SECP probe sends Unity Foods case to FIA over alleged financial irregularities

A Unity Foods investigation by the Securities and Exchange Commission of Pakistan (SECP) has led to a criminal case by the Federal Investigation Agency (FIA).

The case involves alleged misuse of company and shareholders’ funds. It also covers suspected falsification of accounts and other financial irregularities.

Unity Foods Limited is listed on the Pakistan Stock Exchange (PSX). The company has raised funds from public shareholders.

The allegations therefore carry significance for investor protection. The SECP says some funds may not have been used for their disclosed purposes.

Rs3.75bn rights issue under scrutiny

Unity Foods raised Rs3.75 billion through a rights issue in 2019. The company planned to use the money for expansion and diversification.

The plans included acquiring assets and expanding its refinery at Port Qasim. The company also intended to establish an oil terminal.

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The SECP examined the use of those funds. Its review found that around Rs2.87 billion could not be linked to the stated purposes.

The company allegedly failed to provide evidence showing how the money was used.

Billions in transactions questioned

The SECP also identified several other transactions for further investigation.

One involves alleged payments worth Rs5.318 billion to the mother of the former chief executive. The transactions appeared as loan receipts and repayments.

The SECP said the company did not produce suitable banking instruments. It also found no supporting board approvals for the transactions.

Another transaction involved an alleged Rs2.6 billion advance. A Unity Foods subsidiary reportedly transferred the money to two undisclosed parties.

Investigators will also examine other related-party transactions and exposures.

Subsidiaries and company resources examined

The case also raises questions about the disposal of Unity Foods subsidiaries.

The SECP has raised concerns over the alleged use of company funds and inventory. Other company resources also form part of the investigation.

The FIA will identify the beneficiaries of the transactions. It will also trace the movement of funds.

The agency will examine the roles of directors, officers and other people connected to the case.

Major discrepancies in financial records

Financial reporting forms another major part of the investigation.

SECP material showed an alleged Rs44.7 billion difference between Unity Foods’ published accounts and its internal SAP records.

The investigation also concerns an alleged Rs5.2 billion inventory gap. The figure represents a difference between SAP records and physical stock.

Investigators are also examining around Rs5 billion in aged receivables. The SECP said there was no corresponding evidence of goods being delivered.

The regulator identified other accounting inconsistencies as well.

Why the case matters to investors

Listed companies must provide accurate financial information to the market.

Shareholders use published accounts to assess a company’s financial position. Potential investors and lenders also rely on these disclosures.

Large differences between internal records and published accounts can therefore raise serious questions about financial reporting.

SECP refers case to FIA

Following its inspection, the SECP started proceedings under the Companies Act, 2017.

Some findings potentially involved criminal offences. The SECP said those matters fell outside its regulatory jurisdiction.

The Commission therefore referred the case to the FIA under Section 41-B of the SECP Act, 1997.

The FIA’s Corporate Crime Circle Karachi registered an FIR on August 29, 2026.

The FIR cites Sections 406, 420, 477-A, 109 and 34 of the Pakistan Penal Code. It names former management and other accused individuals.

The FIA will now determine whether the accused face criminal liability. It will also investigate the possible involvement of directors, officers, beneficiaries and connected parties.

SECP vows to protect shareholders

SECP Chairman Dr Kabir Ahmed Sidhu said the regulator would continue to act firmly against violations.

He said protecting minority shareholders remains a key responsibility of the commission.

“Funds raised from investors must be used for their disclosed purposes,” he said. “Shareholders have a right to accurate and transparent financial information.”

Dr Sidhu said the SECP would strengthen its oversight of listed companies. He also pledged action where companies put shareholders’ interests at risk.

The allegations remain under investigation. The FIA will determine the facts and any liability in accordance with the law.