FIA says SECP not cooperating in probe into AKD Securities role

EOBI scam

SECP says all cooperation being extended in accordance with law

ISLAMABAD: The future of the joint task force of the Securities and Exchange Commission of Pakistan (SECP) and the Federal Investigation Agency (FIA) is hanging in the balance as the body has failed to probe the Employees Old-Age Benefits Institution (EOBI) scam, in which three directors of the AKD Securities Limited were arrested by the FIA a couple of months ago.

A source in the FIA informed The News that the SECP was not cooperating with the Agency. “The SECP does not even send its officials to attend the meeting of the joint task force, and resultantly no progress is being made in the case.”

When contacted the SECP management said they were fully cooperating with the FIA within the confines of the law. The regulatory body was providing all required data and documents as per the agreed upon terms of reference (ToRs), and rejected the FIA claims that they were not cooperating with it.

A joint task force of the FIA and the SECP was formed on January 19, 2016, on the instructions of Interior Minister Chaudhry Nisar Ali Khan. At that time, the SECP had issued a press statement, saying the joint body was aimed at setting a coordination mechanism between the two organisations to deal with sensitive issues in the capital market.

“This joint task force will discuss all matters prior to initiation of any actions by the FIA pertaining to the capital market,” said the statement. “Both the government institutions” had nominated their senior officers as members of the joint task force, and nomination of officers at zonal/ operational level was also initiated.

The FIA Sindh had arrested two directors and the chief executive officer (CEO) of the AKD Securities Limited for allegedly causing a loss of Rs290 million to the exchequer under shares of the EOBI.

The FIA took into custody Muhammad Farid Alam, CEO of the AKD Securities, Tariq Adam Ghumra, director and head of Equity Operations, AKD Securities, and Muhammad Iqbal, another director at the AKD group, during a raid on the company offices in January this year.

The National Accountability Bureau (NAB), during the previous government, had launched an investigation into the illegal construction of an upmarket housing scheme, namely Naya Nazimabad, on valuable state land, the fraudulent property deal between Pakistan Petroleum Limited (PPL) and the AKD Group, construction of an irregular multi-storeyed building Arkadians Towers and the Ogra corruption case against the AKD Group.

In this regard, NAB forwarded a letter No 1(315)/ K/MW-II/ NAB HQ/2015 asking the Bureau’s director general in Karachi to initiate an inquiry into complaints of massive corruption against businessman Aqeel Karim Dhedhi.

The inquiry was initiated at the FIA Cyber Crime Circle, Karachi, levelling multiple allegations, including purchase by the EOBI, 11,700,000 shares of M/s Amtex Limited on August 16, 2010, against Rs227,172,818 at the price of Rs19.37 per share.

The EOBI again purchased 5,650,000 shares of M/s Amtex Limited on August 27, 2010 against Rs110,487,106 at a price of Rs19,51 per share. A total of 17,350,000 shares of M/s Amtex Limited were purchased by the EOBI against Rs337,659,914. The above shares were purchased on commendation and approval of the Investment Committee of the EOBI comprising Kanwar Khursheed Wahid, the then DG Investment, and Zafar Iqbal Gondal, the then chairman EOBI. The current value per share is Rs2.73 and the total loss to the national exchequer/ EOBI is Rs290 million.

From the enquiries conducted and evidence collected on record during the course of enquiry, it has been revealed that the mandate of the EOBI under the EOBI Benefits Act 1976 and the Employees Old-Age Benefits (Investment) Rules 1979 is to make various investments from the fund created pursuant to Section 17 of the EOBI Act with the objective to maximise the benefits for the beneficiaries of the Fund.

As per the record of the Karachi Stock Exchange (Guarantee) Limited, M/s Amtex was enlisted with the KSE on April 13, 2010, and the EOBI invested on August 16, 2010 and August 27, 2010 whereas the EOBI (Investment) Rules 1979 do not permit to do so. There are two portfolios in the EOBI Enquiries — Trading and Strategic. The shares of Amtex were purchased in trading portfolio. The committee that approves the purchase and sale of shares in trading portfolio comprises the following members: Chairman EOBI (Zafar Iqbal Gondal) and Investment Adviser and Director (Investments) Wahid Khursheed Kanwar.

The said committee of EOBI in August 2010 made the investment to the tune of Rs337,659,924 in the shares of M/s Amtex Ltd. However, the then director F&A, EOBI opposed. Asif Azad, the then director F&A, EOBI, wrote a letter on September 1, 2010 on the issue opposing the investment in question by saying that the F&A Department would like to state that investment by the institution in the shape of small and less reputed companies having very small paid-up capital and market will pose a great risk to the institution. The institution has already booked heavy losses in billions on equity investment in the last two consecutive years.

Yet, Wahid Khursheed Kanwar, DG Investment, EOBI, verbally directed M/s Foundation Securities for the purchase of 11,700,000 of Amtex shares. At that time, the Amtex share stood at Rs18.80 per share. Accordingly, on the directions of Wahid Khursheed, 11.7 million shares at Rs19.37 costing Rs227,172,818 were purchased.

According to the FIA Sindh enquiry, a criminal role of the AKD Securities Limited was found. The AKD Research report submitted by the AKD brokerage house shows the earning per share (EPS) of the company in 2010 was 5.17 and its actual EPS shown in the annual report 2009-10 of the company was Rs3.74 in the year 2010. Initial Public Offer (IPO) and enlistment in the KSE of Amtex Limited was done through the AKD Securities Limited. M/s Aqeel Karim Dhedhi Securities (Pvt) Ltd is the holding company of the AKD Security Limited.

The report further says that the EOBI officers were in a position to avoid the loss to the EOBI, but they wilfully and intentionally caused a huge wrongful monetary loss to the EOBI in violation of the investment rules. Moreover, the Amtex director could not sell shares directly to the EOBI. They need a brokerage house to execute the deal and Amcap Securities, AKD Securities, RAH Securities, Pearl Securities, Investment Capital Market, Foundation Security bridged that gap.