A Sindh High Court judge has lifted the stay against criminal defamation charges filed against The Resource Group (TRG) management and board by TRG’s former CEO, Zia Chishti. The court has directed the parties to pursue their remedies before the lower court.
This development follows an earlier ruling by the District and Sessions Court in Karachi in February 2023, which allowed criminal defamation charges against the board of TRG International (based in Bermuda) to proceed. The charges were initiated by Zia Chishti, former CEO of TRG Pakistan, who alleged that defamatory statements were made about him in a letter sent by TRG International to TRG Pakistan.
Chishti was forced to step down from TRG after a November 2021 U.S. Congressional testimony by Ms. Tatiana Spottiswoode, in which she revealed an arbitration award against Chishti for sexually harassing and assaulting her.
Details of Defendants and Legal Maneuvers
Defendants named in the District Court proceedings, initiated by Chishti, include TRG Chairman Mr. Khaishgi, CEO Mr. Aslam, CFO Mr. Hassan Farooq, General Counsel Mr. Pat Costello, and a number of current and former TRG International directors, such as Zafar Sobani, Patrick McGinnis, Khaldoon Latif, and John Leone. The defendants initially secured a stay from the Sindh High Court, suspending all defamation proceedings brought by Chishti. However, after a twenty-month suspension, the High Court lifted the stay, and the next hearing is scheduled for November 16 in the lower court.
Several defendants have petitioned the Supreme Court, arguing that the proceedings initiated by Chishti are meritless and are being used by him as a tool to harass TRG’s management and board members, including its foreign investors from the U.S. These investors have collectively acted to protect TRG Pakistan from Chishti and his allies, who are accused of attempting a hostile takeover.
Broader Legal Context
The Karachi criminal defamation case is part of a wider series of legal battles between Chishti and TRG’s current leadership, including opposing arbitrations in the United States. In one such arbitration filed by TRG in January 2023, the company alleged that Chishti was prohibited from selling or leveraging his TRG shares. As a result, a stay order was issued in Pakistan, freezing Chishti’s shares until the conclusion of the U.S. arbitration.
In turn, Chishti filed an arbitration in the U.S., accusing TRG and other related parties of breaching contractual obligations. While TRG secured an initial stay on the arbitration, a U.S. federal court has allowed part of the proceeding to continue, while ruling that other parts are barred due to a previous release signed by Chishti after he had collected tens of millions of dollars from TRG.
These ongoing legal battles could significantly impact TRG’s future, with Chishti continuing his efforts to take control of TRG Pakistan. If Chishti prevails on these various fronts, it could increase his chances of regaining control of TRG Pakistan. Conversely, if he fails, he may have to abandon his attempt to return to TRG after resigning in disgrace in 2021 following the sexual misconduct scandal.
With the stay order lifted, the District and Sessions Court has commenced proceedings, issuing notices to Messrs. Khaishgi, Aslam, Leone, McGinnis, Saigol, Sobani, Latif, Costello, and Farooq. It remains to be seen how this TRG saga will play out, with Chishti continuing to use all possible means in a desperate effort to regain control of TRG.