ISLAMABAD, May 2 (Alliance News): The Federal Board of Revenue has registered a First Information Report (FIR) over alleged money laundering involving billions of rupees, claiming that personal liabilities of five directors of a Karachi-based pharmaceutical company were settled through the account of a non-profit organisation.
According to the FIR lodged by the Directorate of Intelligence and Investigation, the pharmaceutical company is linked to a non-profit educational trust that owns a reputed university and several boys’ and girls’ schools. The case emerged after an internal dispute between the company’s founder and its directors escalated into legal proceedings.
The founder, along with his son, had filed a suit in the Sindh High Court seeking Rs60 billion in damages over alleged misconduct by the five directors. The dispute was later resolved through a settlement agreement in December 2023, under which the directors were required to pay Rs7.5 billion in their personal capacity.
However, investigators allege that the directors arranged the payment through the company they controlled, instead of settling the amount personally. The company subsequently recorded the Rs7.5 billion payment as a “business expense” under “Other Indirect Expenses” and claimed it as a deductible expense in its income tax return for Tax Year 2024.
At the same time, the directors reportedly did not declare the amount as salary, perquisite, or benefit in their individual tax returns, raising concerns of tax evasion and misuse of corporate and charitable funds.
The matter was formally brought to the attention of the FBR in February 2025, prompting a detailed investigation. Following due diligence, notices were issued under Section 176(1) of the Income Tax Ordinance, 2001, for civil liability, and under the Anti-Money Laundering Act, 2010, for criminal liability, to all five directors in April 2026.
FBR officials said the responses received from the accused were found unsatisfactory and lacking supporting evidence, leading to the registration of the FIR on April 23, 2026.
The case gained public attention after legal expert Zahid F. Ebrahim criticised the process in a post on X (formerly Twitter), alleging procedural irregularities. He claimed that notices were issued in quick succession without adequate time for response, followed by the filing of the FIR and targeting of bank accounts.
Responding to the criticism, FBR officials maintained that the notices served distinct legal purposes and were issued after more than 14 months of investigation. They emphasised that the Section 176 notice pertains to civil tax liability, while the AML notice addresses criminal aspects of the case.
Officials further revealed that the non-profit status of the educational trust had already been revoked by the Large Taxpayers’ Office in Karachi. The revocation was based on findings that donation funds were allegedly used for personal benefit by the directors, which now forms the basis of the prosecution.
The case is expected to proceed under both tax and anti-money laundering laws, with potential legal consequences for the individuals involved.
