ISLAMABAD, Dec 24: Securities and Exchange Commission of Pakistan (SECP) has directed the Associated Hotels of Pakistan Limited (AHPL) to redress by December 31 the grievance of their minority shareholders who have been deprived of their lawful rights for the past 28 years in blatant violation of the company law, according to a reliable source.
AHPL is the successor organization of Associated Hotels of India Limited, which owned four hotels—Faletti’s of Lahore, Flashman’s Rawalpindi, Cecil’s of Murree and Dean’s of Peshawar.
After independence, its proprietor, Mr Oberoi, migrated to India, the hotels were declared enemy property and a new company called “Associated Hotels of Pakistan Limited” was incorporated to run these hotels under the overall control of Custodian of Enemy Property.
In 1974, a deed was signed between Pakistan Tourism Development Corporation Limited (PTDC), a public sector enterprise, and Deputy Custodian of Enemy Property, transferring the management of the four hotels on lease to the former for a period of 20 years against a rent of only Rs0.5 million per annum. Under the agreement, the Custodian Enemy Property (CEP) transferred its 87 per cent shares in the AHPL to PTDC.
The lease expired in 1994 but the PTDC continued to keep AHPL without any legal authority.
After knocking at all the doors for justice without any response, the minority shareholders approached the SECP early this year. The major shareholder i.e. PTDC, they stated, had grossly violated the company law and the management of AHPL was involved in the mismanagement, misfeasance, unlawful activities and misappropriation of funds.
They charged the PTDC with misappropriation of funds, alleging that an amount of Rs40.47 million was paid out of the funds of AHPL by PTDC as golden handshake to its employees. The money was never reimbursed to AHPL of which 13 per cent are owned by minority shareholders.
As if this were not enough, the entire sale proceeds of Cecil’s Murree were lying with Privatization Commission since April 1998. PTDC made no effort to get the said amount transferred to AHPL’s account for distribution among the stakeholders.
Their interests were further endangered by the attempt by Military Land and Cantonment Board to take over prime land of Flashman’s Hotel, Rawalpindi, measuring about 10 acres owned by AHPL in proposed exchange of 10 kanals owned by the former.
Taking serious notice of the plight of the minority shareholders, according to the source, the SECP directed the company to respond to the allegations. At first the company ignored the directive. Subsequently, the Commission issued a legal notice under section 290 of the Companies Ordinance, 1984.
Finally, Secretary of the Company attended a hearing held at SECP on November 11, 2002 and briefed it about the various steps taken by the company to satisfy the minority shareholders.
He assured the Commission that the money paid by PTDC to its employees as golden handshake would be disbursed to minority shareholders.
CECIL’S MURREE: It was sold for Rs 190.95 million. The money was lying in the account of Privatisation Commission. The portion relating to private shareholders, he stated, would be paid in near future after approval of the board and shareholders to be held on December 31.
FLASHMAN’S RAWALPINDI: Exchange of property was proposed on the plea that land was leasehold given by the Cantonment Board. But the AHPL rejected this plea and maintained that the land is “Fee Simple Property” sold by Thomas Charles in 1917 to Associated Hotels of India Limited. AHPL has since obtained permanent stay against the proposed exchange from a court.
FALETTI’S LAHORE: It was auctioned but later the sale went into snags and was rescinded.
The SEC was further assured that the company would henceforth manage the Faletti’s Hotel and Flashman’s Hotel seriously. In this connection, the AHPL’s Board of Directors has constituted a committee including a representative of minority shareholders for looking into the affairs of the company etc.