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September 18, 2019

Govt questions gas cos about conflict of interest

Top Story

September 18, 2019

Mirza Mahmood Ahmad. Pic SNGPL

ISLAMABAD: In a startling disclosure, the Petroleum Division headed by Federal Minister Mr Umar Ayub has spotted a director of Sui Northern and Sui Southern with a long story of conflict of interest. The Petroleum Division got perturbed when it came to know that the particular director in both the state-owned gas companies has earned mammoth amount by extending the legal services to both the companies through his legal firm M/s Minto & Mirza.

The man has been identified as Mirza Mahmood Ahmad, who is director in Sui Northern since June 2011 and in Sui Southern since November 26, 2007. This means that Mr Ahmad is director in Sui Southern for more than one decade and in Sui Northern is close to one decade. More importantly, the petroleum division is quite upset as to why he is holding the slot of director for so long time in public sector entities. So much so Mr Mriza has also been declared by Intelligence Bureau as corrupt and controversial.

The official documents, also in possession of this correspondent, narrate how influential director in both the gas companies he is as Mr Ahmad emerged as an octopus having strong tentacles in all committees in both the companies. According to official documents Mr Mirza Mahmood Ahmad is in Sui Southern and Sui Northern and is working as chairman of Board Finance and Procurement Committee which is very important body in both the companies. He is also member of special committees separately on UFG, Risk Management, Litigation, Audit and HR and Nominating committees in both the companies.

The story is built based on letter of Additional secretary Mr Sher Afgan who is also spokesman of the petroleum division and director in boards of directors of both gas utilities and the official documents of Sui Southern showing that M/s Minto & Mirza firm also owned by Mr Mirza Mahmood Ahmad earned amount of Rs145 million from SSGC alone from 2010-11 to 2018-19. The story has also detailed version of Mr Mirza Mahmood Ahmad too. The same letter written by Mr Sher Afgan was also signed by Mr Qazi Mohammad Saleem Siddiqui, the then government director in both the utilities. In repose to letter of Additional secretary, Sui Northern has not responded. However, Sui Southern has provided the required information to Petroleum Division.

Mr Sher Afgan Khan additional secretary who is spokesman of the petroleum division also is not available for the version as he is on official visit to US and Canada. However, secretary of Petroleum Mian Asad Hayaud Din when contacted confirmed the development saying that he is very much on this particular issue. Mirza Mahmood Ahmad, however, denies all charges in the replies to the questions raised by The News which are included in the story.

More importantly, one of the top agencies –Intelligence Bureau --has also declared Mr Ahmad is corrupt and controversial and his general reputation speaks that he doesn’t enjoy good reputation vis-à-vis his financial and moral integrity. However his behavior with public and colleagues is good and satisfactory. The IB report also mentioned that Mr Ahmad is also included in a NAB reference filed in 2014 against Tauqeer Sadiq and 11 others pertaining to OGRA scandal of Rs82 billion. The NAB authorities, reportedly, alleged him of being actively involved in shares manipulations of Sui Southern. The IB report does not stop here rather it further unfolds that Mr Mirza Mohammad Ahmad is also founder of Foundation Securities and through this company, he make money in stock exchange too.

The letter of Additional secretary Mr Sher Afgan written to Managing Directors of both gas companies Sui Sothern and Sui Northern consisting on three points says: ‘’It has come to our knowledge that one of the directors of the board namely Mirza Mehood Ahmed has been engaged for provision of legal services to the company in various cases and significant amounts were paid to him or to his firm as professional legal fee for acting as company’s lawyer before different forums.’’ The second point of the letter also available with The News also argues saying that whenever any director enters into any arrangement or contract of commercial nature including provision of services against payment is a ‘Related Party transactions’ within the meaning of section 208 of the Companies Act,2017. You (Managing Directors of both the companies) are therefore requested to provide complete lists of cases and matters where services of Mr Ahmad and his legal firm were engaged along with details of payments his directorship. The letter also asks for provision of details of approvals of the board of directors and disclosure to the shareholders in terms of sector 208(2) of the Companies Act,2017.

The third point of the letter stresses for early actions by both the Managing Directors. To have detail version of Mr Mirza Mehmood Ahmad, this correspondent sent him a questionnaire and he responded in detail.

When asked if you and your law firm is Minto & Mirza which is involved in the legal battle for the companies in various courts of law. And your firm is also engaged in filing with OGRA the petitions for both the gas companies seeking ERR, gas tariff and verdict in the head of unaccounted for gas (UFG) also . Also asked Sir, since you are director of SS and SN and your law firm is also very much involved in fighting the cases of both the companies and don’t you think that this it is the classic example of the conflict of inertest. Plz explain your position.

Mr Mirza Mahemmod Ahmad said: ‘’I have been a lawyer for over 28 years and was elected by shareholders on the Board of SSGCL in 2007 and on the board of SNGPL in 2011. I am currently serving my fourth and third terms, respectively, as elected member on both boards.

Explaining the legal position he responded saying that the established legal position that cannot be denied by anyone – be it the ministry, the two companies or courts of law – is that it is absolutely not a conflict of interest if a law firm represents a company in which one of the law firm’s partners is a director. This is so because both, the lawyer and the director look for the best interest of the company and there is no question of conflict of interest. He said he owes a fiduciary duty to safeguard the interests of SNGPL and SSGCL as an elected director and my law firm does the same.

Mr Mirza Ahmad also referred to legal opinion dated May 15, 2014 given to SSGCL by the prestigious law firm Haidermota & amp; Co. on this very question. According to law firm of Haidermota BNR, Advocates and Corporate Counsel , there is no conflict of interest of Mr Mirza as director rather in fact it is beneficial for SSGCL if he (Mr Mirza or his law firm) represent the companies.

Mentioning about his law firm he said that his 25 year old law form M/s Minto & Mirza has represented the Sui Companies as their counsel in specific types of cases. Under the law his Firm’s engagement with the companies is called a “Related Party Transaction” which has to be disclosed in a certain manner, and approved by the Audit Committee and the Board of Directors of a company. The concerned director cannot sit in board meetings in which such transactions are discussed or approved. All the disclosures were duly made and appointment of my Firm as lawyers for SSGC was ultimately (and unanimously) discussed and approved by the Board of SSGC in meetings in which he never sat (as required by law). He further stated saying that all this is disclosed in the published accounts of the Companies, which are public record. Mr Ahmad said: ‘’Please also note that in the case of SNGPL, I was not even a member of the Board when my firm was appointed and so it was not even a related party transaction. I am proud to state that representation by my Firm has brought benefits to the tune of billions of rupees for the two Sui Companies (a fact that you can verify from the concerned officers of the companies). On various occasions the Boards of both companies have praised my and my firm’s work and this too is a matter of record.

When asked if the MoPNR has written a letter to SS and SN about this issue of conflict of interest and asked for the amount so far SN and SS has paid to Manto& Mirza firm. Plz tell me as of today how much both the companies have paid your law firm against the cases you firm has fought? And pls also tell still your law firm is currently providing the legal services for both the companies. Plz give the detailed answer.

Mr Ahmad replied saying: The MoPNR letter that you mention was merely disguised as one about conflict of interest, while the real issue was something. The said letter was written by two of the directors of the Sui Companies– both federal government nominees –who sought details from the two Companies regarding the appointment of my Firm as their counsel. The two Companies responded with complete factual and legal details of my Firm’s appointment in which it was made clear that let alone any illegality, not even a minor impropriety was found.

And more important I have been told that you are also chairman of the very important finance and procurement committee and is member of the audit, HR & Nomination, Risk management and unaccounted for gas committees of both the gas companies. Don't you think this deep involvement in the company's affairs will damage the interest of the company?

Mr Ahmad answered: ‘’ Every member of the board of any company is supposed to be deeply familiar with the affairs of the company, and every member is always part of multiple committees. The fact that I am a member or a chairman of any committee of the boards of either company is totally normal and has no nexus or relevance to the legal services being rendered to them by my Firm. The only relevant question is whether as a member of any committee, I ever sat over matters relating to the engagement of my Firm as counsels for the two Companies, the answer to which is NO. My involvement in the affairs of the two Companies is only to the extent of the fiduciary duties I owe to the respective companies under the law.’’

When asked as to how much you have earned from gas companies against the legal services you firm has provided he said: ‘’I have no issues with disclosing the fees that my Firm has received from time to time from the Sui Companies. However, this is a disclosure which the companies must consent to. I am sure that if you contact the concerned persons at the two Companies they would share these details with you. But, I can tell you, that professional fee quotes were sought from other law firms, twice, before engaging my Firm, and both times our Firm gave the lowest fee quote.’’

When questioned mentioning that sir, IB report about you is not good rather it says that you are financially corrupt and morally controversial and you do not enjoy the good reputation vis-a-viz financial and moral integrity. And more importantly you are included in a NAB reference filed in 2014 against Tauqeer Sadiq in OGRA scandal of Rs82 billion. You are also said to be actively involved in shares manipulation of Sui Southern. Keeping in view the above IB report and NAB investigation don’t you think you have stigmatized the Sui Southern and Sui Northern and it is high time to resign? Plz respond to me in details.

Mr Mirza Mahmood Ahmad said: “I am not even aware that the IB has a report on me, let alone the contents of any such report. As a reporter, you must be well aware of the common practice of quoting unnamed and unsourced reports to lend credibility to falsehoods. The fictional report smells of the exact same technique. Rest assured that if any such report ever surfaces, it will be met with the full force of the law on the relevant forum.’’

Mentioning about the reference in NAB, he said that NAB Reference is a total lie. I was named as an accused in the so called OGRA Scandal on vague and unsubstantiated charges similar to the ones your sources are raising but the Accountability Court, Islamabad, was pleased to discharge me from the said reference vide its order in May 2014, and the allegations raised against me were thrown out, including baseless allegations that I was involved in any kind of inside trading.

Asked if you are also the founder of Foundation Securities registered with SECP and being director you can easily be part of inside trading of the company in stock exchange, he said, “Foundation Securities is a brokerage house in which I held less than 1% shares over 15 years ago. I have never been part of the management of Foundation Securities and therefore, there is no scenario in which any question of insider trading may arise and no such allegation has ever been made.’’

Mr Mirza also mentioned the real story behind the letter of the government directors to both the companies saying: “You are an experienced reporter and must by now have realised that the real story is quite different and contrary to what you have been told. I am not at all surprised that the concerned quarters have deliberately given you false information since I have an ongoing dispute with the current government because I am refusing to agree to their illegal demands from the two Sui Companies. This shows their desperation as I have always resisted such pressures, which is why I was one of only three directors who refused to sign off the LNG deal currently being investigated by NAB.”

He also pleaded saying that the real conflict of interests in the current scenario lies in certain government-nominated directors who are insisting on forcing various policy decisions of the present government on the Sui Companies fully knowing that these decisions will damage the companies.

“I have strongly resisted this attempt thus far and this has led to many ugly and hot exchanges between me and one of those directors – all a matter of record. These directors seem to have forgotten that even though they are government nominated directors; once they are on the board of the companies they must serve the best interests of the Company, and must not push the political government’s agenda which will inevitably harm the companies.”

He further argued saying: “And this is an actual example of conflict of interest. I have resisted such attacks on the well-being of the two Sui Companies during the previous government, and continue to do so. I would be more than happy to share details regarding such conflicts, if you wish. It is these directors who have written to the company to ask for details about money paid to my firm and I believe they have also questioned my firm’s appointment. Shockingly, these two persons have been sitting in some of the company board meetings in which my firm was appointed for certain cases and these two also approved/authorized my firm’s appointments in such meetings. If what was happening was so wrong, why did they approve the appointment of my firm?”

He says: “It must now be obvious that the real issue is that some people are hell bent that I should leave the boards of the companies so that they can bulldoze agendas of the political government without regard to the health and well being of the companies.’’

The News also sent a questionnaire to Chairmen of both the gas companies and respective company secretaries many day backs, but they did not come up with the answers.