Removal of Securities and Exchange Commission chairman
He has left a legacy for his successor to follow and improve.
Ex-SECP chairman Muhammad Ali was an alumnus of IBA Karachi, and has been a known figure in the capital markets of our country. PHOTO: FILE
DUBAI:
Pakistan has largely become a place where maintaining status quo allows a select group of people to enjoy the perks and privileges of the state. While on one hand, we demand that there be “change” in the way things run, yet the very talk of change is shot down by the protectors and protagonists of the status quo.
Our nation has been led largely by the civil and military bureaucracy since inception, for which status quo suits the most. In developing nations, political forces are required to formulate policies, but in Pakistan, the very thought of policy formulation by politicians is shot down in its ascent.
The Securities and Exchange Commission of Pakistan (SECP) is the regulator of the corporate sector under which four broad categories of regulatory activities fall – corporatisation of the economy, securities market, non-banking financial sector and insurance sector. The SECP chairman is a position of importance and is appointed by the federal government for a period of three years. Not just being the apex regulator, the SECP chairman is, in essence, the chief marketing officer of the corporate sector.
Chairman Muhammad Ali was appointed in December 2010. Ali, an alumnus of IBA Karachi, has been a known figure in the capital markets of our country and will be known as a successful entrepreneur. He not only established successful brokerage companies, but also renowned IT companies in the mid to late 1990s.
Belonging to the new generation of tech-savvy stock brokers, Ali was an early proponent of using information technologies in the capital markets, possibly because of which the KSE has been at the forefront of change.
Hearing a petition against Ali’s appointment filed by an ex-employee of the SECP, a two-member bench of the Supreme Court has declared the chairman’s appointment void.
The petitioner, who had been removed from SECP in 2011, has not been reinstated however. If one needs to understand why status quo must prevail, then the performance of the SECP for the last two odd years needs to be scrutinised.
The key matters that had been left outstanding for years like the capital gains tax on securities business and demutualisation of the stock exchanges were resolved during these two years. The capital markets have again become active with not just improvement in volumes, but also attracting capital flows into the country. While the country has failed to attract FDI during the last five years, Foreign Portfolio Investments remain the only highlight on the investment front.
On the enforcement front, of late the SECP had become active and fined a leading brokerage house and a fund management company for front running.
A day before the petition was to be adjudicated upon, a damaging news report appeared in The News (Thursday, April 11, 2013) claiming that the SECP chairman had business interests with other brokers and hence was in conflict of interest with the position held. Muhammad Ali did respond that he had sold his shareholding in the said business in 2006 and had documentary evidence to prove the same.
The news report was placed at the most appropriate time considering the upcoming hearing and impending judgment. Terms used in the report like “nepotism”, “abuse of authority” and “massive tax evasion” must have been enough for the judges to notice. Does this judgment not cement apprehensions of the legal fraternity that media is trying to influence judicial decisions?
While Ali may choose to appeal against the decision or not, who will be at the losing end but the corporate sector, in general, and capital markets, in particular! With the stock market at an all-time high and expectations for it to reach even higher fuelled by the timely elections and a smooth transition to a new setup, judicial steps like these leave a sour taste for investors.
With less than nine months left in his term, the SECP chairman should have been allowed to complete his agenda and leave a legacy for his successor to follow and improve. When financial embezzlement, fake degrees and dual nationalities could not be proved, conflict of interest, a very subjective charge, has been used to remove an efficient and effective marketer of Pakistani corporate sector.
The writer is a UAE-based investment banker who can be contacted at ali.wahab@tribune.com.pk
Published in The Express Tribune, April 29th, 2013.
Like Business on Facebook to stay informed and join in the conversation.
Pakistan has largely become a place where maintaining status quo allows a select group of people to enjoy the perks and privileges of the state. While on one hand, we demand that there be “change” in the way things run, yet the very talk of change is shot down by the protectors and protagonists of the status quo.
Our nation has been led largely by the civil and military bureaucracy since inception, for which status quo suits the most. In developing nations, political forces are required to formulate policies, but in Pakistan, the very thought of policy formulation by politicians is shot down in its ascent.
The Securities and Exchange Commission of Pakistan (SECP) is the regulator of the corporate sector under which four broad categories of regulatory activities fall – corporatisation of the economy, securities market, non-banking financial sector and insurance sector. The SECP chairman is a position of importance and is appointed by the federal government for a period of three years. Not just being the apex regulator, the SECP chairman is, in essence, the chief marketing officer of the corporate sector.
Chairman Muhammad Ali was appointed in December 2010. Ali, an alumnus of IBA Karachi, has been a known figure in the capital markets of our country and will be known as a successful entrepreneur. He not only established successful brokerage companies, but also renowned IT companies in the mid to late 1990s.
Belonging to the new generation of tech-savvy stock brokers, Ali was an early proponent of using information technologies in the capital markets, possibly because of which the KSE has been at the forefront of change.
Hearing a petition against Ali’s appointment filed by an ex-employee of the SECP, a two-member bench of the Supreme Court has declared the chairman’s appointment void.
The petitioner, who had been removed from SECP in 2011, has not been reinstated however. If one needs to understand why status quo must prevail, then the performance of the SECP for the last two odd years needs to be scrutinised.
The key matters that had been left outstanding for years like the capital gains tax on securities business and demutualisation of the stock exchanges were resolved during these two years. The capital markets have again become active with not just improvement in volumes, but also attracting capital flows into the country. While the country has failed to attract FDI during the last five years, Foreign Portfolio Investments remain the only highlight on the investment front.
On the enforcement front, of late the SECP had become active and fined a leading brokerage house and a fund management company for front running.
A day before the petition was to be adjudicated upon, a damaging news report appeared in The News (Thursday, April 11, 2013) claiming that the SECP chairman had business interests with other brokers and hence was in conflict of interest with the position held. Muhammad Ali did respond that he had sold his shareholding in the said business in 2006 and had documentary evidence to prove the same.
The news report was placed at the most appropriate time considering the upcoming hearing and impending judgment. Terms used in the report like “nepotism”, “abuse of authority” and “massive tax evasion” must have been enough for the judges to notice. Does this judgment not cement apprehensions of the legal fraternity that media is trying to influence judicial decisions?
While Ali may choose to appeal against the decision or not, who will be at the losing end but the corporate sector, in general, and capital markets, in particular! With the stock market at an all-time high and expectations for it to reach even higher fuelled by the timely elections and a smooth transition to a new setup, judicial steps like these leave a sour taste for investors.
With less than nine months left in his term, the SECP chairman should have been allowed to complete his agenda and leave a legacy for his successor to follow and improve. When financial embezzlement, fake degrees and dual nationalities could not be proved, conflict of interest, a very subjective charge, has been used to remove an efficient and effective marketer of Pakistani corporate sector.
The writer is a UAE-based investment banker who can be contacted at ali.wahab@tribune.com.pk
Published in The Express Tribune, April 29th, 2013.
Like Business on Facebook to stay informed and join in the conversation.