The Federal Board of Revenue (FBR) has initiated a money laundering investigation by filing an FIR against the directors of a Karachi-based pharmaceutical company. The case involves allegations that billions of rupees in personal liabilities were paid through the account of a non-profit organisation affiliated with the company and its five directors.
The FIR, registered by the FBR’s Directorate of Intelligence and Investigation, reveals that the pharmaceutical company also owns a non-profit educational trust managing a well-known university along with boys’ and girls’ schools. The controversy escalated after the company’s founder and his son filed a lawsuit in the Sindh High Court, seeking Rs60 billion in damages amid serious accusations against the five directors personally.
In December 2023, a settlement was reached where the directors agreed to pay Rs7.5 billion in their personal capacity. However, the payment was made through the company they controlled. The company recorded this Rs7.5 billion settlement as a “business expense” under “Other Indirect Expenses” and claimed it as a deductible expense in its income tax return for the Tax Year 2024. Meanwhile, the five directors failed to declare this amount as salary, perquisite, or benefit in their individual income tax returns for the same year.
Subsequently, in February 2025, the company’s founder lodged a complaint with the FBR’s Directorate of Intelligence and Investigation in Karachi. After thorough scrutiny, notices were issued in April 2026 under Section 176(1) of the Income Tax Ordinance (ITO), 2001, addressing civil liability, and under the Anti-Money Laundering (AML) Act, 2010, addressing criminal liability, to all five directors. The responses submitted were deemed unsatisfactory and lacking supporting evidence, prompting the FBR to register an FIR on April 23, 2026.
The matter gained public attention when Zahid F Ebrahim posted on X, criticizing the FBR’s actions. He highlighted that the CEO received a notice about unpaid income tax, followed by a second notice accusing him of making false statements, and shortly after, an FIR was filed under the AML law with arrest warrants and bank account freezes. He described these actions as a “shakedown” rather than due process.
FBR’s Intelligence and Investigation officials clarified that the two notices served different legal purposes: the Section 176 notice targets civil income tax liabilities, while the AML notice addresses criminal liabilities. These notices were issued after more than 14 months of investigation. Similar notices were sent to all five directors under both the ITO, 2001, and AML Act, 2010.
Notably, the non-profit status of the educational trust had already been revoked by the Large Taxpayers’ Office in Karachi. This revocation was based on findings that the directors misused donation funds for personal gains, which is the core issue currently being prosecuted by the FBR.
