Rs400m KSE shares plundered

KARACHI Influential characters in the stock exchange shares are not only playing havoc with public properties but also ruining the private sector by depriving people of their hard earned money.
Investors in Karachi Stock Exchange were duped of around Rs 400 million early this year by a private equity company, which used its influence to sell off the shares held around by 400 individuals, according to investigation carried out by TheNation.
Capital One Equity, owned by the wife of Irfan Puri, who is very in influential in the power corridors, used its influence in breaching the regulatory rules and allegedly advised Bank Al-Habib to dispose of shares amounting to Rs 370 million, which were kept pledged in the bank since July 2008, just before the cap was placed on the stock market on August 27, 2008 during the volatile political and economic uncertainty.
Reports said that around 350 to 400 small investors were deprived of their hard-earned earnings ranging between Rs 200,000 to Rs 400,000 or more, which they had saved over the years. Majority of these small investors hailed from Ghotki and Dharki.
The reports said that Irfan Puri, a trusted lieutenant of President Asif Ali Zardari, is the real owner of the Capital One Equity but his name was not mentioned anywhere in the company books, while Muhammad Yasin, a nominee director, run the affairs of the company. Muhammad Yasin was missing since June 5, 2009 thereby paving way for Irfan Puri to put entire blame on Yasin. Furthermore, the companys Secretary Mr. Hasnain was also missing.
According to the reports, the Capital One Equity has two major defaulted clients, Irfan Puri loses around Rs 200 million and Col (Retd) Muhammad Asif, who was operating his account under his sons name Shehzad, incurred losses of about Rs 170 million.
To make up their losses Yasin with the alleged consent of Puri pledged the investors shares, which were lying in the CDC account of the Capital One Equity, with Bank Al-Habib in July 2008 and got loans. Later on, Irfan Puri used his influence and advised the banks management in June 2009 to dispose of the shares kept in the bank.
Sources in the stock market said that in December 2008, when a number of brokers were declared defaulters, Irfan Puri used his influence and obtained a loan of Rs 50 million from production fund against his KSE card for a period of six months to meet the market difference.
However, both Irfan Puri and his front man Yasin passed the six months period and have not returned the loan till date.
When contacted on phone, Najeeb Mehmood, an affected client, alleged that five brokerage interlinked with each other have played havoc with the clients.
Najeeb did not divulge the amount he lost but said two persons who had plundered around Rs 400 million are Irfan Puri and a colonel Muhammad Asif. He said though the name of Irfan Puri was not mentioned any where but the company is owned by his wife.
To overcome their losses, he accused, the two sold out clients shares, which were kept with them as trust without taking the owners into confidence. How a person can sell out the shares kept in others accounts, he enquired.
He referred to a clause of CDS, according to which no one can sell off shares as it were kept as a trust.
According to him, each and everything was in the knowledge of the Karachi Stock Exchanges management about the alleged fraud committed last year but they turned their blind eye for reasons unknown. He said he had talked to the management of Karachi Stock Exchange and asked them to lodge a case against their member who duped the share holders but in vain.
He said that Irfan Puri has held meetings with him number of times at his residence.
When contacted Athar ul Haqi, another affected client of the Capital One Equity, said, he could not comment on the issue as the case against the Capital One Equity was pending in the Sindh High Court. Besides him, around 12 other affected persons have moved the SHC, he said.
When contacted, Manager Bank Al-Habib Stock Exchange Branch Mr. Sabir said that the shares of the Capital One Equity were pledged on different days. As it was a routine matter so it was difficult to identify the exact date, he said. When asked about the date on which the shares were sold, he said it was sometime in June this year.
It may be mentioned here that Irfan Puri was earlier running IP Security, which had 1.7 million shares. He was arrested by NAB but after his release Irfan Puri changed the name of the IP Security to Capital One Equity. To show to the world that he had nothing to do with the Capital One Equity, he appointed a number of persons in the Board of Directors. Dawood Majeed is Chairman of the Board.
The Capital One Equity, had over two million shares, out of which around 1.7 million shares are owned by Asian Emerging Company registered in London and around 0.3 million shares belonged to Naveen Irfan Puri Company. Asian Emerging Company is an offshore company.