FIA allowed to continue probe against sugar mills of Tareen, Shahbaz family

LAHORE: The Lahore High Court on Thursday allowed the Federal Investigation Agency (FIA) to continue its probe against sugar mills of Pakistan Tehreek-e-Insaf leader Jahangir Tareen and the family of NA Opposition Leader Shahbaz Sharif f in light of the report of the Sugar Commission pertaining to a rapid increase in the price of sugar.

A division bench comprising Justice Shahid Karim and Justice Sajid Mahmood Sethi dismissed petitions to the extent of challenging the FIA jurisdiction to hold inquiries.

The JDW Sugar Mills, the Farooqi Pulp Mills of Tareen and the Al-Arabia SugarMills of the Shahbaz family had approached the high court against multiple actions of the federal government, the SECP and the FIA.

“We hold that the inquiry being conducted by the FIA is proper and in accordance with the law. We do not find any jurisdictional error or illegality  in the exercise of jurisdiction by the FIA. We hold that the FIA has lawfully and competently taken cognizance of the matters and to this extent the petitions are dismissed,” the court said and hoped that due process of law would be followed by the FIA in conducting the inquiry which would be independent in all respects.

The court, however, partly accepted the petitions and set aside the Securities and Exchange Commission of Pakistan (SECP) decision to send a reference to the FIA to probe charges of money laundering, illegal transfer of money against the petitioners’ sugar mills. “We hold the decision of the SECP (of 29.7.2020) to be null and of no effect. It is set aside,” the order read.

The court asked the SECP that it might choose to initiate proceedings afresh in accordance with the law and in light of its observations. 

However, at the same time, the court ruled that the FIA was lawfully entitled to make the decision to start an inquiry into the allegation of money laundering.

The court struck down an FIA letter to the SECP to nominate two officers for a joint investigation team. The act of the DG FIA in writing to the SECP for the nomination of two officers to become part of the investigating team is nullity as per law. 

The attorney general of Pakistan has not been able to refer to any provision in the 1974 Act which empowers the DG FIA to solicit the services of officers from another agency.

“Such a course of action is ultra vires and has no basis in the law. The act of the DG FIA in writing to the SECP for nominating two officers is struck down. Consequently, the SECP’s letter dated 30.07.2020 for nominating two officers for investigation to become part of the FIA joint team is also 

The bench observed that callup notices do not make a reference to the Sugar Commission’s report and proceed on the basis of information available with the investigation team regarding money laundering and financial/corporate fraud. The court questioned the working of the SECP independently and  made certain observations.

“The SECP has subverted the very structure and premises of an independent agency. The entire commission (SECP) acted mechanically, under ulterior motives and whimsically. In doing so, the commissioners abdicated their core function of impartiality and made a mockery of the salutary principles of informed decision-making which was at the heart of their role as gatekeepers. If we are permitted to say, they acted as ‘lions under the throne’.”

The court said the integrity of the SECP was seriously compromised by the decision on the facts of the case. Doubtless, the offence of money laundering is part of the Schedule of the 1974 Act and is within the cognizance of the FIA. It cannot be left to the choice of a person to plead that he be charged for an offence under one or the other laws. “This court cannot short-circuit the FIA’s powers to proceed in the matter. This argument, at best, is an argument of double jeopardy and the time to raise it has yet to arrive,” the verdict held.

Both the mills filed the petitions through their company secretaries pleading that the action being taken by the FIA was illegal as it was ordered by the federal cabinet despite having no such jurisdiction.

They said the whole process including the constitution of the Sugar Commission and subsequent proceedings by the FIA and the Security and Exchange Commission of Pakistan (SECP) had been done on the direction of Shahzad Akbar. The petitions said the federal cabinet also ordered action against the sugar mills in light of the commission’s inquiry report.

It was further contended  that the cabinet had no jurisdiction to hold any individual or organization guilty of any alleged offence. The impugned inquiries were in violation of the SECP Act, the Companies Act, the Income Tax Ordinance and the Sales Tax Act. 

The petitions argued that the FIA could initiate its  proceedings only on a reference sent by the SECP. They argued that an inquiry being held on the order of the federal government could not be transparent. They said the FIA act was also in violation of a Sindh High Court judgment, asking the court to set aside all impugned actions by the FIA for having been undertaken and issued without lawful authority.