No Pakistani company involved in Panama offshore scam: SECP

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ISLAMABAD: The Securities and Exchange Commission of Pakistan’s probe into the Panama Papers disclosures reveals that no direct investment had been made in the offshore companies by any company registered in Pakistan.

Informed sources said that the probe concluded, “The available record reflects that prima facie, the investments as mentioned in the Panama Papers were made by the persons in their individual capacity and same has not been routed through the company’s accounts.”

Since no company registered in Pakistan with SECP has been found making investment in offshore companies, the Panama Papers issue seems dead for the SECP.The SECP has, however, sought changes in law to maintain record of foreign investment in the shape of Companies’ Global Register of Beneficial Ownership in the Draft Companies Bill, 2016. Enhanced disclosures have been proposed in the financial statements in the proposed Companies Bill, 2016 in respect of investments in foreign companies.

These changes in law, it is said, will be highly effective in curbing the investments in offshore companies for tax evasions, money laundering, and hiding of assets in future.

In its probe, the SECP found that names of a total of 444 Pakistanis had appeared either on the ICIJ website or given in The News. These persons are officers or owners of 280 offshore companies mentioned in the Panama Papers.

Out of the referred 444 persons, 155 individuals wereCompanies in Pakistan. It is found by the SECP that these 155 persons are directors in 600 Companies registered in Pakistan. The breakup of these companies include 36 Public Listed Companies; 90 Public Unlisted Companies/Not-for-profit companies (registered under section 42&43 of the Companies Ordinance, 1984); and 474 Private Companies.

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It was observed by the probe committee of the SECP that certain companies have entered into transactions with companies registered in foreign jurisdictions. The Companies Ordinance, 1984 does not restrict the companies from making investments in foreign jurisdictions. However, investing Company has to comply with the relevant provisions of the Ordinance at the time of making such investments which includes approval from the board of directors and approval from shareholders in case of associated companies.

The sources said that the Commission, in order to observe whether legal requirements have been complied with, has taken up the matter with such companies. The instances where non-compliance would be observed, necessary legal proceedings shall be initiated in accordance with the relevant provisions of the law.

Further, scrutiny of the offshore companies, with regard to foreign portfolio investment in the companies listed on Pakistan Stock Exchange Limited, was carried out. It was observed that “Slot Rapid Limited”, an offshore company, whose name is appearing in the panama papers, has made an investment worth Rs. 933.270 million in two Pakistani companies – Slot Rapid Limited owns 37% shareholding of Buxly Paints Limited and 52% of Berger Paints Pakistan Limited.

It was also noted that one of the directors of Buxly is also appearing as owner of Slot Rapid Limited in the panama papers. The Commission has taken up the matter with these companies in order to obtain details of such investment.

The SECP sources said that the Commission’s probe is the follow up of Finance Ministry desire to determine in respect of all those companies registered with SECP and their directors whose interests in off-shore companies have been made public by Panama Leaks along with violations of the Companies Ordinance, 1984 (“the Ordinance”) or any rules/regulations of SECP and if so to proceed against such persons under the relevant laws immediately.

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The Committee used International Consortium of Investigative Journalists (the “ICIJ”) website and details given in daily The News in its publication of May 10, 2016, as source documents to identify the list of persons whose names were appearing in PanamaLeaks documents. During the research, it was observed that full/correct names of individuals were not mentioned on ICIJ website, no details regarding parentage and Computerized National Identity Card (CNIC) numbers were available because of which the identification process was very difficult.

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