IHC stops chairman FBR from working

ISLAMABAD: Islamabad High Court (IHC) while halting Chairman Federal Board of Revenue (FBR) Ali Arshad Hakeem from his job function, ISLAMABAD: Islamabad High Court (IHC) while halting Chairman Federal Board of Revenue (FBR) Ali Arshad Hakeem from his job function, cancelled notification of his appointment, The notification was annulled by Justice Shaukat Aziz.

Blast near NADRA office injures 4 in Kharan

QUETTA: Four persons were wounded when a blast occurred near NADRA office in Kharan Monday, According to initial reports, miscreants attacked the NADRA building in Kharan with explosives and fled from the site. As a result of explosion, four persons were injured who have been shifted to hospital for treatment, police told. It is pertinent to mention that it is the second attack of the similar nature on any government building in the past one week.Earlier, District Election Commission’s office was also attacked in which one person was injured. Police retaliated and opened fire after which the militants escaped from the scene.

WikiLeaks to release more records

LONDON: Whistleblowing website WikiLeaks was on Monday to publish more than 1.7 million US diplomatic and intelligence documents from the 1970s, founder Julian Assange revealed. The website has collated a variety of records including cables, intelligence reports and congressional correspondence and is releasing them in a searchable form.Assange has carried out much of the work from his refuge in Ecuador's embassy in London and told the domestic Press Association that the records highlighted the "vast range and scope" of US influence around the world.Assange has been holed up in the tiny diplomatic mission for nine months as he seeks to avoid extradition to Sweden over allegations of rape and sexual assault, which he denies.WikiLeaks sent shockwaves around the diplomatic world in 2010 when it released a set of more than 250,000 leaked US cables.The new records, dating from the beginning of 1973 to the end of 1976, have not been leaked and are available to view at the US national archives. They include many communications which were sent by or to then US secretary of state Henry Kissinger.Many of the documents, which WikiLeaks has called the Public Library of US Diplomacy (PlusD), are marked NODIS (no distribution) or Eyes Only, while others were originally marked as secret.Assange fled to the Ecuadorian embassy in June after losing his battle in the British courts against extradition to Sweden.Ecuador granted him asylum in August but Britain has refused to allow him safe passage out of the country, sparking a diplomatic stalemate.Assange founded the WikiLeaks website that enraged Washington by releasing cables and war logs relating to the wars in Iraq and Afghanistan in one of the biggest security breach in US history. (AFP)

Nine killed in Afghan roadside blast

SEOUL: North Korea appears to be preparing a fourth nuclear test as well as a provocative missile launch, South Korea said Monday,  despite an unusually blunt call from China for restraint.Unification Minister Ryoo Kihl-Jae told lawmakers there were "signs" that another test was in the pipeline, with intelligence reports showing heightened activity at the North's Punggye-ri atomic test site."We are trying to figure out whether it is a genuine preparation for a nuclear test or just a ploy to heap more pressure on us and the US," the JoongAng Ilbo daily cited a senior South Korean government official as saying.It was the North's third nuclear test in February and subsequent UN sanctions that kickstarted the cycle of escalating military tensions on the Korean peninsula.While North Korea has made no secret of the fact that it intends to carry out further nuclear tests, most analysts believe a detonation in the current climate would be a provocative step too far, even for Pyongyang."It would just be unbelievably risky," said Robert Kelly, a political science professor at Pusan National University in South Korea."The Americans would freak out, for a start. I think a missile test is far more likely," Kelly said.Intelligence reports suggest Pyongyang has readied two mid-range missiles on mobile launchers on its east coast, and is aiming at a test-firing before the April 15 birthday of late founding leader Kim Il-Sung.Japan has ordered its armed forces to shoot down any North Korean missile headed towards its territory, a defence ministry spokesman in Tokyo said Monday.A missile launch would still be highly provocative, especially given the strong rebuke the North's sole ally China handed it at the weekend and a US concession to delay its own planned missile test."No one should be allowed to throw a region, even the whole world, into chaos for selfish gains," Chinese President Xi Jinping told an international forum in southern China on Sunday.Although he did not mention North Korea by name, Xi's remarks were taken as a clear warning to the regime in Pyongyang, which is hugely dependent on China's economic and diplomatic support.By AFP

High treason: SC seeks govt stance against Musharraf

ISLAMABAD, While hearing the high treason petition, the Supreme Court on Monday sought government’s stance against former military ruler Gen (R) Pervez Musharraf. A two-member bench of the apex court headed by Justice Jawad S Khwaja heard the petition, seeking to try Musharraf for treason for imposing emergency rule in 2007. During case proceeding, petitioner Maulvi Iqbal Haider’s counsel AK Dogar presented arguments before the bench. Advocate-on-Record Zafar Abbas Naqvi objected saying that AK Dogar has not right to present arguments in the case. Naqvi requested the bench for withdrawal of the application, saying that he had not received any instructions from his client regarding the petition. Justice Jawad S Khwaja remarked that absence of instruction does not mean the bench would allow withdrawal of the application. The case hearing is underway. Pervez Musharraf returned to Pakistan on March 24 following four years of self-imposed exile.He is running in the parliamentary elections scheduled for May 11. He is already facing many court cases for his alleged involvement in the 2007 assassination of former Prime Minister Benazir Bhutto and the 2006 killing of Nawab Akbar Bugti, a senior Baloch politician.

Aik Chirrya Nay “N” League Ko Chit Ker Dia by Ansar Abbasi

Pakistan’s booming market no black and white matter

Jahangir Siddiqui, Chairman of JS Bank Ltd, speaks during an interview with Reuters at his office in Karachi January 30, 2013. — Photo by Reuters

KARACHI: Karachi, one of Pakistan’s chaotic financial heart, is home to 18 million people, Taliban bombers, contract killers – and one of the world’s most successful stock markets.
With 49 per cent returns in 2012, the Karachi Stock Exchange (KSE) was one of the five best performing markets in the world. Now it is seeking a foreign partner to buy a stake and take over management of a market that has risen three-fold over the past four years.
At least some of that performance came on the back of a government amnesty that allowed people holding undeclared assets or “black money” to invest it freely in the market. And the relatively illiquid market has also been vulnerable to manipulation.
But government officials say the market’s success highlights the economic potential of a country better known for spiraling sectarian violence, the war against Al Qaeda and the Taliban, crippling power cuts and entrenched corruption.
The market’s benchmark index continues to soar to record highs — up 10.34 per cent year to date — fueled in part by expectations May elections will mark Pakistan’s first transfer of power from one democratic government to another. Previous civilian governments were all dismissed by Pakistan’s ultimate power: the military.
“Pakistan has a lot to offer investors and this is our chance to show it,” said Nadeem Naqvi, the KSE chairman. He plans to embark on a series of roadshows for potential foreign partners that will take him to London, Frankfurt and Hong Kong in the coming months.
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.
Pakistan now has a 4 per cent weighting in the MSCI Frontiers Market Index and has become somewhat of a discovery for foreign investors chasing new markets and yields.
The Seamier Side
But the KSE’s spectacular rise last year can at least be partly attributed to another factor entirely – the cleansing of “black money”.
The market took off last year just as a government decree was finalised allowing people to buy stocks with no questions asked about the source of the cash.
Average daily volume more than doubled last year to 173 million shares from 79 million in 2011.
Authorities say the measure will bring undocumented funds into the tax net in a country where few pay taxes. But some critics decried it as a gift to corrupt officials and criminals seeking to launder dirty cash.
“Politics and dirty money go hand in hand in Pakistan,” said Dr. Ikramul Haq, a Supreme Court lawyer and a professor on tax law.
“People want to be outside the regulatory framework and outside the tax net.”
The black money amnesty also drew attention to the seamier side of the Karachi stock market. Interviews with regulators, brokers, market officials and analysts showed insider trading and other manipulations are routine. Regulators have been largely ineffectual in controlling the shady practices.
The Securities and Exchange Commission of Pakistan (SECP) said it found 23 violations of securities laws that merited fines in fiscal year 2011-12 (April/March). The market regulator sent warning letters in another 19 cases, it said in its annual report.
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.
Big Dhedhi
Nicknamed “Big Dhedhi” for his ability to move markets, Aqeel Karim Dhedhi heads one of Pakistan’s largest domestic conglomerates, the AKD Group.
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 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, the state-run anti-corruption agency, 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.
Revolving Door
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.
In December, a broker was fined half the amount he made from trades that manipulated the share price of tobacco giant Philip Morris. In February, the SECP fined Pakistani brokerage BMA Capital $500,000 – after it made $460,000 by misleading a foreign client. BMA Capital has appealed.
Imtiaz Haider, the SECP commissioner in charge of market regulation, acknowledged fines were largely symbolic. If they were too high, he said, brokers might not be willing to pay them. Contesting fines in the congested court system could take years.
“The purpose is more to name and shame,” Haider said in an interview. “It causes them reputational damage.”
Like KSE Chairman Nadeem Naqvi, Haider is a former employee of Dhedhi’s. Both men denied any conflict of interest.
“It’s important to have people in charge who know the way markets work,” Haider said. “I’ve had lots of other jobs than just working for Dhedhi.”
The SECP can revoke licenses, impose hefty fines, or open criminal cases against offenders. But it almost never does. It has launched only 10 criminal cases in the past five years – all still held up in the judicial backlog. It has issued dozens of small fines.
“We have great laws and regulations but they are not properly enforced,” said Khalid Mirza, a former SECP chief. “The SECP is just catching the small fish as far as I can see.”
Naqvi, the KSE head, acknowledged his priority has been to boost the market, not to crack down on it.
“My management style isn’t confrontational because I want to build confidence in the market,” he said.
Separating the commercial and the regulatory functions of the market is one of the main reasons the KSE is looking for a foreign partner. It has appointed Deutsche Bank as its advisor on its quest to demutualise – a process that will separate those two functions.
“Demutualization is another step on the road to reform,” Naqvi said. “Right now we have a fairly robust system. But I’m not saying it’s foolproof.”
Black to White
The Karachi market’s small size and lack of liquidity make it vulnerable to manipulation. Market capitalization is only $41.5 billion – the Bombay stock market’s capitalisation is more than 10 times higher at $578 billion.
Only a quarter of the shares are freely floated – about 30 per cent of that is held by foreign funds and investors, including Franklin Templeton, Invesco Ltd, Goldman Sachs Asset Management and Mackenzie Financial Corporation.
Since only 60 of KSE’s 600 listed companies trade regularly, small trades can rapidly make a big difference in a company’s share price.
Boosting volumes on the exchange was one of the intentions behind Pakistani President Asif Ali Zardari’s decree last April turning black money into white.
It said no questions could be asked by the Federal Board of Revenue about the source of funds invested in stocks till July 2014. The investments become legally legitimate.
The pool of such funds is potentially huge. A report by the United Nations Office on Drug and Crime projected the size of Pakistan’s informal or “black” economy at $34 billion in 2010-11, one-fifth of the formal economy.
The Paris-based Financial Action Task Force, which monitors money laundering, said the decree did not contravene Pakistan’s existing anti-money laundering legislation. But anecdotal evidence suggests controls are lax.
In one case shown to Reuters by a lawyer, a man invested $10 million buying stocks in a single transaction. His address: a Karachi slum notorious for Taliban infiltration.