The Axact vs. Student Network Resources (SNR) Case: A New Perspective

Viewed from a legal perspective the Axact vs. SNR case has opened a new dimension. Initial research pertaining to the case shows that Drier LLP the firm whose attorney represented Axact in the SNR case was itself charged with bankruptcy and its founder Marc Drier was sentenced to 20 years imprisonment due to his involvement in a massive investment fraud case. It seems that due to Drier LLP’s bankruptcy and Drier’s implication in a fraud case, Axact ended its legal relationship with Drier LLP and did not pursue the SNR case any further.

A recent article on Wikipedia is a testimony behind Drier’s tarnished image and the bankruptcy of Drier LLP. The facts outlined in this article are also supported by another article appearing on CNN.com which proves that Drier LLP indeed got bankrupt and Marc Drier is an international fraudster implicated in several scams and frauds. According to the article Drier had pleaded guilty on May 11, 2009 to eight charges in the United States District Court for the Southern District of New York.

To make matters worse Drier LLP’s attorneys abandoned Axact’s representation in a highly objectionable manner due to which the defendants reopened and reactivated the discussion forum at their website essaryfraud.org where major of the libelous material previously published against Axact appeared again.
Such events compelled Axact to consult its local lawyers in Pakistan and upon their advice Axact filed a lawsuit in Pakistan in order to recover the damages and injunctions the company received in relation to the case.

It seems that Axact was also disappointed with its attorneys from Drier LLP and thus the company filed a lawsuit in the High Court of Sindh at Karachi, Pakistan against the defendants and acquired a decree and judgment for damages amounting US $6million and other remedies since the defendants opted not to join the suit even after served with several court notices and summons.

In conclusion it is suffice to assume that the bankruptcy of Drier LLP along with its founder Marc Drier’s personal involvement in massive investment scams were the key reasons why Axact ended its legal relationships with Drier LLP and thus didn’t pursued the SNR case any further. It seems that the closure of the Essayfraud website also took place due to the local case filed by Axact at the Sindh High Court.

Finally Drier LLP’s bankruptcy clearly outlines the fact that any reputable company should consider all pros and cons while hiring a firm to fight its case as a wrong decision to hire a firm whose own credibility is at stake can lead to disastrous circumstances for the company in the future.

Advertisements

Regulatory Framework in Pakistan for Fisheries

The Fishing Industry in Pakistan
Pakistan has a fish and seafood industry worth US$1.2 billion. Exports alone are worth nearly US$200 million. More than 800,000 people rely directly or indirectly on the industry for their livelihoods or family income.

The major issue for Pakistan is over fishing, a result of a failure to manage the fisheries correctly. Management failures in fisheries are not peculiar to Pakistan by any means. The most significant feature of marine fisheries in Pakistan, is that it is an “open entry system”. According to classical resource economics, since the point of un-profitability lies beyond the point where the fishery is at it Maximum Biological Sustainable Yield, there will be over fishing in a common property resource with open entry. This is exactly what has happened in Pakistan, the catch is declining and incomes are reducing.

The Regulatory Framework in Pakistan for Fisheries
The current legislative framework dealing with fisheries in the country is the Exclusive Fishing Zone (Regulation of Fishing) Act, 1975 as amended in 1993. This extends to the whole Pakistan and to waters within the exclusive fishery zone of Pakistan beyond the territorial waters. It regulates the management of fishing in exclusive economic zone of the country. The provisions of the law cover:
• Licensing and management of fishing operation
• Fishing craft subject to navigational regulation
• Prohibiting illegal, dynamite and poisoning fishing
• Closed season and prohibited area
• Penalties in contravention of any provisions such as seizure and disposal of fishing craft, fishing gear and fish catch.

The Marine Fisheries Department (MFD) of the federal government performs the functions of conservation of fisheries resources, management and development of resources along scientific lines, training of fisheries and fish farmers and in-service training, extension services of the private sector, revenue earning through auctioning/licensing of water resources and supplies of quality fish-seed to private fish farmers on subsidized rates.

Currently the only local legislation directly related to fish quality is the Pakistan Fish Inspection and Quality Control Act of 1998, which was adopted in response to WTO regulations. This legislation gives the ministry wide ranging powers and lays down rules for the handling of fish, on-board, in landing areas and auction halls and in processing units. The Agriculture Produce (Grading and Marketing) Act, 1937 also provides authority and control for the grading and marketing of the agricultural produce including dry fish, shellfish, and fishmeal.

Pakistan is also bound by the Precautionary Approach to Sustainable Fisheries, part of the Code of Conduct for Responsible Fisheries, as part of the Rome Convention of 1999. The Code in itself is not binding, but is enshrined in other treaties to which Pakistan is a signatory. The Code provides principles and standards applicable to the conservation, management and development of all fisheries. It also covers the capture, processing and trade of fish and fishery products, fishing operations, aquaculture, fisheries research and the integration of fisheries into coastal area management. The code contains many clauses detailing responsible ways to manage fish stocks including:-

“States should prevent over fishing and excess fishing capacity and should implement management measures to ensure that fishing effort is commensurate with the productive capacity of the fishery resources and their sustainable utilization.”

Overview of the Global Fishing Industry
The fishing industry (or fishing sector) is extraordinarily diverse. At one extreme are large, multinational joint ventures, utilizing large factory trawlers and numerous other vessels, employing thousands of workers on several oceans. At the other are small, wooden canoes and other boats used by individual fishermen to catch sufficient food for their families and perhaps more to sell in their local communities. The technology used can be simple and traditional, or it may be highly sophisticated, incorporating the most advanced electronic and other equipment. Some parts of the fishing industry are under social and economic pressures resulting from declines or sudden disappearances in certain stocks of fish (and other living marine resources) due to over fishing and other reasons and to loss of access to fishing grounds.

The Global Fishing Regulations
The world’s fisheries have come under increasing control. International Conventions, Agreements, Codes and activities have had, and are having, a major impact on where and how fishing takes place.

The United Nations Convention on the Law of the Sea gives coastal States the authority to manage fisheries within their jurisdiction.

The EU Code of Practice for Fish and Fishery Products has been developed by the EU Codex Committee on Fish and Fishery Products and gives general advice on the production, storage and handling of fishery products on board fishing vessels and on shore. It also deals with the distribution and retail display of fish and fishery products. It is incorporated as a fundamental operating procedure.

In USA, the Magnuson-Stevens Fisheries Conservation and Management Act (MSA) of 1996 provides the legislative framework for the fishing industry determining the allowable catch limits and habitat-protection rules and so forth.

There are no binding harvesting standards in the fishing industry. However, various organizations have attempted to introduce voluntary harvesting standards that promote sustainable fisheries. The Marine Stewardship Council (MSC), based in the UK, is one such organization.

The Future of Fisheries
Enforcement of regulations is an often-neglected aspect of fisheries management. Setting catch regulations is of little use if they are not enforced and similarly the quality of fish will not be consistent without adequate enforcement of the laws.

The Need for a comprehensive Global Standard for Financial Markets

The Stock Market Crisis
Pakistan stock exchange has been facing crisis since the last year. The outflow of foreign portfolio investment from the country’s equity market continued as the offshore investors withdrew $36.464 million during the third week January in 2009. The outflow of foreign investment from the country’s equity market started in 2008 due to political uncertainty, weakening economic indicators and the law and order situation in the country. The falling returns in the stock market have also forced many brokers and investment houses to lay off staff.

The Karachi Stock Exchange (KSE) ordered the establishment of a floor to stop its benchmark index from falling any further. It stops share prices from dipping any further and in effect prevents the value of their stock wealth from dipping any further. The Securities and Exchange Commission of Pakistan (SECP), the stock market regulator, was obliged to step in and enforce removal of the floor from December 15th, 2008. This was because of the IMF conditions of a ‘free falling market’ set out in a crucial loan agreement with the IMF. The period the floor was in place was a time of much anxiety for Pakistan’s equity investor community.

Steps to curtail the crisis
The Securities and Exchange Commission of Pakistan (SECP) has attempted to deal with the situation through new ordinances and measures. It amended section 95A of the Companies Ordinance 1984 through Companies (Amendment) Ordinance, 2009 to allow listed companies to buy back their own shares and hold them as treasury shares, which may be re-issued under the regulations being prescribed by the Commission. The amendment states:

‘Power of a company to purchase its own shares. (1) Notwithstanding anything contained in this Ordinance or any other law for the time being in force or the memorandum and articles, a listed company may, subject to the provisions of this section and the regulations prescribed by the Commission in this behalf, purchase its own shares.’

The SECP also wanted to incorporate three new sections in the Modaraba Ordinance, through amendments in Modaraba Ordinance 1980 and addition of new section 41A, for improving regulatory framework of the Modaraba sector, empowering the commission to issue regulations for this sector. Modaraba is a kind of partnership, wherein one party provides finance to the other for the purpose of carrying business.

The international scenario
In 2008, failures of large financial institutions in the United States, due primarily to exposure to securities of packaged sub-prime loans and credit default swaps issued to insure these loans and their issuers, rapidly evolved into a global crisis resulting in a number of bank failures in Europe and sharp reductions in the value of equities (stock) and commodities worldwide. The economic crisis caused countries to temporarily close their markets.

On October 8 2008, the Indonesian stock market halted for two days after a 10% one day drop.
The same day, the Icelandic government shut down the stock market and brought trading in the country’s currency to a halt. Similarly, Kuwait’s and the Russian stock markets were also shut down.

Many of the world’s stock exchanges experienced the worst declines in their history, with drops of around 10% in most indices. To counter the crisis, the Federal Reserve of USA announced a multibillion dollar emergency loan to rescue insurance giant AIG. The Fed continued to take unprecedented actions. After deep rate cuts, the Fed’s key rate now stands practically at zero, effectively retiring it as a tool of monetary policy.

Conclusion
There should be a consistent legal & judicial framework prevalent in all countries to protect the stock markets. The framework should:
1. Limit the number of direct foreign investments flowing into the local stock market
2. Limit the amount of short selling to discourage speculation of stocks
3. Regulate bigger investment companies on their portfolio diversifications & ratings to prevent the market monopolization
4. Regulate the transformation of repayments and installments into marketable securities

The governments around the world should also update their legal frameworks regarding their stock exchanges. The legal infrastructure needs to empower the exchange regulatory bodies by ensuring:
1. Tougher penalties for listed companies to ensure compliance with securities laws
2. Stronger powers to review the information that public companies disclose to investors
3. Greater clarification of offences such as securities fraud and market manipulation
4. Broader rights for investors to sue if companies make misleading or untrue statements or fail to give full and timely information
5. Internationally coherent standards of accounting for companies

What are your thoughts? Please share what you think are the best policies and legal frameworks to put into place to establish a Global Standard for Financial Markets.

Genetically Modified Food Can Harm the Environment

A legal suit has been filed in the Pakistan’s Lahore High Court by two food rights groups in opposition to the import of genetically modified Soya-bean from USA. The Pakistani government has confirmed that this transgenic variety is safe in terms of its impact on health and the environment, but this statement is contradictory to the scientific evidence in light of which the oil extracted from genetically modified food does contain protein, peptides and other nitrogenous materials, and can really put the environmental level in danger. This is because these materials are not soluble in oil production and can really endanger the environment by emitting highly dangerous waste and smoke from the factories.

The advocate bodies representing the food groups had taken this issue to court in November 2007. They had sought a stay on the import and sale of genetically modified Soya-bean and its by-products in the country. The groups challenged that genetically modified organisms should be barred in Pakistan until the government develops a regulatory framework to deal with import, sale, distribution and labeling of such food products.

“The government must formulate a regulatory framework to autonomously determine the safety aspects of such products,’ quoted one of the lawyers representing the two groups in the court.

The official government response was: “genetically modified soya oil is in use all over the world since 1996. Not a single report of any harmful effect on human health and environment has been reported.”

In contradiction to this statement, the authorities have countered certain scientifically recognized facts that protein and deoxyribonucleic acid (DNA) contamination makes it difficult to extract pure oil.

But the government has ruled out any immediate need to put safeguards in place to regulate genetically modified organisms. Currently, Pakistan has no law that bans the import of transgenic products. The country’s 1961 Food & Environment Act merely requires exporters to label products with a list of the ingredients.

In contrast, the European Parliament ratified a U.N. bio-safety protocol regulating international trade in genetically modified food in June 2003. The protocol lets countries in the European Union to ban imports of a genetically modified product if they feel there is not enough scientific evidence the product is safe and requires exporters to label shipments containing genetically altered commodities such as corn or cotton. It makes clear that products from new technologies must be based on the precautionary principle and allows developing nations to balance public health against economic benefits.

A lawyer working with the Network for Consumer Protection in Pakistan, pointed out:
“For genetically modified food, too, the government will need to introduce labeling to ensure that consumers can make their choice,”

The case remains in process, and further proceedings are yet to achieve a decision.

Pakistan Electronic Crimes Ordinance, 2008

The President of Pakistan, has Issued a declaration, which makes internet crime liable to be punished with death or imprisonment for life, with huge fines.

Cyber Crime Law

Cyber Crime Law

The law states that, any person who commits “cyber terrorism” and causes death of any individual shall be punishable with death or imprisonment for life and will be fined up to Rs 10 million under the deterrence of Electronic Crimes Ordinance, 2008.

According to the law, It shall apply to every person who commits “cyber terrorism” if hr/she access a computer, electronic system or an electronic device with a view to engage in a “terroristic act”,  irrespective of his nationality or citizenship whatsoever or in any place outside or inside Pakistan, having harmful effect on the security of Pakistan, its nationals, national harmony, any property, any electronic system, any data located in Pakistan, any electronic system or data capable of being connected, sent to, used by or with any electronic system in Pakistan, will be liable for punishment under the ordinance.

The law defines a terroristic act as an effort to “alarm, terrify, upset, harm, damage or carry out an act of violence” against citizens or the government.

According to the law, “Cyber crime” includes elements and activities like, “Thievery or copying” part or whole of information which is classified or any data/information required for making biological, chemical or nuclear weapon.

The law also highlights certain number of durations of imprisonment and penalties for other crimes, such as cyber fraud, stalking and spamming.

The federal government will institute a dedicated investigation and prosecution cell within Federal Investigation Agency (FIA) to investigate and impeach the offences under the Ordinance. Afterwards, an Information and Communication Technologies Tribunal (ICTT) will be established under the ordinance through a gazette announcement to assume cases pertaining to the above mentioned offences.
The federal government may combine forces with any foreign government, Interpol or any other international agency with whom it has mutual arrangement for investigation or dealings against the offences related to electronic system data, for collection of evidence in electronic form of an offence along-with interception of data.

Any person, group or organization, which uses computer network for broadcast of electronic data having terrorist objectives, will be held accountable for cyber terrorism. The ordinance also reveal that any one who deliberately causes any electronic system or electronic device to carry out any function for the rationale of gaining unauthorized access to any data held in any electronic system or electronic device or on obtaining such unauthorized access shall be punished with imprisonment of either explanation for a term which may extend to three years, or with fine or with both.

Whoever create a website, or sends an electronic message with a phony source proposed to be believed by the recipient or visitor or its electronic system to be a genuine source with plan to gain unauthorized access or obtain precious information which later can be used for any unlawful purposes commits the offence of spoofing.

Evolution of Telecom Regulations in Pakistan

Pakistan’s telecom sector has seen phenomenal progress during the past decade. It has more than 48million cell phone users, and nearly 1.5 million wireless phone users.

To promote, and maintain fair competition and regulate the telecom industry and telecom services, three regulatory bodies “The Pakistan Telecommunication Authority (PTA)”, “Frequency Allocation Board (FAB) and “National Telecommunication Corporation (NTC)” were established in July 1994.

An important Telecom regulation from PTA enforceable from August 1, 2008, will bar all cellular companies to sell unauthorized connections. All the mobile phone service operators will sell their cellular connections after verification from the National Database Authority.
 
PTA has also issued an initial draft called the “Telecom Consumers Protection Regulations, 2008”, to populate regulations for protecting consumers’ rights.
Some of the main points from the draft are:

1. Service Interruption:
In case of planned network system enhancements, updates or upgrades, the consumer shall be given thirty (30) days prior service interruption notice by the Operator. Operators shall take all reasonable and the necessary measures to provide Consumers adequate arrangements/concession in case of lengthy outages or service interruptions for which due notice are not served to them.

2. Confidentiality of Information:
(1) All Operators or employees of Operators shall maintain confidentiality of information about Consumers and shall ensure that no information about Consumers is made available to any third person other than what is printed and published in services directories or required by any applicable law or agreed by the Consumer itself.
(2) Operators shall take necessary measure to ensure that information about Consumer’s use of the network or service, or the content thereof will not be available to any third person except duly authorized by Consumer or required by an applicable law.

3. Service Provisioning:
(1) Operators shall provide telecom services to Consumers as per the rollout obligations prescribed by the Authority under their respective licenses.

4. Withdrawal of Service:
 Operators may withdraw the provision of any service to Consumers,  provided such withdrawal is approved by the Authority and thirty (30)  days  prior notice is given to Consumers.

The proposed draft will benefit the Pakistani consumers at large and will critically regulate the Telecom industry in the country. PTA has been seeking further input from Telecom companies, consumers and telecom analysts to finalize these regulations to ensure that telecom consumer’s rights are well protected.