ISLAMABAD: In the wake of the recently concluded Federal Investi­gation Agency (FIA) probe into alleged tampering of records submitted by the Securities and Exchange Commission of Pakistan (SECP) to the joint investigation team (JIT) on the Panama Papers, two opposing groups have emerged within the corporate sector regulator, which is now rife with suspicions and mistrust.

The FIA team is expected to submit its report to the Supreme Court next week, but on Friday, the SECP commission held its first meeting since the arrival of the probe team.

The meeting, which is usually held twice a week, was put off as long as the investigators remained on the SECP premises.

Senior, mid-level officers at corporate sector regulator split in two camps

However, there are rumours that the meeting was put off until Tahir Mahmood, the commissioner of the Company Law division, left on ex-Pakistan leave late on Thursday night.

The two camps, which have emerged in the wake of the allegations and counter-allegations levelled by senior and mid-level SECP executives, have Chairman Zafar Hijazi on one side. Mr Mahmood — the most senior executive — is said to be leading the dissident camp.

While the three-year tenure of Mr Hijazi is set to end in December 2017, Mr Mahmood — a career SECP officer — still has years of service ahead of him.

The cracks in SECP ranks came to the fore when the relevant executives and the chairman gave contradictory statements to the FIA team.

In his defence, Mr Hijazi tried to turn the tables on his subordinates when he told the FIA team headed by FIA Anti-Corruption Wing Director Maqsoodul Hassan: “I have now learnt that some undisclosed witnesses have falsely deposed before the JIT that the case (pertaining to Chaudhry Sugar Mills) was prepared on my directions in 2016.”

In his reply, Mr Hijazi has identified Mr Mahmood as being responsible for the affairs of the relevant department, adding: “The SECP chairman is not supposed to examine each and every file, nor is any such exercise practically possible. He interacts with departments through concerned commissioners and relies upon the briefings given to him.”

Mr Hijazi’s response also claimed there were no allegations of money laundering against Chaudhry Sugar Mills and any impression to this effect was given due to ulterior motives.

This statement contradicts the detailed response given to FIA by Maheen Fatima, who heads the Internal Audit and Compliance department.

It was her earlier statement to the JIT that blew the lid on alleged record tampering. She told the JIT that the alleged money laundering case against Chaudhry Sugar Mills was closed in 2016 on the directives of the chairman, but the date penned in the closing note was May 2013.

In response, the Supreme Court had directed the Interior Ministry to conduct an inquiry through the FIA, which opened a Pandora’s box inside the SECP.

Ms Fatima’s statement to the FIA highlighted how, after the Panama Papers case hearings in the Supreme Court, the Chaudhry Sugar Mills case began to appear in media reports in 2016.

“On June 26, 2016, Mr Mahmood (the commissioner) called myself and Abid Hussain (the executive director) who was also working on Panama-related information, to the chairman’s office with Chaudhry Sugar Mills files,” Ms Fatima told the FIA team.

“We briefed about the case and he (chairman) called Ali Azeem and asked to close the investigation against the Chaudhry Sugar Mills,” she told investigators.

Mr Azeem currently heads the SECP’s Insurance Division, but was head of the Enforcement Department in 2013. Her statement said: “[The] chairman directed us to immediately put a backdated note in the file to confirm the investigation was closed in 2013.”

“This was all done on extreme pressure of [the] chairman,” she said, adding: “I was not in a position to say no.”

File closure in back date

When the four-member FIA team quizzed Ali Azeem, he too accused the chairman of closing the files of the Chaudhry Sugar Mills case in June 2016.

“The chairman at first became aggressive towards me and said that I should not have written the letters and resisted the then-chairman and he then instructed me to close the investigation file in back date. The chairman directed us to immediately put a backdated note in the file to confirm closing of inquiry on the relevant date,” Mr Azeem told the FIA team.

Contrary to this, the SECP’s reply to the apex court in response to allegations of ‘tampering of documents’ shifted responsibility towards SECP Commissioner Tahir Mahmood.

Sources said the reply to the apex court was prepared by the SECP chairman and its Law Department — headed by Mr Hijazi’s son Arsalan Zafar — and without consulting the commissioners, which has led to mistrust among the executives and the chairman.

Due to these differences, even the commission’s spokesperson did not respond to any queries.

Things have become quite tense at the commission and a stressful atmosphere prevails. Even routine discussions during lunch hour have been curtailed and the commission’s performance has also suffered.

Most SECP officials prefer not to speak over the phone and only agree to meet in busy public places.

Usman Hayat, the official SECP spokesperson, also heads three other departments. He was made spokesperson after his predecessor, Bilal Rasul, was appointed to the JIT. Mr Rasul is set to join the SECP again next week when the JIT’s term expires tomorrow (Monday) — unless it is extended.

Published in Dawn, July 9th, 2017

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