The Securities and Exchange Commission of Pakistan (SECP) on Monday filed a concise statement in the Supreme Court in response to Pakistan Muslim League-Nawaz (PML-N) leader Hanif Abbasi's plea seeking disqualification of Chairman Pakistan Tehreek-e-Insaf Imran Khan and PTI Secretary General Jehangir Tareen from Parliament over alleged tax evasion and non-declaration of offshore companies in their nomination papers.
A three-member bench led by the puisne judge Justice Mian Saqib Nisar will take up the PML-N leader Hanif Abbasi's plea on November 23 (today). Earlier, appearing before a two-member bench led by the Chief Justice Anwar Zaheer Jamali, the counsel for Abbasi, requested the court to club the matter with the Panama Leaks case.
However, the Chief Justice Jamali issued directives to both the PTI leaders to submit a response in the matter, saying after examining the record and replies of the respondents, the court will decide to club the case before larger bench of Panama Leaks. The SECP said while submitting a concise statement relating to offence of insider trading in transaction of share purchase of United Sugar Mills (USM) by JDW Sugar Mills Limited (JDW) that the JDW acquired 75% of the paid up capital of the USML (ie Rs 2250 million) as per agreement of October 21, 2005. It disclosed that remaining 21.6% (649,183 shares) were acquired in a public offer held @ Rs 333.33 per share, the listed Companies (Substantial Acquisition of Voting Shares and Takeovers) Ordinance, 2002 ("Takeover Ordinance"), between October 27 - November 17, 2005.
The SECP further submitted that Tareen, the director of JDW, was authorised by the Board of Directors of JDW to negotiate the acquisition of USML. "Hence he was privy to all inside material information during acquisition of USML and consequently made a hefty gain of Rs 70.811 million in violation of Section 15A of the Securities and Exchange Ordinance, 1969 (Ordnance of 1969)," the concise statement added.
The concise statement further said that unusual trading pattern and price movement in the shares of USML from November 2004 to November 2005 was observed by the SECP and investigation under Section 29 of the SECP Act, 1997 was ordered on December 12, 2006.
"Investigation report revealed the contravention of Section 15A of the Ordinance of 1969, Section 214, 216, 217 & 222 of the Companies Ordinance, 1984 ('Ordinance of 1984') and Section 4 of the Takeover Ordinance. It was further revealed that Tareen acquired 341,780 shares through Messrs Haji Khan and Allahyar and made a gain of Rs 70.811 million through sale of his shareholding in USML, in the stock market and under the public offer made by JDW in October 2005," the SECP said.
Then the SECP sent a letter to Tareen on December 3, 2007 to explain his position regarding allegations surfaced in respect of unlawful gain to which Tareen responded on December 8, 2007, saying purchase of shares of USML were made without disclosure.
According to the SECP concise statement, Tareen said, "It might attract provisions of law pertaining to insider trading apart from provisions pertaining to non-disclosure of being an interested director and candidly admitted that provisions of law were contravened in the said transaction."
"Therefore, Respondent No 1 (Tareen) volunteered to offer return of illegal gain of Rs 70.811 million, recoverable under section 15-B(3) of the ordinance of 1969 along with maximum fine of Rs 1.256 million under Section 214, 216 and 222 of the ordinance of 1984 and section 4 of the Takeover Ordinance," the SECP said.
Reproducing the relevant part of Tareen's letter as a reference, the SECP submitted that "he said, however, in view of the alleged violations pointed out by SECP, I admit it does seem possible that some provisions of law may have unwillingly been contravened. It is hereby offered to return the gain of Rs 70.811 million to SECP (in trust for the persons entitled thereto), being the maximum amount recoverable under section 15B(3) of the SE Ordinance, and to make payment of the sum of Rs 1.256 million, being the maximum amount recoverable under the various other provisions mentioned in your letter."
The SECP said that pursuant to admission of violations by Tareen and offer to return the illegal gain and penalties, the matter was discussed with external counsel and after seeking legal opinion on the alleged contravention of Section 15A of the ordinance of 1969 and other laws including the ordinance of 1984 and Takeover Ordinance, deliberated the alleged position of Tareen.
"Therefore, Answering Respondent (SECP) vide its letter of January 11, 2008 has directed Tareen to deposit the illegal capital gain made out of insider trading along with all fines applicable for contravention of relevant provisions of laws. Consequently, Tareen deposited the capital gain, other fines imposed and expenses vide demand draft numbers 000000617556 and 2008/00016/0003 respectively both dated January 14, 2008," the concise statement concluded.
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