The Express Tribune reported earlier this week that foreign security firm G4S’s stake in Pakistan operations was recently purchased by its local partner, Ikram Sehgal. We have noted before that Mr Sehgal has a small problem with disclosing relevant facts and conflicts of interest related to his business ventures when talking to media, and unfortunately it appears that this time is no different.
According to the report in Express Tribune, Ikram Sehgal told reporter Kazim Alam that “G4S officials were simply taken aback by our offer. They never expected that a Pakistani company could raise so much capital on its own.” He went on to note that “Bank Alfalah, Silkbank and Summit Bank helped him raise the money”.
What Ikram Sehgal failed to mention to the reporter is that he sits on the Board of Directors of Bank Alfalah, which may put his use of the Bank for fundraising for his own purposes in direct conflict with Bank Alfalah’s strict Code of Conduct which requires Directors to:
- Disclose any conflict of interest
- Adhere to the highest moral conduct and best practices
- Exercise independent judgment
Bank Alfalah defines Conflict of Interest as:
when any employee permits the prospect of direct or indirect (e.g. through family connection) personal gain to influence his/her judgment or actions more generally, when he/she favors someone else’s interest over that of the Bank’s or any of such customer in the conduct of Bank’s business.
The Conflict of Interest policy goes on to explicitly prohibit any Director from seeking to do business with the bank:
An employee may not hold a position of director, consultant, employee, representative or agent with any supplier, competitor or organization either doing or seeking to do business with Bank without prior written consent of the Bank’s Central Management Committee, CEO or Board of Directors.
It is not known if Mr Sehgal has obtained the required written consent prior to using Bank Alfalah to raise money for this multi-million dollar purchase because the reporter seems to have been unaware of the relationship. Whether or not Sehgal obtained the required written consent, however, may be irrelevant if his action is viewed as ‘Self-Dealing’ which is when a person takes advantage of his position to act in his own self interest rather than the interest of his Bank. This type of conflict of interest can have more than ethical consequences only. The global economic crisis has been blamed in part on self-dealing by banks like Merrill Lynch and Citigroup, both of which ended up being among the biggest losers in the crisis also.
However, these are questions for Ikram Sehgal and his investors, including his own Bank Alfalah. If they believe using their customers’ money to help Mr Sehgal purchase a private security company for himself is a good investment, that is their business decision. But as journalists, our business is reporting all the facts – even if we have to uncover them ourselves – so that people can make their own decisions.