SECP fails to complete forensic probe on time: KSE crash
By Sher Baz Khan
ISLAMABAD, Oct 2: The Securities and Exchange Commission of Pakistan (SECP) is unable to complete the forensic investigations into last year’s stock market crash within the 90-day deadline which expires on Tuesday, officials told Dawn.
The investigations into the March 2005 stock market crash were launched on July 3 with the help of a US team and were scheduled to be completed within three months. The commission was also required to present a complete report of these investigations to the National Assembly Standing Committee on Finance and Revenue so that responsibility for the crash is fixed.
But, so far the SECP has not even prepared a preliminary report of the investigations for which small investors, who lost over $13 billion in the controversial crash, are desperately waiting.
“What we had to lose, we have lost already. But, at least responsibility be fixed, on those who so openly committed this financial crime and are repeating it again and again in different forms, to show the world that this country also has a corporate watchdog,” said Ghulam Nabi, who had invested in the shares of a company at the time when air was being pumped into the Karachi Stock Exchange (KSE) before the bubble burst.
In its last month meeting, the NA standing committee had directed SECP Chairman Razi-ur-Rehman to present before it a complete report of the findings of the US forensic investigators by October 7.
Adviser to the prime minister on Finance Dr Salman Shah and State Minister for Finance Omar Ayub Khan had assured the committee that the probe would be completed within the stipulated time.
Ironically, it has been one and half years since the KSE crashed, but responsibility of any kind is yet to be fixed on anyone. So far there has only been a debate over the SECP which acted as a toothless bulldog amid the allegations of involvement of some high-ups of the finance ministry.
When contacted the standing committee’s members said that so far they had not received any intimation of the meeting and it was more likely that the meeting had been delayed.
Some of them said that it seemed that the issue was being put on a back burner at a time when Gen Musharraf’s book and the Kargil issue had occupied the country’s media scene.
“It seems that the meeting has been delayed as I have not received any invitation yet, normally we get notices a week before the meeting,” PML-N MNA Sardar Ayaz Sadiq, who is also a member of the NA standing committee, told Dawn on Monday.
Sources in the finance ministry said that instead of a complete report, the SECP had now started work on a preliminary report of the forensic investigations that would be presented to the standing committee in its next meeting.
On July 26, SECP issued notices to 12 Karachi-based brokers whose names were mentioned in the task force’s report on the stock market crisis 2005. The brokers had been directed to provide data of their transactions made prior to KSE crash. The data of share transactions was audited by the US team of forensic investigator later.
In March 2005, the KSE lost a quarter of its value in just two weeks. The KSE 100 share index had plunged by 2,595 points from its record high of 10,303 points, losing what officials put at $13 billion in market capitalisation.
