Ghani Osman Sued by JS for fraud -- Karachi Stock Exchange

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Date Posted: 01:29:18 12/01/13 Sun
Author: Newspaper
Subject: Ghani Osman Sued by JS for fraud

In the legal complaint filed in the Sindh High Court on March 12, the JS Group alleges that Ghani Osman, in collusion with Al-Abbas CEO Shunaid Qureshi (a nephew of Jahangir Siddiqui) have colluded to siphon money away from the company’s accounts using a series of shell companies and accounts. The fraud appears to be remarkably crude. In addition to sugar, Al-Abbas also produces ethanol from the molasses which results as a by-product from the manufacture of sugar. Al-Abbas’ capacity to produce ethanol greatly exceeds its internal generation of molasses so it buys molasses from other sugar mills. What Osman and Qureshi appear to have started doing was making payments for molasses that never arrived at the factory. At least nine shell companies were used to funnel money from Al-Abbas to Osman and Qureshi, on the pretext of buying molasses. Those shell companies received the money and then, within a few days, transferred the money to either Osman, or Qureshi, or occasionally to their family and other associates. For instance, a company called Rustam Traders was paid Rs17.5 million on September 10, 2012, ostensibly for molasses that never arrived at Al-Abbas. On September 17, seven cheques, each of Rs2.4 million (totalling Rs16.8 million), were made out by Rustam Traders to Shunaid Qureshi. Another vendor, Ideal Transporters, was also paid for molasses but about Rs19.9 million of that money was paid to Osman and another Rs17.2 million was paid to his brokerage firm, Ghani Osman Securities. In some cases the payments were made on by the shell companies directly to banks to which Osman and Qureshi owed money. This led some at JSCL to conclude that even the signatures on the bank accounts being operated by the shell companies were faked. The Express Tribune was able to see at least one case where the alleged owner of Rustam Traders filed a document with Silkbank to notify them that the signature on his cheques would be different from the signature that appears on his computerised national identity card. In a bid to stem this flow of embezzlement in a company in which the group had such a large share, Ali Jahangir sent a letter to the Securities and Exchanges Commission of Pakistan on March 8, asking them to send an observer to the board meeting at which the JS Group planned to seek the ouster of Qureshi as CEO of Al-Abbas. In a letter dated March 12, the SECP replied saying that they would not be able to send an observer, but asked the JS Group to send evidence of wrongdoing. By that time, JSCL had already filed a lawsuit against Osman and Qureshi.

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