Alleged misuse of funds: SECP findings lead to FIA case against food co

An inspection by the Securities and Exchange Commission of Pakistan (SECP) into alleged misuse of funds by Unity Foods Limited has led to the Federal Investigation Agency (FIA) registering a criminal case. Unity Foods, a public-listed company on the Pakistan Stock Exchange, raised Rs3.75 billion through a rights issue in 2019 for expansion and diversification.

SECP found that approximately Rs2.87 billion of these funds were allegedly diverted from their stated purposes, as the company failed to provide evidence of utilization. Other suspicious transactions include alleged payments of Rs5.318 billion to the former CEO's mother under the guise of loan receipts and repayments, and Rs2.6 billion advanced to two undisclosed parties via a subsidiary.

The investigation also raised concerns about the disposal of the company's subsidiaries and alleged misuse of funds for connected entities. Material suggested an Rs44.7 billion discrepancy between published accounts and internal financial records, as well as a Rs5.2 billion difference between inventory recorded and physical stock.

FIA's Corporate Crime Circle Karachi registered an FIR against former management and other accused persons under various penal code sections. The case highlights the importance of regulatory oversight for listed companies, particularly those involving public shareholders' money. SECP Chairman Dr Kabir Ahmed Sidhu emphasized the Commission's commitment to protecting investors and upholding confidence in Pakistan's capital market.