FIR shows AKD’s criminal role in Rs290m loss to exchequer

KARACHI: Contents of the detailed First Information Report (FIR) of the Corporate Crime Circle of the Federal Investigation Agency (FIA) suggest the criminal role of AKD Securities in causing a loss of Rs290 million to the exchequer under the shares of the Employees Old-Age Benefit Institution (EOBI).

On Monday, the FIA team arrested three senior officials of AKD Securities including Muhammad Farid Alam, CEO of AKD Securities, Tariq Adam Ghumra, Director and Head of Equity Operations, and Muhammad Iqbal, another Director. Contents of the FIR, a copy of which is available with The News, registered under section 409, 109, 34 of Pakistan Penal Code (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, the EOBI purchased 11.7 million shares of M/s Amtex limited on August 16, 2010 against Rs227,172,818 at the price of Rs19.3716 per share; EOBI again purchased 5,650,000 shares of M/s Amtex limited on August 27, 2010 against Rs110,487,106 at the price of Rs19.15 per share and total 17,350,000 shares of M/s Amtex limited against Rs337,659,914. 

Contents of the FIR further reveal that the above shares were purchased on the recommendations and approval of the Investment Committee of EOBI comprising of Kanwar Khursheed Wahid, then Director General Investment, and Zafar Iqbal Gondal, then Chairman EOBI, and the current value of per share is Rs2.73 and due to this act the public exchequer and EOBI suffered loss of Rs290 million.

The FIA case further suggests that during the course of investigation it has been revealed that the mandate of EOBI under the ‘EOBI Act 1976’ and ‘EOBI Investment Rules 1979’ is to make various investments from the fund created pursuant to section 17 of EOBI Act with the objective to maximise the benefits for the beneficiaries of fund. As per the record of the Karachi Stock Exchange (Guartee) Limited M/s Amtex was enlisted with the Karachi Stock Exchange on April 13, 2010 and EOBI invested on August 16, 2010 and August 27, 2010 whereas the EOBI investment rules 1979 do not permit so.

The FIR states that during the enquiry of agency, the criminal role of AKD Securities limited was found. The AKD research report submitted by 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 of 2009-10 is Rs3.74 in the year 2010, Initial Public Offer (IPO) and enlistment in Karachi Stock Exchange of M/s Amtex Limited was done through AKD Securities limited. M/s Aqeel Karim Dhedhi Security (pvt) Limited is holding company of AKD Security limited.

The FIA complaint further suggested that the AKD research report also shows the forecasts of EPS Rs7.10 and Rs9.93 for the year 2011 and 2012 but on ground the M/s Amtex suffered huge losses and EPS went down in negatives i.e. Rs7.19 in the year of 2011 and Rs10.4 in 2012. The long-term deposits have also decreased during the year 2009 and 2010 from Rs27,469,171 to Rs21,448,203 which shows that the M/s Amtex limited was crunching its assets to manage the financial liquidity problems and it is on record that the current market value per share of the said shares is Rs2.73 whereas the average cost of shares per share purchased was 19.46. Thus there has been diminution in the value of shares of the tune of Rs17 and total loss suffered by EOBI is Rs290 million.

Quoting the examples of other investments of EOBI, the complaint of FIA says that EOBI invested in the scripts of Nestle and investment almost reached at double and investment in shares of Attock Pvt Limited which starts at Rs258 reached at 420 plus and in the view of the above the officers of EOBI were in position to avoid the loss to the EOBI but they wilfully and intentionally caused huge wrongful monetary loss to the EOBI in violation of investment rules. The EOBI purchased shares of M/s Amtex through broker M/s Foundation Securities (Pvt) limited. Amtex (Pvt) limited was registered as public limited on April 12, 2010 and its IPO was 13.

During the enquiry, criminal role of Amcap Securities pvt Limited was found, Amcap Security registered at Lahore Stock Exchange, EOBI makes purchase, sell from Karachi Stock Exchange thus Amcap Securities opened different accounts to sell shares to EOBI, the seller director of Amtex could not sell directly to EOBI, they need a brokerage house to execute the deal and Amcap Securities, AKD Securities, RAH Securities, Pearl Securities, Investment Capital Market, Foundation Securities bridged that gap. The EOBI purchased 11.7 million shares of Amtex on August 10, 2010, Amcap sold 2.6 million shares of Amtex through RAH Securities to EOBI.

The FIR concludes that connection between Amcap Securities and Amtex limited was found as Iftikharuddin, founding member of Amcap and father of Khurram Iftikhar, CEO of Amtex, Faiza Khurram, founding member Amcap and wife of Khurram Iftikhar, CEO of Amtex, Sajida Shahzad, founding member of Amcap and wife of Shahzad Iftikhar, Director of Amtex, Sonia Nadeem, Director of Amcap and wife of Nadeem Iftikhar, Director of Amtex and the owners of Amcap Securities and Amtex limited are same and section 187(i) of the Companies Ordinance is violated; criminal role of Khurram Shahzad, Marium Shahzad and Naveed Shahzad was also found in the month of August 2010, Rs9.5 million were credited in two different joint bank accounts of Khurram Shahzad, one with his wife Marium Shahzad and other with his brother Naveed Shahzad at Lahore, in accounts of Rs5 million have been transferred in to the joint account of Khurram Shahzad from the account of Amcap Securities. These payments were made to Khurram Shahzad by Amcap Securities and were immediately withdrawn in cash by Khurram Shahzad, no trades were executed through Amcap Securities during 2010 and even Khurram Shahzad did not have any trading account with Amcap Securities. As per the account opening, Khurram Shahzad was working head of sales at Trust Leasing and Investment Bank Limited at Lahore.

The FIR says “from the above enquiry so far, it is easily deducted that Khurram Shahzad played a main role between Amcap, Amtex Vz Executive Investment Committee to broker the sale and purchase transactions of Amtex shares and is believed to be a front man of Wahid Khursheed”.