AVN 65.52 Decreased By ▼ -1.18 (-1.77%)
BAFL 29.72 Increased By ▲ 0.22 (0.75%)
BOP 4.05 Decreased By ▼ -0.03 (-0.74%)
CNERGY 3.57 Decreased By ▼ -0.05 (-1.38%)
DFML 11.56 Decreased By ▼ -0.24 (-2.03%)
DGKC 42.03 Decreased By ▼ -1.17 (-2.71%)
EPCL 45.66 Decreased By ▼ -0.33 (-0.72%)
FCCL 11.60 Decreased By ▼ -0.25 (-2.11%)
FFL 5.78 Decreased By ▼ -0.10 (-1.7%)
FLYNG 5.94 Decreased By ▼ -0.13 (-2.14%)
GGL 10.88 Decreased By ▼ -0.37 (-3.29%)
HUBC 67.40 Decreased By ▼ -0.48 (-0.71%)
HUMNL 5.59 Decreased By ▼ -0.05 (-0.89%)
KAPCO 24.38 Decreased By ▼ -0.47 (-1.89%)
KEL 2.11 Decreased By ▼ -0.02 (-0.94%)
LOTCHEM 24.92 Decreased By ▼ -0.08 (-0.32%)
MLCF 24.58 Decreased By ▼ -0.29 (-1.17%)
NETSOL 74.12 Decreased By ▼ -2.08 (-2.73%)
OGDC 84.67 Decreased By ▼ -1.19 (-1.39%)
PAEL 10.61 Decreased By ▼ -0.44 (-3.98%)
PIBTL 3.91 Decreased By ▼ -0.07 (-1.76%)
PPL 64.81 Decreased By ▼ -1.19 (-1.8%)
PRL 12.74 Decreased By ▼ -0.21 (-1.62%)
SILK 0.87 Decreased By ▼ -0.01 (-1.14%)
SNGP 39.41 Decreased By ▼ -1.34 (-3.29%)
TELE 7.06 Decreased By ▼ -0.42 (-5.61%)
TPLP 14.70 Decreased By ▼ -0.39 (-2.58%)
TRG 107.60 Decreased By ▼ -2.85 (-2.58%)
UNITY 13.37 Decreased By ▼ -0.14 (-1.04%)
WTL 1.20 Decreased By ▼ -0.01 (-0.83%)
BR100 4,040 Decreased By -40.6 (-0.99%)
BR30 14,413 Decreased By -217.8 (-1.49%)
KSE100 39,942 Decreased By -434.1 (-1.08%)
KSE30 14,739 Decreased By -177.2 (-1.19%)
Follow us

ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) Chairman Aamir Khan Tuesday said the SECP will conduct an investigation and forensic audit into the financial matters of Hascol Petroleum Limited and criminal proceeding may be initiated if required.

The SECP chairman informed the Senate Standing Committee on Finance that the SECP will complete investigation within three months, and initiate necessary actions accordingly.

Upon conclusion of findings of investigation, the SECP shall initiate criminal and civil proceedings against the responsible persons/entities.

Further actions against the auditor may be taken based upon findings of the investigation.

The meeting of the Senate Standing Committee on Finance was held here at the Parliament House under the chairmanship of Committee Chairman Senator Muhammad Talha Mehmood.

The SECP chairman said that the half yearly accounts of June 30, 2019 were published on August 29, 2019.

‘Hascol cooperating with SECP’

During review of accounts, the Commission observed that huge losses in six months amounting to Rs11 billion; unexplained other expenses amounting to Rs6.3 billion; based on information provided by the Company instances have been observed that the Company has purchased oil at higher prices from Vitol Dubai, a related party and restatement of already published March-2019 Quarterly Accounts, in which declared profit of Rs674 million was converted into loss of Rs5.42 billion.

The SECP issued show cause notice (SCN) u/s 257 of the Companies Act, 2017 on October 4, 2019 to initiate investigation into the state-of-affairs of the company. The Company challenged the SCN in the Sindh High Court (SHC).

The Court directed the SECP vide order dated January 10, 2020 not to pass final order. The SECP also filed application for urgent hearing on October 19, 2020. Hearings of the SCN proceeding were held on November 21, 2019, January 9, 2020, September 8, 2020, and the last hearing was held on April 22, 2021.

Subsequently, the company filed the application for vacation of stay which was accepted by the Court on July 30, 2021, the SECP chairman added. Annual accounts of December 31, 2019 were published on August 11, 2020.

During review of accounts, the Commission observed huge losses for the year amounting to Rs25 billion; restatement of account for the Year 2018 declared profit of Rs207 million was converted into loss of Rs215 million and from December 2019, the Company reported change in the name of related party Vitol Dubai, as Vitol Bahrain in its interim and half yearly accounts.

In view of the findings, SECP issued a second SCN u/s 257 of the Companies Act, 2017 to initiate investigation into the state of affairs of the company. Investigation order has been passed and investigation team has commenced its proceedings.

The SECP chairman stated that the company failed to hold its Annual General Meeting for the year ended December 31, 2020, which was due till May 31, 2021; joint auditor, EY Ford Rhodes, Chartered Accountants resigned in January 2021.

EY informed the SECP that Hascol did not provide the record in time to review the opening balances. Other auditor, Grant Thornton Anjum Rahman, chartered accountants also resigned on June 7, 2021.

The reasons disclosed to the SECP were concerns regarding financial records, accounting systems and record keeping at Hascol. In view of failure to hold the AGM for the year 2020, a third SCN u/s-132 of the Act was issued in June 2021 and adjudication proceedings are in process.

The proceedings initiated for adjudication against the auditor of the company, Grant Thornton Anjum Rahman, due to their failure to conduct audit as per applicable laws. Due to failure to hold the AGM and submit annual accounts for the year December 2020, Hascol was placed on defaulter counter by the PSX on June 25, 2021.

SECP unveils oily affairs of Hascol, Vitol Dubai

In view of placement of Hascol on defaulter counter by the PSX, CDC froze ordinary shares held in Central Depository System accounts of sponsors, directors and senior management of Hascol. Moreover, during the period from September 2020 and May 2021, different regulatory actions were taken and penalties were imposed against the company and its directors, the SECP chairman added.

The committee received a comprehensive briefing from the State Bank of Pakistan (SBP) and the SECP on the financial reporting issue of the Hascol. The committee was informed that in 2019, the liabilities increased from Rs24 billion to Rs44 billion as compared to 2018.

The company was constantly investing in its new projects. The Hascol company went to a massive loss from profit in a few months. A company, which was operating with a profit of Rs956 million, suddenly went to an enormous loss of Rs116 billion, an official of the SECP apprised the committee. The SECP officials told the committee that the SECP had issued its instructions to the company.

Two investigations are underway against Hascol, which will be completed in three months. Criminal or civil proceedings against the company will be done under the SECP Act. Senator Saleem Mandviwalla said that it seems that the fraud had been planned for years, and a forensic audit should be conducted.

Senator Kamil Ali Agha said that such fraud is not possible if the auditing companies fulfil their responsibilities in a true sense. Senator Musaddiq Masood Malik asked why the SECP did not take action as the company had taken illegal steps on such a large scale. The stock exchange should protect the capital of the shareholders. The standing committee was directed to conduct a forensic audit of Hascol company.

Senator Talha, in consultation with the senators, gave suggestions regarding forensic audit of the company, auditors, penalties, and steps to be taken to empower the company. The chairman Committee sought the statements of 18 banks from the SBP in three weeks.

The chairman Committee said that a list of those who have given guarantees to these banks should also be provided. The issue of charges on transactions of funds by banks was discussed in the meeting of the standing committee.

Copyright Business Recorder, 2021


Comments are closed.

Criminal proceedings likely: SECP to conduct Hascol's forensic audit

IK says shall persevere, come what may

Free flour: Punjab govt to provide 20kg bags from 29th

Support price of wheat in Balochistan now equal to those in other provinces

India summons Canada High Commissioner, concerned over Sikh protesters

ECC told: G-B working on targeted wheat subsidy plan

Free flour: PML-N seeks to regain a foothold in Punjab

Putin: Russia, China not creating military alliance

PSA seeks annual limit of $800m for solar imports

Militancy crisis: WB to mull over $50m project for Fata, KP families’ succor

'Not a crime': Trump dismisses NY probe at Texas rally