AKD involvedin turning black money into white -- Karachi Stock Exchange

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Date Posted: 01:23:34 12/01/13 Sun
Author: Newspaper
Subject: AKD involvedin turning black money into white

Many of the companies listed on the KSE offer double-digit returns, low stock prices and resilient business models in this frontier market with a population of 180 million. The index still has an attractive price/earnings ratio of $8.50 despite the soaring returns of the past few years.That’s a drop in the bucket, says Ashraf Tiwana, dismissed as head of SECP’s legal department after years of clashes with his bosses over fraud in the market. He has petitioned the Supreme Court to replace the SECP chairman and commissioners.“There’s a lot of fraud, a lot of market manipulation … but not enough action has been taken, especially not enough criminal action has been taken,” Tiwana told Reuters. “They’re just passing small fines and giving out warning letters.”Regulators are too close to the market, Tiwana said. The head of the stock exchange is a former broker and the two top members of the SECP are former employees of Aqeel Karim Dhedhi, founder of one of the country’s biggest brokerage houses.Nicknamed “Big Dhedhi” for his ability to move markets, Aqeel Karim Dhedhi heads one of Pakistan’s largest domestic conglomerates, the AKD Group (AKDC.KA).Lately, the well-known philanthropist and leading member of Pakistan’s business establishment has been trying to fend off arrest over allegations of insider trading.An SECP investigator accused traders, including Dhedhi’s brokerage, of buying shares in a state-run Sui Southern Gas Co (SUIS.KA) before an official announcement allowing the company to raise its prices. In the weeks before Sui Southern’s announcement, the stock price jumped from 13.5 rupees to 20 rupees, its biggest hike in five years.The National Accountability Bureau called it a case of insider trading. But the SECP said its own confidential investigation showed no evidence of fraud. The SECP whistleblower in the case has been suspended from her job for disclosing “confidential information”.Dhedhi strongly denied any wrongdoing and said he purchased his gas stocks years before the announcement.“There is nothing there. The (SECP) report totally cleared us,” said Dhedhi, a burly man wearing a traditional long cotton shirt and baggy pants. “I’m proud to say that in more than 40 years of operating, we’ve never paid a penny in fines.”Dhedhi says he often offers advice to government officials on financial policy. His business empire includes two equity funds that were among the best performing in Asia in 2012.“The SECP has really started listening to the market,” Dhedhi said, a suited executive acting as translator.Dhedhi remains under investigation. But even if regulators were to find him guilty of insider trading, past practice shows he would likely get a slap on the wrist. The SECP’s fines are almost always a fraction above the amount of money made in the stock manipulation, and sometimes even less.

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