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FIA arrests three top officials of AKD Group on Rs290m fraud charges

By Imdad Soomro & Salis bin Perwaiz & Salman Siddiqui
January 05, 2016

Dhedhi blames Siddiqui, govt officials  for plotting against him; JS Group spokesman says chairman has no link with raid; case is based on 2010 report when PPP was in power

KARACHI: The Federal Investigation Agency (FIA), Sindh, on Monday arrested two directors and a CEO of AKD Securities involved in causing a loss of Rs290 million to the exchequer under shares of the EOBI (Employees Old-Age Benefit Institution).

The FIA took into custody Muhammad Farid Alam, CEO of AKD Securities, Tariq Adam Ghumra, Director and Head of Equity Operations AKD Securities, and Muhammad Iqbal, another director in the AKD Group, during a raid on company offices.

It is pertinent to mention here that the National Accountability Bureau (NAB) during the previous government started investigating the matters of 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 has 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.

Regarding the Monday’s raid and according to the documentary evidences available with ‘The News’ a case has been registered at FIA crime circle, Karachi, under section 409, 109, 34, PPC read with 5(2) PCA 1974 following the enquiry number 34/ 2014 which was registered at FIA Karachi, vide office letter number FUA/DSK/ENQ 40/13/CK/B-10947-49.

FIA (Sindh) Director Shahid Hayat Khan, talking to The News, said that an inquiry was initiated at the FIA’s 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 EOBI comprising Kanwar Khursheed Wahid, the then DG Investment, and Zafar Iqbal Gondal, the then chairman EOBI.

He added that the current value per share is Rs2.73 and the total loss to public exchequer/EOBI is Rs290 million. From the enquiries conducted and evidences collected on record during the course of enquiry, it has been revealed that the mandate of EOBI under the Employees Old-Age 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.

Shahid Hayat said that 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 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 & 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.

He added that Asif Azad, the then director F&A, EOBI, wrote an official 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 Rs18.80 per share. Accordingly, on the directions of Wahid Khursheed, 11.7 million shares at Rs19.37 costing Rs227,172,818 were purchased.

The director FIA Sindh said that during the enquiry, a criminal role of 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 is 5.17 and its actual EPS shown in the annual report 2009-10 of the company is 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.

He added that in view of the above, the alleged officers of the EOBI 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 Investment Rules. Moreover, the Seller and Director (Amtex) 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.

The above facts constitute the commission of offences punishable under Section 409/109/34 r/w 5(2). Hence the registration of case against 22 accused persons, including Zafar Iqbal Gondal, Kanwar Khursheed Wahid, Mohammed Iqbal Dawood (Convener of the Investment Committee EOBI), Murtaza Imtiaz Ahmed (F&A EOBI), Mohammed Ayub Khan, the then Director Finance, EOBI, CEO and directors of M/s Amtex Limited and others.

Shahid Hayat said that EOBI management purchased the Amtex shares of Rs330 million (19/20 rupees per share) in 2010 in violation of the Investment Rules. The AKD Securities gave a manipulated research report and issued the IPO of Amtex. Presently, the Amtex share is of Rs2.5 rupees, hence the EOBI suffered a loss of Rs290 million.

Later, addressing a press conference at Karachi Press Club, Aqeel Karim Dhedhi, chairman of the AKD Group, termed arrest of his three employees as a plot against him, and alleged that high-ups and high officials of the country have planned the plot.

“The government should decide if it wants to save [the country’s] stock exchange then it has to remove Jahangir Siddiqui’s aides, including Shahid Hayat [FIA chief] from his post,” he said.

He alleged that Fawad Hasan Fawad and a former director of the FIA, Saud Mirza, were other players in the plot against him.

He said three of his employees, the chief executive officer, the chief financial officer, and a director, were arrested on allegation that they had forecast a wrong share price of Amtex Limited in a research report in 2010-2011. And the forecast had caused losses to the EOBI, as it had taken the forecast seriously and invested in Amtex (pvt) Limited — a listed textile firm.

He said there are a number of research reports published giving forecasts on share prices. However, it is not mandatory that all the forecasts are proved 100 percent accurate. The reports are published by a number of brokerage houses in the country.

Apart from the claims and blames of Dhedhi the matter of Monday’s raid of the FIA is followed on a report of 2010 when PPP government was in place and none of these persons, including the said senior bureaucrat and director FIA, were on the posts. Everybody knows that Dhedhi had close relationship with PPP high ups and had intimate business talk with them.

Spokesman of Jahangir Siddiqui (JS) Group refuted all accusations of Aqeel Karim Dhedhi and told ‘The News’ that the allegations of Dhedhi are baseless, unjustified and mala fide.

The JS Group’s chairman or any official do not have any kind of link with the FIA raid, added the spokesman.

“The FIA is country’s prominent and major investigation agency, how any person could influence and instigate inquiry or any raid against any one or any company,” argued the spokesman.