SEC Policy Board Chairman issues Statement on NAB Press Release

December 21, 2019: Statement of SEC Policy Board Chairman Mr. Khalid Mirza

As Chairman, Securities and Exchange Policy Board (“SEPB”, the “Policy Board”), I have taken note of the Press Release issued by NAB, Islamabad on December 13 and would like to state as follows:

(1)          The Securities and Exchange Commission (“SECP”, the “Commission” ) Act provides for the setting up and operation of SEPB, a body entrusted with distinct functionalities under the SECP Act (primarily, but not only, under Sections 21 and 22), including inter alia oversight of the performance of the Commission “to the extent that the purposes of the Act are achieved”. Accordingly, SEPB has a quasi-supervisory role vis-a-vis SECP. It is also noteworthy that, under the SECP Act, the Federal Government is entrusted with the duty of using “its best efforts to promote, enhance and maintain independence” of the securities regulator which, by extension, is presumably enjoined on all government bodies and agencies. While the Policy Board does not employ its own staff, the Commission is required in terms of Section 24(4) “to act as the Secretariat of the Board and provide all necessary facilities to enable the Board to exercise its powers and perform its functions under the Act...”.

(2)         The press release in question begins by announcing that the Chairman, NAB, Justice Javed Iqbal, had directed Director General, NAB, Rawalpindi, to investigate into alleged illegal appointments made by Chairman, Policy Board, through the misuse of his authority. The fact of the matter is that neither Policy Board nor its Chairman has any authority to make appointments, and therefore, the question of illegal appointments by the Policy Board or its Chairman simply does not arise — clearly, the underlying basis for the investigation just does not exist. The Chairman, NAB, has thus incontrovertibly erred and would do well to retract his direction for the holding of an inquiry into misuse of authority in the making of appointments since the Policy Board as well as its Chairman do not enjoy any privilege or power in this respect.

(3)         As regards other allegations contained in the press release, the Chairman, SEPB, would like to affirm that:

           (A) by his stating that SECP staff had stopped working due fear of arrests can not by any means be regarded as interference in the affairs of SECP as posited in the press release;

            (B) he can and does issue public statements, without any let or hinderance, but none of his public utterances can in any sense be construed as indirectly influencing any investigation by NAB as indicated in the press release. It is inconceivable that the Chairman of SEPB can ever have, or aspire to have, the capacity to directly or indirectly influence the working of an institution with the power and standing of NAB;   and

(C) there was indeed a capacity issue within SECP aggravated by  wrongful appointments in recent years that had adversely affected the working of the institution but in lamenting this, Chairman SEPB had not in any way mocked NAB which seems to have been alleged.

It needs to be asserted for all concerned that the scheme embedded in the SECP Act conceives of a regulatory apparatus comprising  SECP and SAPB that is expected to operate professionally and autonomously (which the Federal Government is obliged by law to support) in order to achieve the beneficial regulation of capital markets and superintendence of the corporate sector — this being a fundamental requirement for investor confidence and the  mobilization of capital as well as its allocation on a risk adjusted basis. Without this, any economy that rests on the private sector for growth would be considerably handicapped. It is for this reason that the legislature, in its wisdom, recently inserted Section 41B that immunes SECP and its staff from any intervention by Law Enforcement Agencies, including NAB.

While the difficult responsibilities shouldered by LEAs need to be appreciated and all government organs and authorities must extend to them all possible support in accordance with law, it is hoped that LEAs would also be mindful with regard to the onerous responsibilities that regulatory  agencies  have been entrusted, and specifically in the case of the securities regulator, fully respect the binding provisions contained in Section 41B of the SECP Act.

Official Statement