ZAHEER ABBASI

ISLAMABAD: Senate Standing Committee on Finance has expressed serious concern on bringing serious tax crimes/tax evasion and taxation offences into the ambit of money-laundering - part of the proposed Anti Money Laundering (AML) amendment Bill - due to fear that it would be misused.

Chairman of the Committee Saleem Mandviwalla said how he could support making tax regime as part of the AML Bill when entire committee has expressed serious concern and opposed its inclusion in the law primarily because of its misuse fear. He said that the committee had asked for Finance Ministry’s and State Bank of Pakistan’s views on the issue in the last meeting because the members were against making tax regime part of the proposed law. A senior official of SBP said the government has to criminalize serious fiscal offenses in the money laundering law to comply with new standards of Financial Action Task Force (FATF) otherwise it would be downgraded to grey list. He added that Pakistan was recently excluded from the grey list by the FATF after the government introduced measures including combating financing for terrorism law.

The committee deferred discussion on ‘The Anti-Money Laundering (Amendment) Bill, 2014 till its next meeting so that members can study the bill and send their recommendations and amendments in writing to the committee.

A senior official of SBP said the Senate Standing Committee on Finance in its meeting has asked the National Accountability Bureau to complete the investigation regarding the matter of privatization of a bank in 1991 and asked the committee to provide with a status report every month. Chairman of the Committee said that the ambiguity in inquiry report on the issue has created serious doubts on the credibility of NAB, SBP and other government institutions and these institutions must come out clean. DG NAB stated that they have restarted inquiry into privatization of the bank from July1 2015 and statements of a number of witnesses have also been recorded and authority would proceed further to establish criminality. Governor SBP Ashraf Mahmood Wathra said that investigation and any consequent drastic outcome would adversely impact the overall privatization process, saying that material in 22 folders of previous inquiry does not support the allegations against the privatization of that bank. He added that the SBP’s consistent viewpoint was that it is not an investigating agency. Senator Talha Mehmood said that the committee would like to know whether those who have made investment abroad in St Johns Hotel and Club were given any exemption in repatriation of remittances and whether prudential regulation process was followed in the case of that bank’s privatization. The matter was taken up as result of a question raised in the Upper House by Senator Saeed Ghani during the 104th session. Senator Saeed Ghani expressed his displeasure over the lack of interest by NAB to probe the matter of privatization of that bank. The committee also decided to review the 21 folders of investigation reports either by asking for their copies or going to NAB Headquarters.

The Senate Standing Committee on Finance approved the amendments proposed by the SECP to section 95-A of the 1984 Companies Ordinance. In terms of these amendments all listed companies would be able to purchase their own shares and hold them as treasury shares.  The concept of treasury shares already exists in various international jurisdictions such as Malaysia, Singapore, the US, the UK, Australia and Japan. The existing section allows companies to buy back shares but requires cancellation of the shares.

Under the amended section 95-A,  a listed company will be able to buy back its shares and retain them as treasury shares, if it believes that its shares are being traded in the market below fair value. As treasury shares have no entitlement for cash dividend, they can be used as an effective measure for bringing stability in the market and improve the earning per share (EPS) of a company’s stock.

The amended section requires purchase to be made either through tender offer or stock exchange against cash and out of the distributable profits or reserves of the company. The company can dispose of the treasury shares in the manner to be prescribed by the SECP through regulations. The proposed changes shall take effect once they are duly approved by both houses of the Parliament.