SECP sends money laundering case against Chinese firm to FIA


Senator (1k+ posts)
ISLAMABAD: After facing the heat from both Pakistani and Chinese authorities for more than seven months, the Securities and Exchange Commission of Pakistan (SECP) on Wednesday forwarded a case of alleged money laundering by a Chinese company to the Federal Investigation Agency.

The case is among the most complicated issues faced by the SECP and the commission has remained secretive about the matter for a long time. It was not even shared with the finance minister by the now suspended chairman of the SECP, Zafar Hijazi.

Investigations against the Jiangsu Yabaite Technology, listed on the Shenzhen Stock Exchange by the China Securities Regulatory Commission (CSRC), were initiated last year after undue foreign inflows were detected in its accounts.

The company told the Chinese regulators that it had received the amount after executing work on the Multan Metro Bus project and the CSRC approached the SECP in December for assistance in information, including certain documents.

Multan project in focus as clue to neighbouring country’s probe found in Hijazi’s emails

However, Mr Hijazi did not refer the case to the FIA or even the finance ministry for almost seven months and the relevant files were managed by only two persons heading the international relations and law departments of the SECP.

Finally, after pressure from the Punjab government, the SECP on Wednesday forwarded letters to the FIA and provincial authorities along with the information and documents pertaining to the case.

Earlier, the SECP had maintained that the secrecy clauses under the International Organisation of Securities Commissions protocols did not allow it to respond to any query in this regard.

The SECP acknowledged that there were certain issues related to the Chinese company and the Multan project after the CSRC authorised it to share certain segments of its request with the authorities concerned in Pakistan.

A statement released by the SECP said the CSRC was not conducting any investigation into the Multan metro bus project. Once the SECP would receive the CSRC’s investigation report, it would be in a position to assess any possible violation in Pakistan, it said.

During the investigation by the CSRC, the Yabaite China had said that it worked as a subcontractor of the Capital Engineering and Construction Company, a subcontractor itself of a consortium for a section of the project.

Responding to the request, the SECP told the CSRC that the Capital Engineering and Construction was not registered with it and its office address remained untraceable.

The documents submitted by the company to the CSRC to show that it was a subcontractor in the project have been termed unauthentic by all the authorities concerned in Pakistan, including the Punjab government.

“It is pertinent to note that till date CSRC has not shared any investigation report in the matter with SECP,” The Pakistani regulator said.

A complete file containing all the documents forwarded by the CSRC and the responses of Pakistani individuals and authorities named by Yabaite has never been presented in an SECP meeting.

According to sources in the law department of the commission, all the documents are held by a few people and only the summary of the case was presented in the commission’s meetings.

An FIA official said the case had caught the attention of the agency when its teams noticed certain emails in Mr Hijazi’s computers that were related to the money laundering inquiry involving Pakistan and China.

Investigation, briefing sought
As the SECP finally acknowledged that it was cooperating with the CSRC on the matter, Pakistan Tehreek-i-Insaf chief Imran Khan tweeted: “Now NAB (National Accountability Bureau) must investigate all Metro and Train projects, which were clearly not undertaken for the public good but for massive kickbacks.”

He claimed that like the Panama Papers about offshore wealth had exposed ousted prime minister Nawaz Sharif and his family’s corruption, the Chinese had exposed Multan metro bus ‘fraud’ allegedly implicating Punjab Chief Minister Shahbaz Sharif.

The Senate Standing Committee on Finance has also taken notice of the case and summoned the SECP authorities on Sept 7.

Senator Saleem Mandviwalla, the committee’s chairman, said the SECP had been asked to give a briefing on the project and the inquiry conducted by the Chinese securities regulator.

“China’s regulator has investigated the corruption case in Multan metro bus project and sent a letter to the SECP. Parliament should be briefed on it to make an independent investigation into the matter,” he said.

He added that for the first time a foreign country had asked the SECP to investigate an allegation and it would have to respond to the CSRC.

Published in Dawn, August 31st, 2017
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