FIA opens case against Unity Foods over alleged funds misuse

The Federal Investigation Agency (FIA) has registered a criminal case against the former management of Unity Foods Limited, a company listed on the Pakistan Stock Exchange (PSX), over alleged financial irregularities, including discrepancies of about Rs44.7 billion between published accounts and internal records, following an investigation by the Securities and Exchange Commission of Pakistan (SECP).

The SECP referred the matter to the FIA under Section 41-B after its investigation identified possible criminal offences involving the use of company funds, financial reporting and inventory records, according to the FIR.

As per a statement released by the SECP on Monday, Unity Foods had raised Rs3.75 billion from shareholders through a right issue, of which about Rs2.87 billion was allegedly used for purposes other than those stated in the issue documents.

The FIR also alleged that Rs5.318 billion was paid from company funds to the mother of the former chief executive officer as a loan.

In another transaction under investigation, a Unity Foods subsidiary allegedly advanced Rs2.6 billion to two unidentified parties, according to the FIR.

The SECP investigation also found an alleged discrepancy of around Rs44.7 billion between the company’s published financial accounts and its internal SAP records. At the same time, the FIR said it identified a difference of about Rs5.2 billion between inventory recorded in the company’s books and its physical stock.

The investigation further pointed to a lack of evidence showing the supply of goods against old outstanding liabilities of around Rs5 billion, according to the FIR.

The FIA’s Corporate Crime Circle in Karachi registered the case on August 29 against the company’s former management and other accused under relevant provisions of the Pakistan Penal Code, following the SECP’s referral.

SECP Chairman Kabir Ahmed Sidhu said the regulator would ensure the protection of investor funds in listed companies and promote transparent financial reporting.

“Protection of minority shareholders’ rights is a fundamental responsibility of the SECP,” Sidhu said, adding that funds raised from investors should be used only for the purposes disclosed to them.

Unity Foods Limited was incorporated in Pakistan as a private limited company in 1991 and later converted into a public limited company on June 16, 1991.

Initially operating in the textile sector as Taha Spinning Limited, the company faced operating losses and financial problems, leading to a shift in its principal business activity to edible oil extraction, refining, and related businesses under the new name Unity Foods.