SHC orders criminal proceedings against TRG management

The Sindh High Court orders criminal charges against The Resource Group (TRG) management to proceed with the further order for the TRG Chairman Mohammed Khaishgi and CEO Hasnain Aslam to appear before the court.

The Sindh High Court ruling follows an earlier ruling by the District and Sessions Court in Karachi in February 2023, ordering criminal defamation charges against the management and board of Bermuda-based TRG International to proceed.

The charges were brought by former TRG Pakistan CEO Zia Chishti challenging defamatory statements made against him in a letter written by TRG International to its parent, TRG Pakistan.

The defendants in the District Court were listed as Mr. Mohammed Khaishgi, the Chairman of TRG Pakistan; Mr. Hasnain Aslam, the CEO of TRG Pakistan; Mr. Hassan Farooq, the CFO of TRG International; Mr. Pat Costello, the General Counsel of TRG International; and various present and former directors of TRG International including Mr. Zafar Sobani, Mr. Patrick McGinnis, Mr. Khaldoon Latif, and Mr. John Leone.

After having been ordered by the District Court to appear, the defendants approached the Sindh High Court and received a stay order that blocked the District Court from proceeding.

After a twenty-month delay, the Sindh High Court vacated its stay and ordered the proceedings against the defendants to continue in the District Court.

The next hearing in the District Court is set for November 16, at which the defendants will have to appear or face arrest warrants.Several of the defendants have now approached the Supreme Court seeking a further stay of the proceedings.

Legal experts say that such a further stay is unlikely given the ruling of the Sindh High Court that TRG’s leadership was attempting to bypass the proper legal process by filing revision applications directly with the high court.

Citing legal precedent, the court stated that all such grievances should first be heard in the appropriate trial court.

The criminal defamation proceedings in Karachi are part of a broader set of legal proceedings between Mr. Chishti and TRG’s present leadership, including dueling arbitrations filed against each other in the United States. In one arbitration that TRG filed against Mr. Chishti in January 2023, TRG alleged that Mr. Chishti was not allowed to sell or borrow against his TRG shares.

TRG has received a stay order in Pakistan freezing Mr. Chishti’s shares pending the conclusion of the U.S. arbitration.On the other side, Mr. Chishti had filed an arbitration in the United States alleging criminal, civil, and contractual violations by TRG, Mr. Aslam, Mr. Khaishgi, and other related defendants.

TRG had received a stay on that arbitration, but this stay was rejected by a federal court in the United States last month which ordered the arbitration to proceed.

The expected rulings in the three sets of proceedings could have major consequences for TRG and its management. An election for the TRG board is expected in January of 2025 and should Mr. Chishti prevail in his various litigations that may increase his chances of retaking control of TRG.

The company’s most prized asset, Afiniti, is now in insolvency in Bermuda. The company’s stock price is down over 70% while at the same time the Pakistani market is up 70%.