Saudi investors move IHC for action against FIA

• Plea filed over potential misappropriation of Rs10.5bn in funds. 
• Investors seek judicial order to compel FIA to initiate probe. 
• They allege handling of sale proceeds marred by irregularities.

LONDON: Karachi Electric’s Saudi investors have filed a writ petition with the Islamabad High Court (IHC) requesting action against the perceived inaction of the Federal Investigation Agency (FIA) in response to a critical complaint they had previously submitted around the potential misappropriation of Rs10.5 billion of foreign investors’ funds, specifically, the sale proceeds from an investment firm in Pakistan.

Represented by White Crystals Limited, these investors are now seeking a judicial order to compel the FIA to initiate a thorough investigation.

White Crystals Limited, a subsidiary of the Saudi conglomerate Aljomaih Group, has a substantial stake as a foreign investor in Pakistan. In the complaint filed with the FIA, the group says it has made a direct investment of $10 million in the Infrastructure and Growth Capital Fund LP (IGCF), which indirectly invested in the publicly listed company on the Pakistan Stock Exchange.

According to papers, in a transaction that took place in 2021, the IGCF sold a significant portion of its interest in the firm to Busicentco Incorporated for an approximate amount of Rs10.5 billion. However, the investors, including White Crystals Limited, now allege that the handling of these sale proceeds has been marred by irregularities. According to their claims, these funds were transferred to a bank account held by Cynergico Mu Incorporated (C-Mu Inc.), a Mauritian entity only partially owned by IGCF-OGL, instead of being held for the benefit of IGCF’s limited partners, the investors in the Fund, which notably includes White Crystals Limited.

The investors assert that they suspect the funds were wrongly portrayed as the property of C-Mu Inc, hence potentially causing significant harm to IGCF investors such as White Crystals Limited.

White Crystals Limited alleges that the transfer of the sale proceeds occurred under dubious circumstances, with the application submitted to the State Bank of Pakistan (SBP) for repatriation being inexplicably withdrawn under instructions from C-Mu Inc. This action, the investors contend, has jeopardised the interests of IGCF’s limited partners, including White Crystals Limited, with respect to dwindling all their hopes of getting access to any sale proceeds outside Pakistan.

The FIA complaint says the DW Pakistan Private Limited (DWPL) is now the holder of the transferred funds, maintained in a bank account. The DWPL is majority owned by Shaheryar Arshad Chishty, with Danyal Arshad Chishty as a shareholder and director. The investors have raised questions regarding the legitimacy of sale proceeds being held in DWPL’s bank account and withdrawal of the repatriation application without prior information to the limited partners.

The investors contend that the mode and manner of transfer to the DWPL raise suspicions for potential wrongdoing. Moreover, they point to inaccuracies and incomplete information, passed by the manager of the IGCF, which is now under the control of Shaheryar. 

They allege that Shaheryar has misled the limited partners into falsely believing that the sale proceeds are secure while transferring approximately Rs10.3 billion that essentially belonged to the odd 80 international investors in the IGCF to a company, DWPL account which is controlled by Shaheryar himself. All of this arrangement being done under an “escrow agreement”, says the complaint to the FIA.

It is notable that White Crystals Limited belongs to the same Saudi Group which is embroiled in legal battle with Shaheryar over the recently surfaced tussle over the management control of K-Electric.

White Crystals Limited lawyers say they previously reached out to the CEO of bank in Pakistan seeking answers, however, received no response and then they made the decision to raise the matter to the FIA by filing a complaint in August 2023.

The investors assert that multiple offences, including criminal misappropriation of property, and cheating, may have taken place and under the Federal Investigation Agency Act 1974, the FIA has the authority to inquire and investigate such offences. They also allege that if the transfers violate the SBP regulations or involve offences, they could also potentially constitute money laundering under the Anti-Money Laundering Act 2010.

Emphasising their rights as foreign investors and their demands for redress and justice, White Crystals Limited has approached the IHC, seeking its intervention to compel the FIA to consider their complaint and launch a comprehensive investigation.

The writ petition filed with the IHC requests the court to issue appropriate directives to the FIA for swift and impartial action in accordance with the law. A spokesman of the FIA said it was in receipt of a complaint and reminders by lawyers of White Crystals Limited.

Shaheryar said: “I have not seen the IHC petition yet so can’t comment.”

Originally published in The News