Bank’s chairman booked under Benami Transactions Act, 40m shares confiscated

ISLAMABAD: The Anti-Benami Zone-III, Karachi has filed a reference with the adjudicating authorities against the chairman of a bank and confiscated 40 million shares of the said bank.

Official sources told Business Recorder, here on Wednesday that the reference has been filed under section 22(5) of the Benami Transactions (Prohibition) Act, 2017 for 40 million shares of the said bank.

After detailed investigation, the Anti-Benami Zone-III, Karachi, successfully found the trail of the case, proved the Benami transaction and also identified the Benamidar, who purchased 40 million shares on behalf of the beneficial owner (the chairman of the bank) and transferred back to him without any proper arm’s length transaction.

According to sources, a shareholder of the bank alleged that the chairman of the bank executed Benami transaction by providing funds to his friend from his offshore company to purchase shares in 2014-2015 and kept the shares as Benami. These shares were later transferred in April 2020. Under the law, the major shareholders are required to seek prior approval in writing from the State Bank of Pakistan (SBP) for acquiring five percent or more shares along-with information with proper justification of holding more than five percent shares of the paid-upcapital.

However, investigation proved that the ownership of the 40 million shares has been kept in the name of the Benamidar (non-resident British citizen), but the real beneficial owner was the chairman of the bank, exposing Benami transaction as well as the Benamidar.

The arrangement between the Benamidar and the actual beneficial owner is well-thought and the payment of the shares made through a company owned by the beneficial owner (the chairman of the bank).

The Anti-Benami Zone-III, Karachi, is authorised to conduct inquiries into the Benami properties or incidence of Benami transactions as defined under section 2(1)(7) read with section 2(1)(8) of the Benami Transactions (Prohibition) Act, 2017.

After the promulgation of the Benami Transactions (Prohibition) Act, 2017, it has been made illegal to conduct Benami transactions, hold Benami property or re-transfer Benami property in the name of the beneficial owner.

Therefore, holding of Benami property or its proceeds or entering into a Benami transaction attracts relevant provisions and if confirmed such a property or its proceeds are liable to be confiscation by the federal government besides criminal proceedings. Based on the information received, the said Zone initiated a probe against the Benami transactions and subsequently carried out information gathered from various organisations/ institutes.

The Anti-Benami Zone-III Karachi ensured to provide adequate opportunity of being heard.

However, the chairman of the bank had nothing concrete to provide as evidence for the suspected transaction.

As per officials, the case findings revealed that investigation proves that ownership of this property (shares) has been kept in the name of the Benamidar, who is a non-resident.

However, the real/ beneficial owners have been identified as the chairman of the bank.

The said property (40 million shares) are Benami in nature and therefore, attracts relevant provisions of the Benami Transactions (Prohibition) Act, 2017.

The consideration for the property (shares) has been acquired through an offshore company and benefits of the property were reaped by the said chairman of the bank.

The Anti-Benami Zone-III, Karachi has filed the reference under Section 22(5) of the Benami Transactions (Prohibition) Act, 2017 for 40 million shares of the bank.

Therefore, the provisions as laid down in the relevant sections, defining Benami transaction are hereby attracted and the Benami property 40 million shares of the bank are found to be Benami property and a subject matter of the Benami transaction under the Benami Transactions (Prohibition) Act, 2017.

Copyright Business Recorder, 2021