TRG's Ex-CEO Accuses Incumbent Management Of Mishandling Company's Financials

Former chief executive and company founder says he welcomes investigation into allegations of poor management of the publicly traded company 

TRG's Ex-CEO Accuses Incumbent Management Of Mishandling Company's Financials

The founder and former chief executive of The Resource Group International Limited (TRG) has accused its incumbent management of poor performance, leading to substantial financial impact for the company and its shareholders, as it seeks a window to retake control of the company nearly two years after leaving it.

TRG, through its subsidiaries, exports information communication technolog (ICT), software and ancillary services, and employs approximately 6,000 young professionals in IT/IT-enabled services and enterprise software.

Muhammad Ziaullah Khan Chishti, who founded the company, and then took it public in 2002, had last month attempted to requisition an extraordinary general meeting of TRG with the agenda of remove nine out of the ten directors of the company apart from seeking amendments to the Articles of Association of the company. 

The attempt came as rumours swirled that revenues at TRG's principal subsidiaries, Afiniti and Ibex, were falling dramatically, and the company was reportedly suffering from heavy losses, causing the value of its investments to fall dramatically.  

Some sources claimed that operating losses at one subsidiary had climbed to approximately Rs30 billion a year while operating profits at the other subsidiary were down by more than 25%.  

An insider, who did not wish to be named, fearing retribution, claimed that even though the TRG management had announced a turnaround, engineered after Chishti's exit from the company in November 2021, its stock today was trading at a comparatively significantly lower value.

The company's current management has been accused by some of the opaqueness in its dealings and adopting a trajectory which is not in consonant with its claims.  

An investor, who did not wish to be named, pointed to the stock market and said that the performance of the company's incumbent management, which comprises Hasnain Aslam (Director of TRG International and CEO of TRG Pakistan), and Mohamedulla Khan Khaishgi (CEO and Chairman of TRG International and Chairman of BOD Of TRG Pakistan) since taking over the company in 2022 was amply reflected in the company's share price.

"TRG was the future of the country," the investor said.
The stock market shows that the company's shares have tumbled by 40% over the past year. Its share prices have fallen from Rs151.43 in October 2022 to Rs90.13 at the day close on October 10, 2023.

Its financial disclosures before the PSX for the financial year ending June 30, 2023, show that the company reported an operating loss of Rs191.223 million, up from Rs37.817 million the year before. However, its loss before taxes was Rs1.541 billion, down from Rs5.883 billion the year before.

Cumulatively, it reported a loss of Rs2.45 per share (basic and diluted), compared to Rs9.132 for the preceding year. It is pertinent to note that the company has market capitalisation of Rs49.156 billion and 70% of its 545.39 million shares as free-float in the market.

There were accusations that the company was attempting risky manoeuvres to keep the prices of its shares inflated while it was allegedly seeking means to avoid facing share- and stakeholders.

When Chishty requisitioned the extraordinary general meeting of TRG Pakistan Limited last month, the company moved the Sindh High Court over "false, unsubstantiated, and defamatory allegations published" by him, read a disclosure filed with the Pakistan Stock Exchange (PSX). 

The court subsequently issued an interim injunction which stopped the company from holding annual general meetings (AGM) until further others.

As a result, an AGM of the company scheduled for October 2023 could not be held, TRG's disclosures to the PSX from earlier in October showed.

The company claimed that Chishti, who had stepped down as the company's CEO - and all associated positions- in 2021 following damaging disclosures abroad of an arbitration award, was seeking means to take over control of the company. 

When asked for comment, Chishti told The Friday Times that he stands behind the accusations he has levelled against the company's incumbent managers and welcomes an investigation into all of his claims.  
Despite multiple attempts to contact the TRG management and its board members, they refused to provide clear comment on the allegations raised against them by Chishti, nor would they comment on the fact that TRG stock has tumbled. 

TRG stock is trading at Rs90.13, much lower than Rs138.43, the level near which Chishti left the company in November 2021.  

Chishti's exit and defence of assault allegations
Chishti, the founder of Invisalign and TRG, had left Afiniti after being accused of grooming and sexual assault in 2021 by a former employee* in a United States Congressional testimony.

Chishti denied the allegations robustly, stressing that whatever took place between him and the employee was consensual. He then launched defamation proceedings against the employee worth $500 million as compensation for himself and his wife for financial and psychological harm. His lawsuit states that the employee "weaponised" their affair in Congress.

TRG, in a letter to the PSX on October 3, 2023, stated that they believe that any association with Chishti would be highly damaging to the value of the company’s underlying assets.

*Name withheld to protect identity