ISLAMABAD: The Joint Investigation Team (JIT) probing the fake accounts case on the orders of the Supreme Court (SC), has implicated chairman of Securities & Exchange Commission of Pakistan (SECP) in its report for involvement in illegal takeover of banks and their merger with the Summit Bank on behalf of former president Asif Ali Zardari.
In this connection, a special team of the Federal Investigation Agency (FIA) raided the SECP headquarters in Islamabad on Wednesday and seized important record. The FIA team was in the SECP office till the filing of this report, a senior SECP official confirmed to The News.
Reportedly, Tahir Mahmood left Pakistan on December 21, 2018 from Islamabad Airport on flight EY-613 on 3-month Dubai visa expiring on February 18, 2019. However talking to The News, the chairman said he had not fled the country as he was on official leave from December 24 to January 4.
The 128-page JIT report submitted with the apex court states, "The officer, (Tahir Mahmood, then Executive Director Enforcement, presently acting SECP chairman) misinterpreted and misapplied the relevant law and committed an act of deliberate omission causing loss of Rs830 million to the general public.
In return of this favour, the report says, Tahir was awarded prized position as a commissioner in the regulatory body. It is worth mentioning here that SECP commissioner is a prized position with average monthly salary including bonuses of Rs2.5 million.
The report says M/s Suroor Investment Ltd acquired 59 percent shares each from majority shareholders of Atlas Bank (Atlas Group) and Arif Habib Bank Ltd (Arif Habib Group), renamed it Summit Bank, and subsequently Summit Bank purchased 59 percent shares of Mybank (under novation agreement discussed above during 2009/10). After the acquisition of majority shares, these banks were merged with the Summit Bank.
“SECP, instead of taking cognizance and protecting the rights of minority shareholders, interpreted these acquisitions as mergers falling under exemption clause (3g) of listed companies (Substantial Acquisition of Voting Shares and Take-overs) Ordinance 2002. Consequently, it absolved the acquirer (Summit and Suroor) of purchasing minority shares at least at same price as majority shares. These shady acquisitions and subsequent mergers caused a loss of at least Rs830 million to the general public (minority shareholders),” the report said.
The report further added, “The officer (Tahir Mehmood, then Executive Director Enforcement; presently acting SECP Chairman) who misinterpreted and misapplied the relevant law and committed an act of deliberate omission by failing to take cognizance (misuse of authority under NAB Ordinance-1999) was internally elevated to the position of commissioner first time in the history of SECP.”
In its most damning part, the report accused the current SECP Chairman of collusion with former president Asif Ali Zardari. “This substantiates the inference that failure of regulator was not inadvertent rather directions were coming from top (Presidency) in favour of the Summit Bank,” says the report.
It is pertinent to mention here that the PTI government had elevated Tahir Mahmood to the position of acting chairman in October, 2018. However, when contacted by The News, SECP chairman strongly denied the allegation leveled in the JIT report and said the team did not even bother to get his version on the allegations. The chairman said he has submitted his response to the Supreme Court and FIA.
He said in case of merger of banks, State Bank of Pakistan is main regulator which approves merger and rehabilitation. “Respectfully, the authors of the report have failed to appreciate the scheme of law governing the actions of the SECP taken through legitimate exercise of the powers entrusted to it and its officers pursuant to the laws administered by it,” Tahir said in a written response.
He said the contents of the report related to him “reflect an immature understanding of how the law relating to take-overs has historically been developed and implemented in Pakistan. “There is also evidently a lack of understanding of the role of a person appointed as an officer of a regulatory authority entrusted with the interpretation of provisions of the law administered by the regulatory authority,” he added.
The chairman said the SECP has no authority to impose its will on the corporate entities to force a public offering if the mandate of the law is to be followed.
“If the authors of the report had approached me for my comment before making such a damning observation against me in the report, several examples in which the same exemption has been sought for and applied by merging corporate entities could have been made available. One such relatively recent example is the merger of KASB Bank with Bank Islami,” he said.
The chairman said he found it highly offensive and irregular that authors of the report who may not have the requisite experience in the field of law in relation to which they pass judgment or the authority to finally adjudicate on the matter at hand, find an officer of the SECP to have ‘misinterpreted and misapplied’ provisions of law.
“The offensiveness is further exacerbated by the deliberate misstatement by the authors of the report as to my elevation to the position of commissioner sometime after the Summit Bank merger. To set the record straight, as evidenced by the Gazetted notification of my appointment, I was appointed a commissioner of the SECP on Sept 6, 2010 much before the subject Summit Bank merger,” he added.
He also added that the law indemnifies government officials tasked with carrying out regulatory functions of the state. Responding to allegations of collusion with the than president Asif Zardari, the chairman said: “Respectfully, misinterpretation or misapplication cannot be taken to substantiate ‘the inference that the failure of regulator was not inadvertent rather directions were coming from the top (Presidency) in favour of Summit Bank’ as proposed by the authors of the report. At the most a misinterpretation could be considered a difference of opinion to be finally adjudicated through proper processes put in place by the law to address grievances in relation to such interpretational issues based on the available facts,” Tahir said.
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