The Securities and Exchange Commission of Pakistan (SECP) has referred a case involving Unity Foods Limited to the Federal Investigation Agency (FIA) after an inspection and subsequent regulatory proceedings identified alleged misuse of shareholders’ and company funds, falsification of accounts and other financial irregularities. The FIA has now registered a criminal case against former management and other accused persons, with the investigation covering the alleged transactions, movement of funds and possible involvement of directors, officers, beneficiaries and connected parties. Unity Foods is a public listed company on the Pakistan Stock Exchange (PSX), making the matter significant from an investor protection and corporate governance perspective.
According to the SECP reference, Unity Foods raised Rs3.75 billion through a rights issue in 2019. The funds were raised for specific business purposes, including expansion and diversification, acquisition of assets, additions to the company’s refinery at Port Qasim and establishment of an oil terminal. However, SECP’s examination found that approximately Rs2.87 billion of the proceeds were allegedly diverted from their stated purposes. The company was reportedly unable to provide evidence establishing how the identified amount had been utilised for the purposes disclosed when the funds were raised.
The SECP investigation also identified several other transactions that the regulator considered to warrant further investigation. These included alleged payments amounting to Rs5.318 billion from company funds to the mother of the former chief executive officer, described as loan receipts and repayments. According to the material referred by SECP, appropriate banking instruments and board approvals supporting these transactions were not produced. A further Rs2.6 billion was allegedly advanced through a subsidiary to two undisclosed parties, alongside other exposures and transactions involving related parties.
Questions were also raised regarding the disposal of Unity Foods’ subsidiaries and the alleged use of company funds, inventory and other resources for the benefit of entities connected with the accused persons. The FIA investigation will examine the beneficiaries of the transactions, the movement of funds and the roles played by directors, officers and other individuals or entities involved. The investigation is expected to determine whether the alleged transactions constituted criminal offences and establish the responsibilities of the persons connected with them.
A significant part of the case concerns the reliability and consistency of Unity Foods’ financial reporting. Material referred by SECP reportedly indicated an alleged difference of Rs44.7 billion between the company’s published accounts and its internal SAP records. The investigation also identified an alleged Rs5.2 billion discrepancy between inventory recorded in the SAP system and physical stock. In addition, around Rs5 billion in aged receivables were identified without corresponding evidence of the delivery of goods, along with other accounting inconsistencies that raised questions regarding the company’s financial records.
The alleged discrepancies are particularly important because Unity Foods is a listed company whose published financial statements and corporate disclosures are relied upon by shareholders, prospective investors and lenders. Financial statements provide stakeholders with information used to assess a company’s financial position, business performance and risks. Any significant differences between reported figures and internal records can therefore have implications for investor decision making and confidence in the accuracy of corporate disclosures.
Following its inspection, SECP initiated proceedings under the Companies Act, 2017. The regulator subsequently determined that some of the matters identified during its examination potentially constituted criminal offences that fell outside SECP’s regulatory jurisdiction and the legislation administered by the Commission. The case was therefore referred to FIA under Section 41-B of the SECP Act, 1997 for further investigation and action under the applicable criminal laws.
Based on the SECP reference and available material, FIA’s Corporate Crime Circle Karachi registered a First Information Report (FIR) on August 29, 2026. The case was registered under Sections 406, 420, 477-A, 109 and 34 of the Pakistan Penal Code against former management and other accused persons. FIA will now investigate the criminal liability of those named in the case while also examining the involvement of other directors, officers, beneficiaries and connected parties.
The case highlights the regulatory importance of monitoring listed companies, particularly where funds have been raised from public shareholders for specific corporate purposes. The SECP’s intervention followed an examination of transactions, financial records and corporate activities and resulted in the referral of matters that may involve criminal liability to the relevant investigative authority. The regulatory process is intended to ensure that investor funds are used according to disclosed purposes and that companies provide accurate financial information to the market.
SECP Chairman Dr. Kabir Ahmed Sidhu said the Commission would continue taking regulatory action to protect investors and maintain confidence in Pakistan’s capital market. He said protection of minority shareholders remains a fundamental responsibility of the regulator and that funds raised from investors should be used for their disclosed purposes. He also emphasised shareholders’ right to accurate and transparent financial information and said SECP would continue strengthening oversight of listed companies where investor interests may be at risk.
The allegations against Unity Foods and the other accused persons remain subject to investigation by FIA and determination according to law. The registration of the criminal case does not by itself establish liability, and the allegations will have to be examined through the applicable legal process. FIA’s investigation will determine the facts surrounding the transactions, the movement and use of the funds, the beneficiaries involved and the potential roles of former management, directors, officers and connected parties.
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