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Summary
Four board members of Lahore Stock Exchange (LSE) demanded the LSE chairman to take stern action against the Exchanges senior management, including the managing director and chief financial officer for violation of exchange rules and tax evasion on which the Security and Exchange Commission of Pakistan (SECP) and Federal Board of Revenue (FBR) had issued show cause notices to the LSE. The four members, including Ammar-ul-Haq, Ch Muhammad Afzal, Mazhar Rafiq, and Omar Khalil Mailk, in a detailed four-page letter pointed out many irregularities made by the top management. They mentioned in the letter that payments of approximately Rs 20 million were made in cash over a period of eight months, which was also pointed out in the audit committee meeting. Letter states that the meeting had also transpired that withholding tax applicable on the salaries of CFO and MD was also improper and without authorisation deposited as a lesser amount under the head of Payments of Service whereas the same was to be done under the head of Payments of Salary. They pointed out that a detailed inspection of certain transactions had also revealed that after a lapse of several months, certain entries with regards to payments to certain parties were tampered with an incorrectly booked in the name of different parties. Moreover, withholding taxes applicable at the time of payments were also not promptly and correctly deducted. On the committees call, four officials of accounts department were summoned who testified that the CFO and Deputy Manager unlawfully instructed their subordinates to destroy the relevant record in connection with counter foils of unauthorised payments. The officials also testified that they were forced to tamper the counterfoils of cheques not only to the extent of cash payments but also that of previous two years to hoodwink any prospective investigation to believe that such mistakes were consistent. The said changes/tampering of the financial record was done after taking record outside the LSE premises over to the residence of CFO and Deputy Manager. The officials also stated that due to reasons best known to the management access to their logins of Oracle financial database were restricted and their passwords were randomly changed. Their examination also transpired that consequent to an inquiry by the Audit Committee, payments in the accounts were maliciously tampered by the CFO. It was also stated in the letter that the meeting had alleged that incorrect and unlawful changes to the method of deducting withholding taxes on salary of CFO and MD were changed on instructions from the CFOs office. A refund of about Rs 3 million was also booked after an inquiry by the Audit Committee and in an attempt to make amends.
