KARACHI, April 4: The simmering battle between Jahangir Siddiqui & Company (JSCL) and two majority stakeholders in Abbas Sugar Mills Limited came in full view of the public on Thursday, when a spokesman for JSCL defended the ‘advisory fee’ paid to a company’s non-executive director.
Also in a tit for tat for an early last week initiative of the major rival Haji Abdul Ghani — another powerful broker at the Karachi Stock Exchange — who had distributed a newspaper clipping alleging that advisory fees paid by JSCL was hefty, the JSCL spokesman on Thursday passed on to the press publicly available papers of the cases filed by JSCL in Sindh High Court against the
Broker Haji Ghani and CEO of Al-Abbas Sugar Mills, Shunaid Qureshi (nephew of JS Group founder, Jahangir Siddiqui).
The spokesman, however, stressed that he would not comment as the matter was with the courts.
The first issue of contention between the parties was the advisory fees of Rs424 million paid to Ali Siddiqui non-executive director and son of Jahangir Siddiqui.
According to the Annual Report 2012: “The company was holding 23m shares of Pakistan International Container Terminal (PICT), representing 21.07pc of the shares of PICT.
During the period, the company received Rs379.5m as cash dividend from PICT and an in specie dividend in the form of 11.5m shares of Pakistan International Bulk Terminal Limited (PIBT).
The note also stated: “During the period, the company sold its entire holding in PICT for aggregate sale proceeds of Rs3.631m and consequently earned a capital gain of Rs2.453bn.”
The JSCL spokesman said that the advisory fee of Rs424m paid to the advisor, Ali Siddiqui, formed 14pc of the total receipts in transaction. He stressed that internationally it was a recognised practice for major corporates to pay 20pc or more as ‘advisory fees’ for successfully completing such transactions.
The suit filed with the Sindh High Court by the JSCL stated that the company CEO Suleman Lalani, along with Ali Jehangir Siddiqui held 20pc shareholding in Al-Abbas Sugar Mills. The ‘suit for declaration and injunction’ stated: “There is massive pilferage/siphoning of and fraudulent diversion of the huge sums of money belonging to the company and is being diverted to the personal accounts of the CEO/directors (of Al-Abbas Sugar), namely Shunaid Qureshi; Haji Abdul Ghani; Hajiiani Noor Jehan and Ghani Osman Securities.”
The documents details methodologies alleged to have been used to siphon off the company money and calls for forensic audit of the company by independent chartered accountants.
Shunaid Qureshi, CEO of Al-Abbas Sugar Mills in regard to the advisory fees said that internationally 0.5 to 1pc of the transaction is paid as fees and not hefty 14pc as was paid by the JSCL to the executive director.
In relation to the Al-Abbas Sugar, Shunaid denied the allegations, saying that they would fight the battle in the courts. He thought that since the matter was subjudice, JSCL should not have released the court papers, to which the JSCL spokesman pointed out that those were ‘public documents’.
Shunaid also said that the SECP had taken notice of the advisory fees and called for explanation from JSCL.
Interestingly, both parties insisted that the action by the other was in reaction of them having first pointed out the irregularities in each other’s companies. It was not immediately possible to detect who was the first to have levied the charges against the other: JSCL for alleged pilferage of funds from Al-Abbas or the payment of advisory fee by the JSCL to the executive director.
It was, however, clear that in the cold cruel world of high finance, greed for wealth was so deep that even family members of highly reputed conglomerates were willing to wash dirty linen in public.