Arbitrator in the US mandates Zia Chishti to settle $9.1 million debt to TRG International.
In a major blow to ex-TRG Pakistan CEO, Zia Chishti, a foreign arbitrator has ordered him to cough up a whopping $9.1 million (equivalent to PKR 2.5 billion) to TRG International due to some dicey share dealings, as revealed on Tuesday.
This move comes as a result of a squabble over the validity of Chishti's share pledges, which were crucial for his borrowing PKR 2.5 billion from JS Bank to get his hands on additional shares of TRG Pakistan. TRG raised the red flag, claiming these share pledges were all part of a slick scheme by Chishti and the JS Group to wrongfully seize control of TRG Pakistan and, subsequently, attempt to override TRG's international assets.
In a notice to the Pakistan Stock Exchange (PSX), TRG Pakistan broke the news on Tuesday. They shared that their affiliate, The Resource Group International Limited (TRGIL), had successfully employed a US arbitrator to dismantle Chishti's illicit share pledges.
According to the notice, on January 27, 2025, the arbitrator initially ruled against Chishti, declaring he breached his contractual obligations by pledging shares for collateral. Later, on April 22, 2025, the same arbitrator called on Chishti to compensate TRGIL to the tune of $9.1 million (PKR 2.5 billion).
TRG felt Chishti was not entitled to pledge those shares due to his contractual obligations, and they urged the arbitrator to pull the plug on the pledge. The US arbitrator agreed with TRG in January 2025 and ordered Chishti to remove the pledge.
All eyes are now on Chishti to see if he can manage to pay off such a hefty figure against TRG. With JS Bank questioning the loan's status following this order, the fate of the PKR 2.5 billion loan from the bank to Chishti remains uncertain.
Interestingly, Chishti and his wife were barred from transferring shares of TRG Pakistan by the courts, as revealed in a recent bourse notice from TRG Pakistan. The situation thickened as both the Lahore and Islamabad High Courts dismissed Chishti's writ petitions to suspend ad-interim orders that restrained the company regarding its board elections.
Sources suggest this struggle delves deep into the world of intricate corporate governance, with international implications due to TRG's extensive international operations and involvement of various banking and financial entities. It also highlights the potential consequences for individuals' reputations and careers, especially in the realm of publicly listed companies and financial institutions.
- The US arbitrator ordered Zia Chishti to pay TRG International $9.1 million (equivalent to PKR 2.5 billion) due to his breach of contractual obligations related to pledges of shares.
- In January 2025, the US arbitrator agreed with TRG and ordered Chishti to remove his pledge of shares.
- The arbitration outcome may affect the status of the PKR 2.5 billion loan from JS Bank to Chishti, as all eyes are on him to pay off the hefty figure.
- The complex corporate governance dispute between Chishti and TRG has international implications due to TRG's extensive international operations and the involvement of various banking and financial entities.
