ISLAMABAD .: A Senate panel has decided to expand the scope of its investigations into alleged corruption of $17.5 million in the Multan Metro Bus project and transfer of money abroad, as fresh details reveal a link between a top official of the China-based Yabaite Technology Company Limited with the Yabaite Pakistan Construction Group Private Limited.
The Yabaite-Pakistan is among the three companies working on the Rs17.6 billion ($167 million) Multan Metro Bus project. The China-based Yabaite Technology is also facing a probe by the China Securities Regulatory Commission (CSRC) over alleged violation of Chinese securities laws.
The Senate Standing Committee on Finance that took up the matter on Wednesday grilled the Securities and Exchange Commission of Pakistan (SECP) for “not doing enough to probe the matter” that may affect the relations with Beijing.
The Senate committee found the SECP ‘non-cooperative’ and ‘unwilling’ to take serious steps in the matter. So much so that statements from acting SECP Chairman Zafar Abdullah and Commissioner Securities Division Akif Saeed did not match, with the latter appearing to be hiding facts from the parliamentary body.
Abdullah rejected Saeed’s claim that the SECP presented documents of the case in the Commission meetings for seeking approvals, and said no documents of Chinese authorities were shared as all the approvals were obtained on the basis of information.
On cross-questioning, Saeed revealed that the chief executive officer of the Yabaite Technology China has 70% stake in Yabaite-Pakistan. He did not disclose the very fact in a brief factsheet that the SECP shared with the standing committee.
“The SECP has brought a bad name to the government and the country and is now considered one of the worst performing bodies of Pakistan,” observed Senator Saleem Mandviwalla, Chairman of the Standing Committee, while rejecting the SECP’s presentation.
The standing committee took up the matter after media reports revealed that China’s securities market regulator was investigating the affairs of the company that is working on the Multan Metro Bus project. The report alleged $17.5 million corruption.
Abdullah said the SECP would not investigate Yabaite-Pakistan until China shared its investigation report with SECP – a statement that infuriated the Senate committee.
“These are lame excuses and the SECP should have taken action against Yabaite-Pakistan,” said Senator Mohsin Aziz of the PTI. “The SECP is lethargic, unwilling to take action and hiding behind jurisdictions,” he added.
“The committee would summon all five SECP commissioners and if correct information is not provided it will order a forensic audit,” said Mandviwalla.
He lamented that due to its non-cooperative behaviour, SECP officials were bringing bad name to the institution that was already facing a credibility crisis after allegation of record tampering against its suspended chairman, Zafar Hijazi.
SECP briefs committee
In December 2016, the CSRC approached the SECP, seeking assistance regarding ongoing investigation of Yabaite Technology Company Limited, which is listed on the Shenzhen Stock Exchange, according to the SECP brief to the committee.
The CSRC is investigating alleged disclosure violations of Chinese securities laws.
The CSRC stated that Yabaite on January 29, 2015 disclosed that the sub contract of the Multan Metro Bus project with a value of $32.5 million was awarded to Habib Rafiq Private Limited that subcontracted some project deliverables to the Capital Engineering which further subcontracted work to Yabaite-China.
The CRSC stated that out of $57 million subcontracts, the Capital Engineering awarded work amounting to $37.5 million to Yabaite for steel structures, curtain walls and decorative lamps at 13 stations of the Metro.
“On 25 March, 2016, Yabaite-China released its 2015 annual report and showed $32 million profit out of $37.5 million contract cost from the deal,” the SECP said while citing CSRC statements.
“Till March last year, the Capital Engineering paid $19.5 million to Yabaite through 16 third party companies from Hong Kong, the United States, Dubai and Malaysia,” it added.
On the request of the Chinese regulator, when the SECP checked its database it did not find Capital Engineering company. The commissioner securities division said Capital Engineering was a fake company.
However, a Chinese individual, Sha Zhuo, in September 2016 applied for the availability of the name of Capital Engineering and Construction Company Limited, according to the SECP brief.
The proposed name was rejected owing to close resemblance with the name of an existing company, the SECP informed the committee, it added.
The SECP also sought information from the companies working on the Multan Metro project and the Punjab government and shared this with the Chinese regulator.
Habib Rafiq Limited, Yabaite Pakistan Construction Group and Matracon are working on the Metro Multan project and the SECP shared their details with the CSRC, according to the SECP brief.
In June, the SECP requested the CSRC to share the findings of its investigations against Yabaite.
On July 24, 2017, the CSRC sent a second request for information to the SECP and sought its assistance to verify appreciation letters that Punjab Chief Minister Shehbaz Sharif, Senator Mushahid Hussain and Senator Kalsoom Parveen reportedly gave to Yabaite-China.
However, all three dignitaries have denied that they gave appreciation letters to Yabaite-China. The SECP sent the responses to the CSRC on August 24.