LAHORE, April 1: The Securities and Exchange Commission of Pakistan (SECP) has taken notice of a hefty payment by the Jahangir Siddiqui & Company Limited (JSCL) of Rs431 million to one of its non-executive director as ‘advisory fee’ in a Rs1.95 billion deal with the International Container Terminal Services Inc (ICTSI) Mauritius Limited early last year.

The payment made to Ali Jahangir Siddiqui, son of Jahangir Siddiqui, founder of the JS Group, forms over 22 per cent of the total deal amount. The company documents say the payment of the fee to him had been “duly approved” by the board of directors.

In a letter sent to the company’s chief executive officer, Suleman Lalani, the commission has asked him to “substantiate the advisory services” given by Ali for which the payment was made to him.

The commission’s letter states the review of the company’s audited accounts for 2012 has shown that an advisory fee of Rs443 million had been paid, which also includes the payment made to its director for signing a share purchase agreement with ICTSI Mauritius Ltd.

Under the agreement the company sold about 13 million of its voting shares to ICTSI in the Pakistan International Container Ltd at a price of Rs150 per share.

The commission has pointed out in the letter that it had also received complaints from a few of the company’s shareholders about the advisory fee payment (to the director). Therefore, it has asked the company’s CEO to provide a certified copy of advisory agreement entered into with Ali Jahangir Siddiqui, minutes of the board meeting in which advisory agreement was approved and details of transactions against which advisory services were provided.

Additionally, the commission has advised the CEO to explain the “transaction in respect of payment to the director” before shareholders at the company’s annual general meeting scheduled for Friday.

Our Equities Correspondent adds from Karachi: Sources close to the company, when asked to comment said: “As this letter was issued today, April 1, 2013 and therefore JSCL board meeting is to be held on Tuesday on this matter.

JSCL cannot comment on communication between itself and the regulator unless it has responded to the regulator first”.

Sources also said: “It is curious that SECP has raised this matter on the basis of an unsigned letter from one of the rivals. The SECP letter is simply a request for information”.