ISLAMABAD, Sept 9: Arif Habib Securities (AHS), a member of the three-party consortium that bid for the Pakistan Steel Mills, filed a review petition before the Supreme Court here on Saturday, requesting removal of adverse paragraphs against the group in its detailed judgment on the scrapped deal.

This is the second such review petition before the apex court, pleading to review or expunge remarks from its August 8, 2006 detailed judgment, annulling the steel mills sale.

On Friday, the federal government, the Privatisation Commission (PC) and the steel mills had submitted a similar petition before the apex court, seeking revision of its judgment.

Drafted by senior advocate Khalid Anwar, the review petition contended that the apex court in its judgment had failed to realise that the August 31, 2000 inquiry report of the Securities Exchange Commission of Pakistan (SECP) had favoured Arif Habib but condemned Iftikhar Shafi, Chairman of Diamond Group of Industries.

During court hearing against the mills’ privatisation, Iftikhar Shafi had become an intervener and had accused Arif Habib of indulging in unfair trade practices, facing civil suits of Rs18.2 billion in the Sindh High Court.

In the 31-page review petition, the petitioner contended that Iftikhar Shafi was involved in different fraudulent and illegal activities and subsequently found guilty of manipulating the securities markets of Pakistan in May-June 2000, a period during which the stock markets throughout Pakistan faced the worst-ever crisis in the history of Pakistan.

The SECP report of August 31, 2000 had held that the Iftikhar Shafi Group was responsible for hypothetically raising the prices of certain shares astronomically, which eventually led to crisis of the securities market across Pakistan, it alleged.

Likewise, a taskforce on the stock market crash had mentioned Arif Habib Securities Ltd as one of the biggest badla providers, indicating certain areas which SECP should examine for improvement.

The petition stressed that badla financing was a legal and lawful activity which provided a much-needed facility to small investors through a transparent system at the stock exchange.

On his disqualification, the petition stated that Arif Habib’s ineligibility to participate in the bidding process did not apply to him because he was neither a defaulter nor pending litigations.

In its judgment, the Supreme Court had held that it was the duty of the PC to apply its mind before declaring Arif Habib qualified, adding that a person who was involved in litigation and against whom a report had been issued publicly by a taskforce should not have been considered for handling the affairs of the steel mills transparently.

The petition also pleaded that the sale of the steel mills to PSMC SPV (Mauritius) Limited did not constitute sale to a different third party as this was a 100 per cent owned subsidiary of the foreign members of the consortium.

Moreover, PC was cognizant of the fact that many consortium prefer to enter into such transactions through the medium of a Special Purpose Vehicle (SPV), which simply is a company, owned by two foreign members of the consortium and formed for a specific purpose to acquire steel mills shares for the foreign members of the consortium.

“The main purpose of this SPV is to avoid tax complications in Russia and Saudi Arabia but it does not pose any negative impact as far as Pakistani tax authorities are concerned,” the petition explained.