Commerce Ministry is deeply concerned over the financial affairs of Pakistan Reinsurance Company Limited (PRCL) whose share value has nose-dived to Rs 15 from Rs 800 per share, well-informed sources told Business Recorder.
Commerce Ministry's top officials are appearing before the Supreme Court of Pakistan on the Rs 6 billion scam of National Insurance Company Limited (NICL) whose former Chairman Ayaz Khan Niazi is behind bars whereas a number of influential personalities are being questioned by the Federal Investigation Agency (FIA).
According to official documents made available to Business Recorder, Chief Financial Officer (CFO) of the company, Farzana Munaf is just a Bachelor of Commerce (B.Com) and not qualified to deal with reinsurance matters of billions of dollars annually. However, when contacted Farzana Munaf told this scribe that she is a Chartered Accountant.
An insider told this scribe that PRCL's own auditors have raised a number of questions over the maintenance of books and these auditors are being requested to make a presentation before the Board of Directors.
"We have concerns over the financial health of the company. Auditors will be called in the Board meeting to give presentation on the financial process being adopted by the company as per SECP rules," said one of the Board members.
When asked about the Commerce Ministry as well as some Board Members concerns over the value of shares, she replied that the price of shares is determined in the Karachi Stock Exchange (KSE) and not by the company itself.
Sources said investment profits of the company have also declined whereas management expenses have increase manifold.
"When the CFO assumed charge, management expenses were Rs 154 million which increased to Rs 254 million next year. Last year, management expenses were Rs 332 million," said an insider on the condition of anonymity.
One of the PRCL Board members has sought the following details from the Commerce Ministry: (i) who is Crossby broker, what is the link of the broker with PRCL, update the board on last three years business done with Crossby; (ii) details of deals with international reinsurance companies along with selection criteria; (iii) last three years' contracts/business given to international reinsurance companies; and (iv) last three years' details of tenders and participating companies.
When the Board member was approached for clarification, he refused to comment citing some family engagement at the time. The Commerce Ministry is also concerned about the financial affairs of the company which has yet to give a presentation to the Ministry despite four formal requests.
When contacted, PRCL CFO said that a presentation will be given to the Ministry soon. Regarding appointment of contract employees, the CFO stated that PRCL has been converted into a company under the Companies Ordnance, 1984 and is no more a corporation so that it runs purely on commercial lines.
In order to introduce a corporate culture in PRCL, a plan was prepared which was later approved by the Commerce Ministry in 2004. On February 26, 2011, PRCL Company Secretary Shehzad Lodhi, in a letter to the Commerce Ministry stated that one of the important components of the corporate plan was to hire professionals in the field of reinsurance, finance, accounts, information/data processing and human resources. The company had also clarified in the letter that no officer had been re-employed on contract after superannuation.
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