Securities and Exchange Policy Board (Policy Board) Chairman Khalid Mirza Tuesday asked the Federal Investigation Agency (FIA) to 'comply with' four measures; otherwise, Securities and Exchange Commission of Pakistan (SECP) would be forced to take lawful action against the agency.
In a statement issued from abroad on Tuesday, Khalid Mirza said that it is incumbent upon the FIA to first, publicly express regret over the transgressions committed by them; second, return all the files taken by them forthwith and intact; third, provide SECP with a statement on oath by the Director General of FIA or head of FIA's department that took charge of the files that the files have not been tampered with or manipulated in the slightest; and fourth, to give an unconditional undertaking that henceforth FIA will always act within the bounds of law and that this kind of illegal action will never be taken vis-à-vis SECP or any other regulatory body. If all these four measures are not carried out by FIA, it will be hard to resist the temptation that the raid was an act of malice, aforethought and pre-meditated illegality. It will, obviously, then be up to SECP to take whatever lawful measures that are necessary in order to remedy the harm it has suffered, the chairman Securities and Exchange Policy Board said.
He said that by conducting an armed midnight raid of the SECP headquarters during the night of December 26th /27th and whisking away files pertaining to a bank merger mentioned in the JIT report, the FIA and the personnel involved have effectively trespassed and committed acts of flagrant lawlessness. Not only was Section 42 of the SECP Act violated with impunity but even the semblance of decency and good practice was not observed inasmuch as no authorisation was shown to the hapless SECP staff present at that time nor was any receipt issued for the files taken. This unlawful conduct by a law enforcement agency against a statutory regulatory authority has simply no precedent across the globe. The sanctity of the SECP as the apex corporate and securities regulator has been severely violated and till now the FIA has done nothing to alleviate the grave harm done to SECP.
The need for this illegal raid for the purpose of taking files pertaining to the bank merger covered in the JIT report is not understood since the JIT had already taken a definite position in the matter presumably after the ascertaining the facts and the evidence required to reach that conclusion, Khalid Mirza said.
Referring to the JIT report, Khalid Mirza claimed that, however, here it must be stated that the relevant para in the JIT report that implicates SECP with regard to the approval granted for this merger is actually quite senseless and betrays a complete lack of understanding of the regulatory imperatives and processes involved. In the case of banks, the authority to approve or disapprove a merger is the central bank (the banking sector regulator) and once a merger of banks takes place under a scheme of arrangement approved or fostered by the central bank in its wisdom, this has precedence over generic securities legislation administered by the securities regulator, viz the SECP, who is then bound to acquiesce with the central bank approved scheme.
This is in line with best regulatory practice and is precisely what happened in this case. "I sincerely hope that the rest of the JIT report does not reflect such poor quality as in the case of this para which displays a singular lack of appreciation of the facts, the applicable law and relevant regulatory practice, quite apart from flawed logic and poor English," alleged Prof Khalid A Mirza.
"I believe the JIT would do well to expunge the para wrongly implicating SECP from its report and also take the forth right step of requesting the federal government that the names of four SECP officials placed on the ECL based on this para may please be removed from this list. The JIT would rise in the estimation of all reasonable people if it were to do this because it is only fair and just," added the chairman Policy Board.