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Multi-million dollar money laundering scam unearthed

Multi-million dollar money laundering scam unearthed

By Aleem Malik, Weekly Pulse, August 19, 2013

This may be shocking for Pakistan Muslim League-Nawaz zPML-N) and some foreign countries who are fighting hard against money laundering, to know about a multi-million dollars money laundering scam that surfaced in a deal of JS Group in acquiring operations of HSBC Pakistan.

This shady deal has been unearthed by a letter of Transparency International Pakistan (TIP), Securities and Exchange Commission of Pakistan (SECP) and National Bank of Pakistan (NBP).

According to documents available with Weekly Pulse, Transparency International Pakistan (TIP) has unearthed a money laundering case of US $ 46 million in the sale deal of HSBC Pakistan operations by JS Group, and approached the top management of HSBC for verification.

TIP has also moved Supreme Court of Pakistan, besides approaching Prime Minister and National Accountability Bureau (NAB) to take action against laundering of $ 46 million.

The SECP, in its letter sent to State Bank of Pakistan (SBP) on November 19, 2012, said that the initial findings of the enquiry had indicated possible violation of section 17 of the Securities and Exchange Ordinance 1969 by the companies in acquiring operations of HSBC. These companies of JS Group included JS Global Capital Limited, Jahangir Siddiuqi and Company Limited, JS Investments Limited, Jahangir Siddiqui & Sons Limited, Jahangir Siddiqui Securities Services Limited and JS Pakistan Limited.

In a letter sent to CEO HSBC, a copy of which is available with Weekly Pulse, Transparency International Pakistan (TIP) stated that it had received a complaint that HSBC had sold HSBC Middle Ltd and North Africa operations, and also received payments in lieu of the sale amounting to US$ 46 million.

TIP said that it is very interesting to note that apparently JS Group has already made payment for HSBC Middle Ltd. This is borne out by reviewing HSBC worldwide consolidated statement of accounts posted on its website at page # 53 where the HSBC, under the head of “business sold and proceeds received”, has an entry showing “HSBC Middle East Region and North Africa, US $ 46 million”. This indicates that some individual/organization has paid US$ 46 million to HSBC for the purchase of operations of HSBC Middle East Region and North Africa prior to December 31, 2012. On page 87, it also indicates US $ 46 million as net income from other financial instruments designated at fair value.

TIP said that none of JS Group’s entities in Pakistan who have signed an agreement with HSBC in September 2012 reflect in their annual statements for 2012 that proceeds for acquisition has already been paid to HSBC, as the HSBC Pakistan is part of Middle East Region and the State Bank of Pakistan has not approved the sale/purchase of HSBC. SBP letter dated October 15, 2012 and SECP letter dated November 19, 2012, confirm the agreement and non-clearance of the deal by State Bank of Pakistan.

“That in case the remittance in 2012 of HSBC Pakistan operation buy out payment out of US $ 46 million is not sent through State Bank of Pakistan, this may be another act of money laundering by HSBC who is already fined US$ 1.9 million in USA for money laundering and is also facing more charges of committing money laundering in other countries,” TIP letter adds.

TIP said that there was a criminal case filed in April 2013 in court of Pakistan by Securities and Exchange Commission of Pakistan (SECP) against five JS Group companies for the insider charges in Azgard shares in 2007 and 2008. SECP has also prayed to the court to take cognizance of the acts committed by the accused in terms of section 24 of the Securities & Exchange Ordinance 1969 whereby the share price and volume of Azgard Nine Ltd shares were artificially manipulated through an insider scheme in terms of section 17 of the Securities & Exchange Ordinance 1969.

TIP had requested the president/CEO HSBC as well as government State Bank of Pakistan to confirm whether the complaint is correct regarding reported information that HSBC has received US$ 46 million in the year 2012 for the sale of proceed of its operation in the Middle East Region and North Africa.

JS Group is also facing a probe by the National Accountability Bureau (NAB) into the allegations of “insider trading” by Jehangir Siddiqui Group in the Azgard Nine Ltd shares. NAB has approached the SECP chairman on the subject of “insider trading in the Azgard Nine Ltd shares”, seeking information.

NAB said that it had come to their knowledge that the Securities and Exchange Commission of Pakistan had earlier established that M/s Jehangir Siddiqui group was involved in insider trading in Azgard Nine Ltd shares. SECP had established that M/s Jehangir Siddiqui group had been involved in insider trading in Azgard Nine Ltd.

About Taimoor

Taimoor
Taimoor is the Digital Content Lead at www.RightJobs.pk . He has been working at prominent media outlets for several years. He blogs at several websites about current affairs, religion, careers and other walks of life.

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