The Federal Investigation Agency has registered a criminal case against former Unity Foods Limited executives over alleged financial irregularities involving billions of rupees, following an investigation and referral by the Securities and Exchange Commission of Pakistan.
The FIA’s Corporate Crime Circle Karachi registered the case on August 29 against former Unity Foods executives and other accused persons under Sections 406, 420, 477-A, 109 and 34 of the Pakistan Penal Code. The FIR, based on an SECP referral, alleges misuse of company funds, manipulation of financial records and other irregularities.
According to the FIR, Unity Foods raised Rs. 3.75 billion from shareholders through a rights issue in 2019 and 2020. The funds were intended for specific purposes, including capital expenditure, the acquisition of assets and payment of loans. However, the investigation alleges that around Rs. 2.87 billion was used for purposes other than those stated in the rights issue documents.
The FIA document also alleges that Rs. 5.318 billion in company funds was paid to the mother of the former CEO as a loan. It further alleges that Rs. 2.6 billion was advanced through a Unity Foods subsidiary to two unidentified parties without the required documentation, authorization or approvals.
The SECP investigation also identified major discrepancies between Unity Foods’ published financial accounts and its internal SAP records. According to the FIR, the analysis found a difference of approximately Rs. 44.7 billion between the reported accounts and internal records relating to customer receivables and other financial information.
The investigation further found an alleged discrepancy of around Rs. 5.2 billion between the company’s recorded inventory and its physical stock. The FIR also raises questions over approximately Rs. 5 billion in old receivables, for which investigators found no evidence that goods had been supplied against the outstanding amounts.
The FIR alleges that the company’s financial statements and records contained material misstatements and that certain assets, liabilities, receivables and transactions may not have been accurately reflected. It also alleges that company resources were used for the benefit of certain individuals and related parties.
The case names former Unity Foods executives and other individuals as accused, with the FIA investigation assigned to its Corporate Crime Circle in Karachi. The FIR states that the investigation will examine the company’s records, transactions, advances and movement of funds and establish the role of the accused in the alleged offenses.
The SECP referred the matter to the FIA under Section 41-B after its investigation identified what it considered potential criminal offenses. SECP Chairman Dr. Kabir Ahmed Sidhu said protecting investors’ funds and minority shareholders’ rights remains a core responsibility of the regulator, adding that funds raised from investors should be used only for the purposes disclosed to them and that shareholders have a fundamental right to accurate and transparent financial information.
