The Securities & Exchange Commission of Pakistan (SECP) Chairman Muhammad Ali was a partner in a construction business with brokers he regulates till mid-2011 despite serving as one of the top regulators of the country, official documents reveal. It is said to be believed that the Chairman SECP is blue eye of AKD (Aqeel Karim Dady) who is well know in stock market with his nick name "Aik kay Dau", revealed by former Addl. Registrar Ahmed Muzzamil who is currently working in a Lahore based law firm (The closed ally of Mr. Abdul Rehman Qureshi - Secretary to SECPB.
Ali, appointed SECP chairman on December 24, 2010, was a 15 percent shareholder in RI Enterprises, which had four other partners — all stock market brokers, according to Federal Board of Revenue (FBR) documents for the financial year ending on June 2011.
The partnership between stock market brokers and a regulator raises eyebrows because this arrangement remains open to nepotism and abuse of authority. One of the partners, Dawood Jan Mohammad, a leading name at the Karachi Stock Exchange, has a number of cases pending against him relating to massive tax evasion which conveniently go nowhere near prosecution with the current SECP administration, market sources said.
The FBR documents, a copy of which is available with ‘The News,’ stating that Ali had opening capital of more than Rs52 million in RI Enterprises. A pre-tax profit of around Rs5.5 million was earmarked in his name in fiscal 2010-11, taking his total drawing capital right to a little over Rs56 million. The FBR accused the company of evading Rs2.5 million worth of taxes in fiscal 2010-11.
However, the SECP chairman, when contact by ‘The News,’ denied that he was a partner in R I Enterprises after assuming office and said that he had sold his shares in early 2006.“I have all the documents, proving that I sold my share in this business in 2006,” he said by telephone from Islamabad. “The confusion about the FBR documents is because my former partners did not remove my name from the business,” he maintained.
In Pakistan it remains a common practice that the relevant authorities — the registrar office in this case — are often not informed about the change in partners in time, he added.However, market sources said that it was surprising that an expert of Ali’s caliber, who remains on top of the game, failed to properly close his deal after selling his stakes in a business. An expert said in fact Ali would have known that his financial issues would remain secured by remaining a partner. That was the reason that he did not get his name removed. He would have thought that if this was pointed out he could say that his partners have not removed his name.
“This is not the case of some novice businessman... here we are talking of Muhammad Ali, who even before assuming the SECP charge, was a big name in the stock market,” said one stock market broker, requesting anonymity. He established and led key brokerage houses, including W I Carr Securities and Elixir Securities during the mid-1990s and the early 2000s respectively besides being the moving spirit behind many other business ventures.
Mansoor Ahmad Janjua, an official of an Islamabad-based brokerage house, who lodged complaints against the SECP chairman at the Federal Tax Ombudsman, Inland Revenue Karachi and FBR, asked why did Ali not take action against his former partners for not removing his name from the documents of the business.
“Why did he not officially clarify to the FBR or the other authorities that he was no longer with this business?” he said.In his declaration to the tax authorities for FY2010-11 and FY2011-12, Muhammad Ali cites seven and six businesses respectively in which he had stakes, but it did not mention R I Enterprise in them.
SECP’s Commissioner Securities Market Division Imtiaz Haider, who himself has been controversial at times because of his closeness to the SECP chairman, said that Januja worked as the company secretary of a brokerage house, Ahmed Nadeem Securities, which remains under scrutiny for defaulting on payments to its investors.
This brokerage house has applied for voluntary winding up of operations after defaulting on the payments for Rs80 to Rs90 million, he said questioning the motives behind what he called propaganda against the SECP chairman. The Islamabad Stock Exchange has frozen the membership of its owner and investigations are being carried out against it, the SECP official said.
The SECP chairman said that an organised campaign had been lodged by some powerful brokers to malign him because decisive action was being taken against them for violating various rules and regulations and manipulating the market. However, his appointment is also challenged in the Supreme Court, the judgement of which has been reserved.
Ali, appointed SECP chairman on December 24, 2010, was a 15 percent shareholder in RI Enterprises, which had four other partners — all stock market brokers, according to Federal Board of Revenue (FBR) documents for the financial year ending on June 2011.
The partnership between stock market brokers and a regulator raises eyebrows because this arrangement remains open to nepotism and abuse of authority. One of the partners, Dawood Jan Mohammad, a leading name at the Karachi Stock Exchange, has a number of cases pending against him relating to massive tax evasion which conveniently go nowhere near prosecution with the current SECP administration, market sources said.
The FBR documents, a copy of which is available with ‘The News,’ stating that Ali had opening capital of more than Rs52 million in RI Enterprises. A pre-tax profit of around Rs5.5 million was earmarked in his name in fiscal 2010-11, taking his total drawing capital right to a little over Rs56 million. The FBR accused the company of evading Rs2.5 million worth of taxes in fiscal 2010-11.
However, the SECP chairman, when contact by ‘The News,’ denied that he was a partner in R I Enterprises after assuming office and said that he had sold his shares in early 2006.“I have all the documents, proving that I sold my share in this business in 2006,” he said by telephone from Islamabad. “The confusion about the FBR documents is because my former partners did not remove my name from the business,” he maintained.
In Pakistan it remains a common practice that the relevant authorities — the registrar office in this case — are often not informed about the change in partners in time, he added.However, market sources said that it was surprising that an expert of Ali’s caliber, who remains on top of the game, failed to properly close his deal after selling his stakes in a business. An expert said in fact Ali would have known that his financial issues would remain secured by remaining a partner. That was the reason that he did not get his name removed. He would have thought that if this was pointed out he could say that his partners have not removed his name.
“This is not the case of some novice businessman... here we are talking of Muhammad Ali, who even before assuming the SECP charge, was a big name in the stock market,” said one stock market broker, requesting anonymity. He established and led key brokerage houses, including W I Carr Securities and Elixir Securities during the mid-1990s and the early 2000s respectively besides being the moving spirit behind many other business ventures.
Mansoor Ahmad Janjua, an official of an Islamabad-based brokerage house, who lodged complaints against the SECP chairman at the Federal Tax Ombudsman, Inland Revenue Karachi and FBR, asked why did Ali not take action against his former partners for not removing his name from the documents of the business.
“Why did he not officially clarify to the FBR or the other authorities that he was no longer with this business?” he said.In his declaration to the tax authorities for FY2010-11 and FY2011-12, Muhammad Ali cites seven and six businesses respectively in which he had stakes, but it did not mention R I Enterprise in them.
SECP’s Commissioner Securities Market Division Imtiaz Haider, who himself has been controversial at times because of his closeness to the SECP chairman, said that Januja worked as the company secretary of a brokerage house, Ahmed Nadeem Securities, which remains under scrutiny for defaulting on payments to its investors.
This brokerage house has applied for voluntary winding up of operations after defaulting on the payments for Rs80 to Rs90 million, he said questioning the motives behind what he called propaganda against the SECP chairman. The Islamabad Stock Exchange has frozen the membership of its owner and investigations are being carried out against it, the SECP official said.
The SECP chairman said that an organised campaign had been lodged by some powerful brokers to malign him because decisive action was being taken against them for violating various rules and regulations and manipulating the market. However, his appointment is also challenged in the Supreme Court, the judgement of which has been reserved.
“I have everything in black and white... it is just propaganda to tarnish my name,” he said.It is said that powerful business groups of Karachi, which are close to powerful PPP circles, want to make the SECP chairman finance minister of the country.
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