The Competition Commission of Pakistan (CCP) is said to have initiated a probe into the shadowy affairs of M/s Hascol as the company allegedly presented tailored accounts for acquisition of M/s Vitol Dubai Limited, well-informed sources told Business Recorder.
“CCP has the power to scrap or change the merger’s approvals of M/s Hascol Petroleum Limited and M/s Vitol Dubai Limited in terms of Section 11(14) of the Act, if it is found that there were discrepancies in the data/ accounts provided by the firm,” the sources added.
The CCP granted approvals of merger and acquisition of shares on the basis of financial accounts of 2019, the sources said, adding that since the accounts were forged, CCP law says that if it is made known to the Commission at a later stage that the approvals of mergers were based on fake accounts, it can undo the merger process.
Criminal proceedings likely: SECP to conduct Hascol’s forensic audit
As per CCP’s website, various merger transactions took place in Hascol and its related companies and shares were mostly acquired by M/s Vitol Dubai Group. These merger transactions were duly authorised by CCP after checking market dominance and cartelisation issues.
Now there is the question as to the impact of findings of SECP’s, OGRA and other relevant bodies investigating the case of Hascol. Sources in OGRA and SECP have confirmed that they have received letters from CCP in which information has been sought about Hascol and its activities, However, officially CCP appears reluctant to share information about the inquiry or its scope with this scribe. According to official record, Hassan Kaunain Nafees, Legal Advisors, the legal firm of incumbent Chairperson’s husband, represented the firm several times at the CCP for mergers.
According to sources, ten transactions of shares transfers have taken place in the merger and M/s Vitol Dubai Limited gradually increased its investment in Hascol.
The sources said, M/s Hascol continuously purchased POL products at expensive rates from M/s Vitol and sold it at lower price in the market and to bridge the gap, loans were raised from the banks.
Insiders claim the fraud could amount to Rs98 billion, of which Rs21 billion belongs to National Bank of Pakistan (NBP). “This is the biggest ever fraud in Pakistan’s history,” the sources continued.
CCP’s spokesperson was asked repeatedly by this correspondent if the organisation has initiated any probe into the mergers of M/s Hascol and M/s Vitol Dubai Limited; however, he neither denied nor confirmed it and merely stated that the mergers’ information is available on CCPs website.
On July 13, 2021, SECP issued an official statement, saying that it took notice of Hascol’s reported accounts for the period ending June 30, 2019 during October 2019. In this regard, the SECP has diligently followed its requisite internal protocols in compliance with its mandated role and responsibility. However, being the apex corporate regulator of the country, SECP has to conclude its proceedings after following due process as envisaged under the law.
On August 24, 2021, Chairman SECP, Aamir Khan, testified before Senate Standing Committee on Finance that criminal proceedings may be initiated against Hascol, if required.
According to him, the company failed to hold its Annual General Meeting for the year ended December 31, 2020, which was due till May 31, 2021, as Joint Auditor, EY Ford Rhodes, Chartered Accountants, resigned in January 2021.
During the review of accounts, the Commission observed huge losses for the year amounting to Rs 25 billion. Restatement of account for the year 2018 declared profit of Rs 207 million was converted into loss of Rs 215 million and from December 2019, the company reported change in the name of related party M/s Vitol Dubai as Vitol Bahrain in its interim and half year accounts.
Two investigations are under way against Hascol at the SECP, which will be completed in three months. Criminal or civil proceedings against the company will be done under the SECP Act.