
On April 17, the SECP had filed a criminal complaint against a group of 23 persons/entities including brokerage houses, investment companies and individuals from renowned business families. The institutional accused in the complaint included JS Global Capital Limited, Jahangir Siddiqui and Company Limited, Jahangir Siddiqui & Sons Limited, Jahangir Siddiqui Securities Services Limited, JS Investment Limited and Aziz Fida Hussain and Company Limited.
While the individuals nominated were Saad Saeed Farooqui, Mehboob Ali Kalyar, Muhammad Sadiq Patni, Syed Nizam Shah, Humayun Shaikh, Alia Sheraz Monoo, Amna Humayun Shaikh, Nasreen Shaikh, Ahmed Shaikh, Muhammad Riaz, Muhammad Ijaz, Irfan Aziz, Saba Irfan Aziz, Zehra Nazim Aziz, Mohammad Iqbal and Muhammad Mubashir Hameed Dagia.