KE Files Rs. 5 Billion Defamation Suit Against Former Director Asad Ali Shah

K-Electric has filed a Rs. 5 billion defamation suit against chartered accountant Syed Asad Ali Shah for leveling ‘false’ allegations against it, a company on whose board of directors he served until recently.

In a disclosure to Pakistan Stock Exchange, the company stated that a defamation lawsuit had been filed against Shah, which had been accepted by the court on 24th January 2023. The company’s plea to the Sindh High Court also questions the methodology while presenting point-wise clarification of the allegation leveled by the former director with supporting evidence from governing policies and principles.

KE in its plea cites Clause 8.5(a)(iii) of NEPRA Consumer Manual (CSM) which provides that “The consumers who sell their houses, shops, industries, seasonal factories, etc. without making payment of electricity bills, DISCO (KE) shall recover the arrears from the new occupants of the defaulting premises.”

This statement dismisses one of the key premises of Shah’s allegations that premises should not be used as a basis for revenue recording.

The plea further quotes paragraph 25.13.9 of NEPRA’s publicly available decision on KE’s MYT (Multi-Year Tariff) on 20.03.2017 stating that actual write-offs against private sales “are a genuine cost of petitioner’s business,” which forms the basis of this being recorded.

In response to the allegation of not having ID cards of customers whose dues had been claimed in write-off, KE highlights that during tariff deliberations, this matter was discussed and subsequently removed as a requirement for the claims process due to ground realities. As such, there is no requirement in the final decision of MYT awarded to KE, the company maintains.

KE argues further that all necessary disclosures including those surrounding write-offs are made clearly in annual reports in compliance with accounting standards, therefore, the question of misleading investors is also ill-founded.

Industry experts had already raised their concern over the letter’s premise being based on a “misunderstanding of accounting principles” which was also later reiterated by the company in its initial statement to the Pakistan Stock Exchange.

Few members of the accounting fraternity also questioned Shah’s motive, who has served on Boards of Directors of different outfits including the Policy Board for SECP for the peculiar manner in which the letter was circulated.

Addressing accusations that KE is recording revenue against illegal theft of electricity, the petition states that the letter omitted the distinction between registered or temporary hook connection which inadvertently implied that the company was recording unidentified theft.

The company objected to Shah’s attempt to deliberately show a skewed and untruthful image of KE’s actual practice.