The Securities and Exchange Commission of Pakistan has taken action against Jahangir Siddiqui & Company Limited (JSCL) for awarding over $4.3 million to son of Jahangir Siddiqui, a non-executive director, under the head of advisory fee - an extraordinary payment.

According to sources, the SECP has issued notice to Suleman Lalani, the Chief Executive Officer of JSCL for illegitimate payment to Company’s Chairman’s son and asked to explain its position within 48 hours. The CEO of JSCL would have to clarify and substantiate the advisory services fee of Ali Jahangir Siddiqui in his reply.

Moreover, a KSE broker Haji Usman Ghani has complained to the SECP, a copy of which is also available with The Nation, criticising the Annual General Meeting of M/s JS Bank Ltd and said that it was only 7-8 minutes meeting, in which no outsider shareholder were allowed to attend the said meeting. The company management tactfully manipulated the arrangement of the meeting and they only allowed their own people (employees) to occupy the seats to show the presence of shareholders.

Moreover, the company deputed police force to stop outsider shareholders to participate in the AGM. He complained that only less than 100 people were in the meeting and they were their own staff members of their own other sister-concern companies.

According to JSCL 2012 financial statement, the total advisory fee was $4.42 million out of which Ali Jahangir Siddiqui received $4.3 million alone. The company has not announced any dividends for the shareholders in the same year. Jahangir Siddiqui & Co. Ltd. was incorporated (under Companies Ordinance 1984) in 1991 as public unquoted company.

According to sources, while reviewing the account 2012 of Jahangir Siddiqui & Company Limited, the SECP enforcement department observed that a payment of Rs 442.94 million was paid as an “Advisory Fee” to Ali Saddiqui, Son of Jahangir Siddiqui for advisory services.

It was mentioned in annual report that the fee charges was rendered in the respective advisory service for signing the Share Purchase Agreement with ICTSI Mauritius Limited under which the Company had sold about 13 million of its voting shares in Pakistan International Container Limited (PICL) at a rate of Rs 150 per share. The share was sold in March 2012. The agreement was duly approved by the Board of Directors.

Talking action on the shareholder’s complaint, the SECP directed the JSCL to furnish the certified copy of Advisory Agreement entered into with Ali Jahangir Siqqiqui and substantiate the advisory services given by him. The notice was issued on April 1 and the CEO, JSCL Suleman lalani was asked to furnish the reply by April 2, 2013.

According to the report and as per JSCL 2012 financial statement, the total advisory spending was $4.42 million out of which Ali Jahangir Siddiqui received $ 4.3 million alone, whereas shareholders received less than a penny per their share as dividends. Jahangir Siddiqui (father) is the founder of JS Group, one of Pakistan’s largest conglomerates and Managing Partner of JS Private Equity, Pakistan’s largest private equity firm. Ali Jahangir (son) is in process of inheriting the father’s fortune but unfortunately is involved in many controversies and illegal practices.