ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has reportedly initiated an inquiry into the affairs of Pakistan Reinsurance Company Limited (PRCL) after a row between Commerce Minister Jam Kamal Khan and the Prime Minister’s Office (PMO) over the role of Special Secretary to the Prime Minister, Shakeel Mangnejo, as representative of the Commerce Ministry on the Company’s Board, sources told Business Recorder.
Sources said that Shakeel Mangnejo has resigned from the Board of PRCL after the Commerce Minister’s letter, in which he stated that he would meet the Prime Minister after his China visit on the affairs of PRCL and NICL.
SECP, in a letter to the Secretary PRCL — a copy of which is available With this correspondent — has sought responses to a volley of questions, saying that under the Securities and Exchange Commission of Pakistan Act, 1997 and the Insurance Ordinance, 2000, it is conducting a review of the reported issues in the appointment and conduct of Farman Ullah Zarkoon, the former Chief Executive Officer (CEO) of PRCL.
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According to SECP, upon review of the minutes of the meetings of the Board of Directors (BoD), the following information, documents, and explanations are required for further scrutiny of the matter: confirmation whether the Board has approached the Ministry of Finance and Ministry of Law & Justice, through the Ministry of Commerce, as resolved in the 193rd Board meeting held on May 17, 2025, along with copies of the letter(s) and responses received there against. If not, PRCL should immediately to do so and provide a copy of such letter(s) to SECP; copies of the advertisements published in 2019, 2020 & 2021 for the appointment of CEO; copies of letter(s) from PRCL to the Ministry of Commerce seeking its approval for conversion of the post of CEO from MP-I to SPPS-III, and responses received from the Ministry of Commerce, along with copies of rules/ regulations governing SPPS pay scales (particularly SPPS-III); copy of the declaration submitted by Farman Ullah Zarkoon with his application, as required under the Public Sector Companies (Appointment of Chief Executive) Guidelines 2015 (“Guidelines”), that he is fit and proper to act as CEO of PRCL; share degree verification conducted by PRCL at the time of his joining PRCL or his appointment as CEO; copy of the Board’s evaluation record of short listed candidates vis-à-vis the requirements contained in the published advertisement, the Ordinance, Insurance Companies (Sound and Prudent Management) Regulations 2012 (“Regulations”), and Public Sector Companies (Corporate Governance) Rules 2013 (“PSC Rules”).
According to SECP, the Finance Division, in its letter of November 11, 2020, clarified that SPPS is an all-inclusive package, and no additional benefits — such as bonuses, accommodation, conveyance, gratuity, or medical allowances — were admissible beyond the approved remuneration.
However, on the very next day of approval of CEO by the Federal Government, the Board of PRCL, in its meeting held on August 19, 2022, approved the compensation package of the CEO along with additional benefits, including ten annual bonuses, which significantly diverged from the terms recommended by the Board of PRCL and concurred by the Federal Government.
SECP has sought a copy of the letter of November 11, 2020 from the Ministry of Finance and any opinion obtained from the Ministry of Law & Justice on whether the Board can fix remuneration and other perks of the CEO in excess of the limits approved by the Federal Government.
The Board discussed revision of the CEO’s remuneration package in its 176th Board meeting held on June 9, 2023. Based on concerns raised by two directors, the Board resolved to seek legal opinion from the Ministry of Law and Justice regarding alignment of the CEO’s appointment with the State-Owned Enterprises (Governance and Operations) Act, 2023. Subsequently, during the 178th Board Meeting held on October 2, 2023, the Board revised the CEO’s salary on the pretext of aligning it with the Act.
SECP has sought a copy of the letter sent to the Ministry of Law and Justice and any opinion received from the Ministry. If not, PRCL must provide reasons for not seeking the Ministry’s opinion, despite a specific Board resolution.
The Board approved the revision in the remuneration package retrospectively from February 2023. However, Section 36 (3) of the Act requires that “any person appointed to any office prior to the coming into force of this Act shall be deemed to have been appointed to that office under and by virtue of this Act, and any condition or term of service or employment modified through this Act shall not have retrospective application or effect.”
SECP has asked the Secretary PRCL to provide reasons for non-compliance with the aforesaid requirement of the Act.
SECP further stated that Section 18 of the Act stipulates that the Board shall appoint the CEO under a performance-based contract. The proviso to Section 18 stipulates that the Board shall bring the existing contract of CEO in line with Section 18 within one year. In view of this, PRCL was required to embed a performance-based element in the existing contract of its CEO.
SECP has asked for provision of performance-based criteria set by the Board at the time of revision of the remuneration package of the CEO. If not, PRCL must share reasons for not complying with the aforesaid requirements of the Act.
The Ministry of Commerce, in its letter of November 18, 2020, titled “Details of Salary for All Employees Working Under the Administrative Control of the Commerce Division” directed that bonuses must be linked to the performance of the respective organisation. However, in the contract of Farman Ullah Zarkoon, the former CEO, the Board included ten fixed annual bonuses, irrespective of the actual performance of PRCL. SECP has sought a copy of the letter and reasons for non-adherence to the referred requirement.
SECP further stated that Farman Ullah Zarkoon was appointed as Acting CEO, with effect from September 2021, by the Board of PRCL. However, the power to appoint the CEO of a public sector company was vested in the Federal Government, whereas the Board was only entrusted to shortlist candidates for the position of CEO as per PSC Rules and Guidelines.
While noting that no approval was obtained by PRCL from SECP in this regard, the regulator has sought confirmation whether approval was obtained from the Federal Government for the appointment of Farman Ullah Zarkoon as Acting CEO. If not, PRCL must share reasons for not seeking approval from the Federal Government and SECP before his appointment.
SECP has also sought details of meetings of the Board and its committees held during the tenure (2021-2025) of the CEO, in the specific format provided to the Secretary PRCL, which includes per-meeting fee, number of meetings of the Board, number of meetings of Board Committees, locations where the meetings were held, fees paid to each Director for attending meetings, and per-meeting fee paid to the CEO for attending meetings.
SECP has also directed the Secretary PRCL to provide the dates on which meeting fees for directors and the CEO were changed, along with details of the revised fees. Furthermore, in case of meetings held abroad, PRCL must share approval, if any, granted by the Federal Government to hold such meetings outside Pakistan.
SECP has sought confirmation that PRCL and its Board fully complied with the requirements of the Ordinance, the Regulations, the PSC Rules, and the Guidelines at the time of appointment of the CEO.
Copyright Business Recorder, 2025