TRG saga continues: company says SHC has suspended operation of bailable warrants

Events at TRG Pakistan continued to take new turns after the company filed a notice to the stock exchange, conveying that the Sindh High Court (SHC) has suspended, for the time being, operation of bailable warrants issued by the District and Sessions Court against certain directors of the company.

In its notice, TRG Pakistan said: “With reference to various news articles circulating in the electronic and print media regarding the issuance of bailable warrants by the District and Sessions Court in Karachi against various individuals, including certain directors of TRG Pakistan, these individuals have filed appropriate legal applications in the Sindh High Court and submitted, inter alia, that the impugned District and Sessions Court order suffers from illegalities, infirmities as well as jurisdictional error.

“These individuals submitted that in November 2021, the United States House Judiciary Committee had made public, the testimony of Tatiana Spottiswoode against Zia Chishti, which was publicised extensively in international media, and was followed by the resignation of Chishti from all his positions at the Company and its associates.

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“Furthermore, it was submitted that the United States House Judiciary Committee has also publicly released on its website, the Arbitration award against Zia Chishti.

“Accordingly, the High Court of Sindh was pleased to pass orders on February 22, 2023, suspending, for the time being, the operation of the bailable warrants issued by the District and Sessions Court against these individuals.”

The warrants came after a criminal defamation suit was filed by Zia Chishti.

The next hearing on the case in the District and Sessions Court is scheduled for March 8, while a follow-up hearing in the Sindh High Court is scheduled for March 20.

Background

TRG Pakistan, which has gotten caught up in a web of legal battles and attempts of a hostile takeover, was first rocked in November 2021 when then CEO and founder Chishti was accused in the US of sexual assault during testimony to a hearing into how forced arbitration clauses signed with companies have been used to prevent survivors of sexual harassment and sexual violence from pursuing cases through the courts.

Spottiswoode, an ex-employee at Afiniti – the US company also founded by Chishti and in which TRG International has a controlling stake in – was among one of the witnesses, which included former employees of broadcaster CBS and luxury giant LVMH, who shared experiences they said they had been required to keep quiet because they had signed contracts with “forced arbitration” clauses, stated a report by The New York Times on November 16, 2021.

The testimony, which implicated executives at the companies, came as the House Judiciary Committee was considering legislation that would abolish forced arbitration for victims of sexual assault and harassment, said the report.

Chishti disputed all accusations then, according to a spokeswoman for Afiniti.

However, on November 19, 2021, the Board of Directors of Afiniti Ltd announced that Chishti has stepped down from his role as chairman, Chief Executive Officer, and director of Afiniti, effective immediately.

It appointed Larry Babbio as Chair of the Board of Afiniti, and also announced the formation of a Special Committee of the Board to investigate issues surrounding the conduct of its former CEO and Chair.

Later that month, Chishti also resigned from his role as CEO and a Director of TRG Pakistan Limited.

His undignified departure has since turned into a power struggle with the TRG looking to stave off what were seen as hostile takeover bids.

Attempts

In October 2022, TRG Pakistan informed that it has mounted a legal battle against an alleged attempt at a hostile takeover by companies belonging to the JS Group as well as other entities and individuals that the IT firm believed are “acting in concert”.

A notice to the Pakistan Stock Exchange (PSX) contained an interim order by the Sindh High Court (SHC) dated October 19, restraining the companies and individuals from taking the benefit — or acting in pursuance — of the voting shares that they’ve acquired of over 30 per cent until the next date of hearing.

“The company believes that these parties have violated the provisions of the Securities Act 2015, as they had acquired a shareholding of over 30pc in the company without making a mandatory public offer under the relevant provisions of the Securities Act 2015,” it said.

In January 2023, the firm forestalled yet another alleged attempt at a hostile takeover by its former CEO and co-founder and a number of financial institutions.

The company informed the PSX then that the Sindh High Court has passed an interim order on January 7 that restrains JS Bank Ltd, JS Global Capital Ltd, Bank AL Habib Ltd and DJM Securities Ltd from “creating any third-party interest” in relation to the company’s shares pledged by ex-CEO Zia Chishti and his wife Sarah Jennifer Pobereskin with them till the next hearing.

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Chishti’s lawsuit against Spottiswoode in the US

Apart from being accused of takeover bids in Pakistan, Chishti also sued Spottiswoode for defamation and other claims in December 2022, reported POLITICO, a political newspaper company based in the US.

Later, the House Judiciary Committee entered a sharply critical 2019 arbitration tribunal ruling about Chishti’s workplace behavior into the Congressional Record — instantaneously turning the heretofore secret report into a publicly-available document.

The document, which lists details, said that it found Mr Chishti “liable to Ms. Spottiswoode under the DC Human Rights Act based upon either a quid pro quo or hostile work environment theory”.