Islamabad
TRG Pakistan, a leading technology company, is in the midst of a corporate governance crisis. On September 25, 2023, the company’s largest shareholder, Zia Chishti, initiated a process of removing essentially all members of the board of directors through an Extraordinary General Meeting (EOGM).
This move comes after months of allegations of mismanagement and wrongdoing against the current board, led by CEO Hasnain Aslam.
Chishti has also accused TRG of violating Pakistani law by having an affiliate or subsidiary buy its shares, and of violating a state bank mandate to promptly return foreign currency to Pakistan.
He has also raised questions about the company’s financial performance, noting that Ibex’s share price has reduced by 50% from its peak.
Within this context, one of TRG’s subsidiaries, Afiniti, has experienced a substantial decline in revenue; a loss of approximately Rs.30 billion a year, a mass exodus of employees and a lack of clear strategic direction.
In addition to the allegations of sexual harassment and financial misconduct, Chishti has also accused TRG of the following:
-Causing at least Rs 8 billion in losses to the Government of Pakistan through the avoidance of due taxes
-Violating Clause 8.13 of the 2005 Preferred Stock Purchase Agreement which governs the relationship between TRGP, TRGI, and their principal shareholders.
-Reducing TRGP’s voting interest in TRGI to 45.3% despite TRGP having an economic interest of 68.8% in TRGI through a maneuver undisclosed to TRGP.
TRG has denied all of the allegations against it. However, the company has refused to provide any evidence to support its claims. In fact, TRG has gone to great lengths to suppress information about the allegations of harrasment against Aslam and the company’s financial performance while receiving a stay order from court.
For example, TRG failed to disclose Chishti’s arbitration against the company in its March 2023 financial statements.
TRG shareholders have a right to know the truth about what is happening at the company. TRG should release all relevant information about the allegations against Aslam and the company’s financial performance.
Why has Ibex’s share price reduced by 50% from its peak? Has TRG violated Pakistani law by having an affiliate or subsidiary buy its shares? Has TRG violated a state bank mandate to promptly return foreign currency to Pakistan? Has TRG violated FBR regulations on taxes?. Shareholders deserve to know.
