A Federal Investigation Agency (FIA) inquiry team has found Securities and Exchange Commission of Pakistan (SECP) Chairman Zafar Hijazi guilty of tampering the records of companies owned by the Sharif family, and has recommended registering a First Information Report (FIR) against him.

The team submitted a 28-page inquiry report to the Supreme Court (SC) on Saturday, in which it endorsed the stance of the joint investigation team (JIT) probing the offshore assets of Prime Minister Nawaz Sharif and his family in connection to the Panamagate case.

Last month, the JIT told the SC that not only have some governmental departments shown reluctance in handing over the relevant records required for their investigation, but some records had also been tampered with.

In the wake of the FIA investigation, two opposing groups have emerged within the corporate sector regulator, which is now rife with suspicions and mistrust.

On Friday, the SECP commission held its first bi-weekly meeting since the arrival of the probe team.

The meeting was put off as long as the investigators remained on the SECP premises.

However, rumours circulated that the meeting was put off until Tahir Mahmood, the commissioner of the Company Law division, left on ex-Pakistan leave late on Thursday night.

The two camps, which emerged in the wake of the allegations and counter-allegations levelled by senior and mid-level SECP executives, have Chairman Zafar Hijazi on one side.

Mahmood — the most senior executive — is said to be leading the dissident camp. While the three-year tenure of Hijazi is set to end in December 2017, Mahmood — a career SECP officer — still has years of service ahead of him.

The cracks in SECP ranks came to the fore when the relevant executives and the chairman gave contradictory statements to the FIA team.

In his defence, Hijazi tried to turn the tables on his subordinates when he told the FIA team headed by FIA Anti-Corruption Wing Director Maqsoodul Hassan: "I have now learnt that some undisclosed witnesses have falsely deposed before the JIT that the case (pertaining to Chaudhry Sugar Mills) was prepared on my directions in 2016."

In his reply, Hijazi has identified Mahmood as being responsible for the affairs of the relevant department, adding: "The SECP chairman is not supposed to examine each and every file, nor is any such exercise practically possible. He interacts with departments through concerned commissioners and relies upon the briefings given to him."

Hijazi’s response also claimed there were no allegations of money laundering against Chaudhry Sugar Mills and any impression to this effect was given due to ulterior motives.

This statement contradicts the detailed response given to FIA by Maheen Fatima, who heads the Internal Audit and Compliance department.

It was her earlier statement to the JIT that blew the lid on alleged record tampering.

She told the JIT that the alleged money laundering case against Chaudhry Sugar Mills was closed in 2016 on the directives of the chairman, but the date penned in the closing note was May 2013.

In response, the SC had directed the Interior Ministry to conduct an inquiry through the FIA, which opened a Pandora’s box inside the SECP.

Fatima’s statement to the FIA highlighted how, after the Panama Papers case hearings in the Supreme Court, the Chaudhry Sugar Mills case began to appear in media reports in 2016.

"On June 26, 2016, Mr Mahmood (the commissioner) called myself and Abid Hussain (the executive director) who was also working on Panama-related information, to the chairman’s office with Chaudhry Sugar Mills files," Fatima told the FIA team.

"We briefed about the case and he (chairman) called Ali Azeem and asked to close the investigation against the Chaudhry Sugar Mills," she told investigators.

Azeem currently heads the SECP’s Insurance Division, but was head of the Enforcement Department in 2013.

Her statement said: "[The] chairman directed us to immediately put a backdated note in the file to confirm the investigation was closed in 2013."

"This was all done on extreme pressure of [the] chairman," she said, adding: "I was not in a position to say no."