ISLAMABAD: Securities and Exchange Commission of Pakistan (SECP) has defended a appointment of Managing Director, National Investment Trust (NIT) Adnan Afridi as member of SECP Policy Board, saying his appointment constitutes no conflict of interest.
Informed sources told Business Recorder that some of the unit holders of NIT, had approached the concerned ministry & SECP to get direction for removal of the MD NIT for simultaneous positions as MD of NIT and member SECP Policy Board.
When SECP was asked if it is true that MD NIT is member of Policy Board acting as regulator and at the same time, he is the regulatee, which is clearly a conflict of interest, a spokesperson of the SECP replied that the Federal Government appointed Adnan Afridi as a member for SECP Policy Board on November 20, 2018. At the time of his appointment, he was not the Managing Director of National Investment Trust (NIT). As required under the Act, Afridi, in his first meeting as member of the Board, submitted a declaration of disclosures of shareholdings and directorship. Later, on February 11, 2019, the federal government appointed him as the Managing Director, NITL. Subsequently, as required under Section 16 of the SECP Act, Afridi submitted a written declaration to the Chairman Policy Board, declaring his appointment as MD NIT to disclose any potential conflict of interest.
Moreover, the Securities and Exchange Policy Board (Conduct of Business) Regulations, 2000, explicitly provides for detailed procedures to avoid any existing or potential conflict of interests. The Regulations also require that before commencement of every meeting of the Policy Board, or any of its sub-committee, members shall file/submit a written declaration to the Secretary Board, disclosing his/her conflict (if any) to any items on the meeting agenda.
SECP maintains that the existing legal framework adequately provides for the management and declaration of conflict of interest by the members of the board.
The following question was put to SECP: "Recently MD NIT was served a show-cause notice on pretext of tenderable gain which is a serious offence on his part. It is general impression that he might get benefit to bail himself out by being the member of Policy Board. What is the progress of this case?"
SECP replied that the issuance of show-cause notices to regulatees is part of SECP's adjudication process to ascertain facts, which is followed by appropriate hearing opportunities and issuance of order by the relevant officers. However, mere issuance of show-cause notice does not establish a regulatory violation. Further, in terms of SECP's Public Disclosure Policy, all orders are made public and disclosed on its website. Accordingly, SECP does not comment on show-cause notices.
Another question put to SECP was: "While granting Fitness certificate by SECP at the time of induction of Afridi was his past [alleged] dubious role as MD KSE considered?"
SECP spokesperson replied that the federal government is the appointing authority for Members of SECP Policy Board & MD NIT. SECP does not issue any Fit and Proper certificate for appointment.
And the final query put to SECP was: "What was the outcome of the inquiry regarding leakage of data during his tenure as MD KSE?"
The spokesperson stated that the question is not clear as to which inquiry is being referred to. However, as a general matter of principle, all enquiries ordered by the Commission are thoroughly examined, and based on evidence and legal advice, appropriate and requisite action is taken so long it is warranted and supported by evidence.
Copyright Business Recorder, 2021
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