The Securities and Exchange Commission of Pakistan (SECP) and the management of Karachi Stock Exchange have been trying to get in touch with KSE Managing Director M.A. Lodhi for the last six days.
According to informed sources Lodhi has become untraceable after learning of a decision by the KSE Board of Directors to remove him from his post after it had become clear that the systems at the Exchange are at variance with the regulations of SECP and the Exchange itself, and he is unable to manage the affairs according to the satisfaction of board of directors and the SECP. Lodhi has been at the helm for just over a year.
The timeframe to undertake hardware procurement and software acquisition and development as per SECP's orders was given by the KSE management. Repeated failure to meet these deadlines resulted in frustration in the SECP, which pressed KSE Chairman Zafar A Khan for fulfilment of the obligations of KSE. The previous Board of Directors asked the chairman to investigate into issues and decided to provide him an office at the Exchange along with a secretary.
Lodhi apparently expressed his dissent at this decision and pointed out that the non-executive chairman office was shut down at KSE on the orders of SECP three years ago. The issue was referred to the SECP. However, this time SECP sided with the Board and permitted KSE to provide an office for chairman inside or outside the exchange; since SECP's reliance on the KSE chairman increased due to its MD's management weakness.
The new Board of Directors, which took up the responsibility in January, was reportedly briefed about the previous Board's decision to remove Lodhi and give the officiating charge to DMD Yaqub Memon until a new managing director is appointed. The new board has not ratified the previous board's decision and a consensus has to be reached in order to break the impasse.
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