The Sindh High Court (SHC) has ordered criminal charges against the management of The Resource Group (TRG) to proceed, instructing TRG Chairman Mohammed Khaishgi and CEO Hasnain Aslam to appear before the court.
This ruling follows a previous decision by the District and Sessions Court in Karachi in February 2023, which ordered criminal defamation charges against the management and board of Bermuda-based TRG International. The charges were filed by former TRG Pakistan CEO Zia Chishti, who alleged defamatory statements made against him in a letter from TRG International to its parent company, TRG Pakistan.
The defendants in the District Court included: Mr. Mohammed Khaishgi, Chairman of TRG Pakistan, Mr. Hasnain Aslam, CEO of TRG Pakistan, Mr. Hassan Farooq, CFO of TRG International, Mr. Pat Costello, General Counsel of TRG International, Several current and former directors of TRG International, including Mr. Zafar Sobani, Mr. Patrick McGinnis, Mr. Khaldoon Latif, and Mr. John Leone.
After being ordered by the District Court to appear, the defendants sought a stay from the Sindh High Court, which temporarily blocked the proceedings. However, after a delay of twenty months, the SHC vacated its stay order and instructed that the proceedings against the defendants continue in the District Court. The next hearing is scheduled for November 16, when the defendants must appear, or arrest warrants may be issued.
Several defendants have now approached the Supreme Court, seeking a further stay of the proceedings. Legal experts suggest that a further stay is unlikely, given the SHC's ruling, which emphasized that TRG's leadership had attempted to bypass the proper legal process by filing revision applications directly with the high court. Citing legal precedent, the SHC stated that such grievances should first be addressed in the trial court.
These criminal defamation proceedings are part of a larger set of legal battles between Mr. Chishti and TRG's current leadership, including competing arbitrations filed in the United States. In one arbitration filed by TRG against Mr. Chishti in January 2023, TRG claimed that Mr. Chishti was prohibited from selling or borrowing against his TRG shares. TRG has also received a stay order in Pakistan, freezing Mr. Chishti’s shares pending the outcome of the U.S. arbitration.
On the other hand, Mr. Chishti has initiated an arbitration in the United States, alleging criminal, civil, and contractual violations by TRG, Mr. Aslam, Mr. Khaishgi, and other related defendants. TRG sought a stay on this arbitration, but the U.S. federal court rejected it last month, ruling that the arbitration should proceed.
The outcomes of these three sets of proceedings could have significant consequences for TRG and its management. A board election for TRG is expected in January 2025, and should Mr. Chishti prevail in his various legal challenges, it could increase his chances of regaining control of TRG. In his public filings, Mr. Chishti has pointed out that under the current management, TRG's stock price has plummeted, and the company has recorded staggering losses, including a loss of over 30 billion rupees last year.
In a statement, Mr. Chishti commented: “TRG and its current management have taken millions of dollars out of the company for themselves while overseeing its collapse. The company’s most valuable asset, Afiniti, is now in insolvency in Bermuda. TRG's stock price is down over 70%, while the Pakistani market has risen by 70%. The company is also covering up sexual harassment allegations against CEO Hasnain Aslam. Furthermore, TRG has not held a shareholder AGM or had its accounts approved in three years. What was once Pakistan’s leading technology company has been ruined. It will be interesting to see how shareholders vote in January after three years of disaster under this management, when the board elections are finally due.”
Both Mr. Aslam and Mr. Khaishgi declined to comment.
With the SHC lifting its stay order, the District and Sessions Court has resumed its proceedings, issuing notices to Messrs. Khaishgi, Aslam, Leone, McGinnis, Saigol, Sobani, Khaldoon Latif, Costello, and Farooq. It remains to be seen whether the defendants, most of whom do not reside in Pakistan, will attend the upcoming hearings in the district court.