MEGA

SCANDALS & CORRUPTION

OF General Pervez Musharraf Government

The process of privatization of PSMC stands vitiated by act of omission and commissions on the part of certain state functionaries reflecting violation of mandatory provisions of law and the rules framed hereunder which adversely affected the decisions qua pre qualification of a member of the successful consortium (Mr. Arif Habib), valuation of the project and the final terms offered to the successful consortium which were not in accord with the initial public offering given through advertisement’. Supreme Court of Pakistan in Steel Mill Case

Pakistan Muslim League (N)
House No 20-H streets 10, sector F-8/3 Islamabad. 051-2852663, 2852665; Fax No: 051-2852662

STEEL MILL
104 billions were being looted

Stealing the Steel Mill!
Introduction The Supreme Court of Pakistan in its historic judgment delivered in a public interest litigation has declared the sale of 75% shares of Pakistan Steel Mills as void and of no legal effect “as the process of privatization of PSMC stands vitiated by acts of omission and commissions on the part of certain state functionaries reflecting violation of mandatory provisions of law and the rules framed hereunder which adversely affected the decisions qua pre qualification of a member of the successful consortium (Mr. Arif Habib), valuation of the project and the final terms offered to the successful consortium with the initial public offering given through advertisement”. Pakistan Steel Mills Corporation (Pvt.) Ltd (the “PSMC”) was inaugurated in 1985 with the technical and financial assistance of the former Soviet Union and owns and operates an integrated steel manufacturing plant with the design capacity of 1.1 million tons per annum. The steel demand in Pakistan is approximately 4.5 million tones per annum. PSMC meets approximately the domestic demand of steel products. The shortfall is met through a large number of small private sector units in Pakistan and through imports. PSMC has a chequered history and has been plagued by mismanagement, corruption and overstaffing. It has been functioning at a lower capacity and with heavy losses in some years. First Plan of Privatization The privatization of PSMC was taken up in 1998 but was dropped and instead it was decided to undertake restructuring of the corporation. To offload the excess regular manpower from 20533 to 15000, PSMC introduced an optional Voluntary Retirement facility w.e.f. 25th May 2000. This scheme was funded by internal resources to the tune of Rs. 4.5 billion. A Memorandum of Understanding was signed with Russia, during the visit of the president of Pakistan to Moscow in February 2003, to enhance the capacity of PSMC from 1.1 million tones to 1.5 million tones per annum. The Change of Heart Inclusion of PSMC in the privatization programme again came under consideration of the Cabinet Committee on Privatization (CCOP) on 31-122004 and it approved the proposal of Privatization Commission to conduct

an Initial Public Offering of 10% of its shares to the general public. Within months, the government changed its mind without any cogent reasons and decided to sell it. The Board of Directors of PSMC was given indications for its privatization by sale (instead of IPO) to a private party but the Board opposed it. The government appointed a new Board which was summoned to the Prime Minister House on February 10, 2005 at 4:15 p.m. The Prime Minister disclosed that the purpose of the meeting was to inform the Board of Directors that: (i) the government wanted to privatize PSMC on a fast track; (ii) the schedule of privatization would be given by the Minister for Privatization within a week; (iii) a Financial Advisor would be hired by the Privatization Commission to facilitate the privatization process at the earliest. Pursuant to this desire of the Prime Minister, the obedient Privatization Division submitted a summary on “Inclusion of Strategic Sale (i.e. 75% of its stake) of PSMC Corporation in the Privatization Programme” The suppliant Cabinet Committee on Privatization (CCOP) considered the Summary and approved the proposal on 11-04-2005. The Assets Let us now look at the assets of PSMC. Out of total 19000 acres of land, the Government has offered 4457 acres of land for bidding purpose. The government hired M/S Sadar-ud-din Associates to evaluate the said land. It evaluated the price of the land at the rate of rupees 10-11 million per acre whereas its actual market price is more than 100 billions rupees. As per directive of Privatization Commission, PSMC prepared its balance sheet on 31-12-2005 according to which current and fixed assets ( raw materials, work in process, finished goods inventory and spare parts) on 31-3-2006 are: (i) Raw Material & finished Goods & Spare Parts of Rs. 12.40 billions; (ii) Book valued of Fixed Assets including plant but excluding land of Rs. 13.04 billions. If we add the value of the 4457 acres of the land (Rs. 44.5 billions to 49 billions i.e. average amounts to approximately 47 billions), the total value of the PSMC amounts to, as per government’s own estimates, Rs. 72.5 billions. If we take the market price of the land, then it amounts to 125.5 billions rupees. Payments of Undue Loans PSMC loans were restructured. It was asked to pay, (as it is better to pay off all due and undue loan before the death), its entire loan which was

even due for payment after year 2013. Interestingly, the post dated cheques were issued to settle the bank loan amounting to Rs. 7.77 billion while the Ministry of Finance had agreed to bear the interest thereon. The said loan was payable by 2020 in seven equal installments beginning from the year 2013. Why all this? Probably, the bankers do not like liability. Profits PSMC had also wiped out its entire accumulated losses by the year 2004-05 and posted a net profit of rupees 3.938 billion. In the next year it rose to Rs. 6 billions. Hardly, any other state enterprise of its nature in whole of Pakistan can boast of such achievements. Valuation The Privatization Commission commissioned Citigroup Global Markets Limited (which associated A.F. Ferguson, Orr Dignam & Co. and Corus Consultant) in connection with the proposed sale of a 75% of stake in PSMC. The Citigroup submitted a report with a disclaimer that the report has not been prepared with a view to public disclosure. In preparing this report, City Group ‘relied upon’ the accuracy and completeness of the information received by it from PSMC or Corus Consulting without independent verification thereof. The report further said, ‘Such estimates, projections, targets or forecasts involved significant assumptions and subjective judgments which may or may not prove to be correct and there can be no assurance that any estimates, projections, targets or forecasts are attainable or will be realized. No representation or warranty, express or employed, is made by CGML as to the accuracy, completeness or fairness of any information contained in this report and, so far as is permitted by law and except in the case of fraud by the party concerned, no responsibility whatsoever is accepted for the accuracy or sufficiency thereof or for errors, omissions or misstatements negligent or otherwise, relating thereto. This report should not be regarded as constituting an opinion as to be fairness or otherwise of any offer for an equity stake in PSMC, nor relied on as a basis to proceed, or not to proceed, with a formal offer for an equity stake in PSMC’. So this is the report on which the whole exercise of the determination of reference price, bidding etc is based. It does not need a special knowledge to declare that the report is not worth the paper on which it is written. This trash should have been put into a dust bin rather than making it the sole basis for the sale of our invaluable and strategic family silver. Reference Price The Citigroup submitted its report to the Privatization Commission on 30-3-2006 based on cash flows forecast developed till FY 2015 and without valuation of the 4457 acres of the prime land. On the same day, yes on the

same day, the PC examined the report ( 200 pages of detailed figure work) and submitted its summary to the CCOP on the same day. The minutes of the cabinet meeting dated 31-3-2006 reveal that Privatization Division informed the CCOP that the Financial Advisor (Citigroup) has recommended a value of US$ 375 million for privatization of PSMC on 100% equity basis. CCOP was informed that FA’s valuation of US$ 375 million for 100% equity stake is based on the average of the following three valuation methodologies [ (i) Discounted Free Cash Flow Analysis (ii) Public Multiple Analysis (iii) Precedents Transaction Analysis] with a 10% discount. CCOP was informed that the Privatization Commission has recommended a total value of US$ 500 million for 100% equity stake of PSMC (also considering current market value of the total assets). According to this, the Reference Price for 75% equity stake (1,290,487,275 shares) works out to US$ 375 million i.e. Rs.17.43 per share (calculated at the rate of Rs. 60 per US$). The CCOP ignored the recommendations of the Privatization Commission and approved the valuation of US$ 464 million based on DCF stakes. On the basis of the above, 75% equity stake worked out to US$ 348 million i.e. 16.18 per share. The Committee in contradiction to the rule 4 (2) The Privatization (Modes And Procedure) Rules, 2001 (Upon selection of a highest ranked bidder as specified in sub-rule (1), the Board shall refer the matter for approval, or rejection of such highest ranked bidder with full justification, to the Cabinet) approved in advance (before the bidding) to issue the Letter of Acceptance (LOA) to the successful bidder if their per share price is equal or higher than the reference price. And Pakistan Steel was never consulted for the fixation of the reserved/ sale price. Bidding On the same day i.e. 31-3-2006, the bidding took place. Its process is also intriguing. In pursuance of request for Expression of Interest, 19 parties applied for pre-qualification out of which, nine were qualified. Out of these nine, the following six pre-qualified parties formed two bidding consortiums ( rest lost interest or were compensated) ) and took part in the bidding: 1. 2. Al-Tuwairiqi (Saudi Arabia), Arif Habib Securities (Pakistan) and Magnitogorsk ( Russia). Noor Financial Investment Company (Kuwait), Government of Ras Al Khaimah, (UAE), Industrial Union of Donbass (Ukraine) and Aljomaih Holding Company, (Saudi Arabia)

Under the law, these consortiums could not take part in the bidding on the following two reasons: (i) as per ‘Instruction to Bidders’ issued by the Privatization Commission on March 11, 2006, consortiums could be formed before submission of Statement of Qualifications (SOQ) whereas these so called consortiums were cobbled after the SOQ; (ii) actually the winning/ first consortium was made on 20th day of April 2006 i.e. 20 days after the bidding. But the Privatization allowed this consortium to participate in the bid rather it had already got approval from the CCOP to issue LOA to it. Why? Only God knows. There is another interesting fact that the name of the constituents companies of the bidding consortium is different than the actual consortium later formed on 20-4-2006. Now Al-Tuwairiqi was replaced by Al-Ittefaq and two following offshore companies were added into it: (i) ATG Holdings Mauritius Limited (ii) MMK Holdings (Asia) Limited. Despite the courts repeated instructions, the legal documents of these companies were never submitted in the court. Letter of Acceptance Further to the bidding held on 31st March 2006, the Commission declared, on the same day, the consortium to be the successful bidder by accepting the bid of Rs.16.80 per share at the aggregate sale price of Rs. 21,680, 186,220.00 (Rupees twenty one billion, six hundred and eighty million, one hundred and eighty six thousand, two hundred and twenty). On the same day, the Commission issued the Letter of Acceptance (LOA) to the authorized attorneys of individual companies forming the bidding consortium. Three things deserved to be noted: (i). Under section 4 of the Privatization (Modes And Procedure) Rules, 2001, “upon selection of a highest ranked bidder, the Privatization Board shall refer the matter for approval, or rejection of such highest ranked bidder with full justification, to the Cabinet”. It was not done. After the bidding, the letter of approval of bid was issued and LOA was also issued; (ii) the said letter was not issued in the name of the consortium, rather LOA was issued to individual constituent companies; (iii) the representatives attorneys of all the three constituent companies are two Rizviz: Mr. Zaigham Adil Rizvi, Mr. Ahsan Zahir Rizvi, and again, Mr. Zaigham Adil Rizvi. (Is it a strange coincidence or a deliberate scheme? Let the readers judge! ) (iv). In the bidding process, Al-Tuwairiqi was part of consortium but the letter was issued in the name of Al-Ittefaq which was replaced later in the consortium agreement dated 20-4-2006; how the Commission knew it in advance that this replacement will be done after 20 days

(v). under our law, a company can only do business in Pakistan if Board of Investment gives permission and the said company is registered with Securities and Exchange Commission of Pakistan under section 451 of the Companies Ordinance 1984; in this case, only Arif Habib Securities was registered here; so why such letter was issued to these unregistered companies?. And about Arif Habib, an application was moved in the apex court on the accounts of pending money suits ( Rs. 12 billons) against him in courts in Sindh and his role in the alleged crash of Karachi Stock Exchange in 2005 wherein he made about Rs 5 billion in one day by manipulation as per enquiry committee appointed by the Securities and Exchange Commission of Pakistan. ( the report is available on SECP web site) Purchaser different than Bidder? The bidder consortium consisted of (i) Al-Tuwairiqi (ii) (ii) Arif Habib and (iii) (iii) Magnitogorsk But the Share Purchase Agreement was executed between the Pakistan and (i) PSMC SPV (Mauritius) (ii) Arif Habib Securities (iii) Arif Habib s/o Habib Haji Shakoor. The following became the guarantors of the agreement: (iv) ATG Holdings Mauritius (v) Al- Ittefaq (vi) MMK Holdings (Mauritius) (vii). Magnitogorsk. The following points are worth consideration: (a) Why and under what law, companies were changed? Why bidders were different and agreement was made with different parties? (b) one person signs on behalf of first five parties (i to v) and another person signs for (vi) and (vii); (c) PSMC SPV was registered as a special purpose vehicle offshore company with capital of four dollar just to avoid tax. It also means that in case of a problem, its liability will be limited to four dollars (d) Privatization Commission did not check the documents of three Mauritius companies and did not submit these in the Court; (e) It appears that, like consortium, these have been registered after the bidding;

(f) How come Arif Habib s/o Habib Haji Shakoor became buyer in its personal capacity as he neither figure in EOI and bidding nor in the consortium, actual or dummy? Judgment of Supreme Court of Pakistan! The nine member special and larger bench of the Supreme Court of Pakistan heard the case for 16 days from 9 am to 1.30 pm. The government/buyers were represented by a team of the senior most lawyers including Syed Sharif-ud-Din Pirzada, Mr. Hafeez Pierzada, Mr. Khalid Anwar, Mr. Waseem Sajjad ( i.e. four former Law Ministers)and the Attorney General. The honorable court announced its short order on 23-62006 wherein the Letter of Acceptance (LOA) dated 31st March 2006 and share purchase agreement dated 24th April 2006 were declared as void and of no legal effect. I quote hereunder a few lines from the judgment to confirm the story: “On the very next day, CCOP determined the reference price of the share @ Rs.16.18 less than the value suggested by Privatization Commission @ Rs.17.43 per share, whereas final bid was accepted @ Rs.16.80 per share.” “It may also be noted that as against the above price, the GOP as well as Privatization Commission has extended following benefits to the purchaser: i) The stock in trade in the Unit worth about Rs.10 billion, to be handed over to the purchaser, ii) The cash worth about Rs. 8.559 billion lying in its account, out of which post dated cheques of about Rs. 7.67 billion have already been issued to clear the liability of loans, which were due form the year 2013 to 2019. iii) The Tax of Rs.3 billion has already been paid, out of which Rs.1 billion will be refunded to the purchaser on taking the possession of the Unit. iv) v) Total loss to Government in this way works out to Rs.18 billion (net) (10.00+7.67+1.00) Above all, the Government has accepted the liability to pay compensation of about Rs. 15 billion to the worker as Golden Hand Shake Scheme, which will be another loss to the State.”

‘Conscious of the mandate of Article 153 and 154 of the Constitution, we hold that the establishment and working of the Council of Common Interest (CCI) is a cornerstone of the Federal Structure providing for protection of the rights of the federating units. Mindful that the important institution is not functioning presently, and taking note of the statement made by the council for the federal government Mr. Abdul Hafeez Pirzada that the process for making it functional is underway, we direct the federal government to do the needful expeditiously as far as possible but not latter than 6 weeks. -------by way of propriety it would be in order if the matter is referred to the counsel of common interest CCI for consideration’.( EDITOR’S NOTE: Article 153 deals with the constitution of the CCI. Article 154 mandates the CCI to formulate and regulate policies in relation to matters in Part II of the Federal Legislative List. The Part II of the Federal Legislative List includes ‘Development of industries, where development under Federal control is declared by Federal law to be expedient in the public interest; institutions, establishments, bodies and corporations administered or managed by the Federal Government ----all undertakings, projects and schemes of such institutions, establishments, bodies and corporations, industries, projects and undertakings owned wholly or partially by the Federation or by a corporation set up by the Federation. In other words the privatization of PSMC should have been placed before CCI.) ‘The process of privatization of PSMC stands vitiated by act of omission and commissions on the part of certain state functionaries reflecting violation of mandatory provisions of law and the rules framed hereunder which adversely affected the decisions qua pre qualification of a member of the successful consortium (Mr. Arif Habib), valuation of the project and the final terms offered to the successful consortium which were not in accord with the initial public offering given through advertisement’. Conclusions It is not difficult to judge that the ‘deal’ has been managed from the day one to benefit certain people. Leaving aside ‘acts of omission and commission, out of which some have been mentioned and the rest will be precisely documented by the highest court of the land in its detailed judgment, let us calculate the final figure. a) The Steel Mills has been sold for 21.68 billions. b) The buyers have been given benefits of 17.67 billions. c) If half the employees take or are sent on golden hand shake (PSMC Chairman is on record that 50% employees will opt for this scheme),

d) e) f) g)

government will further pay Rs. 7.5 billions. If all opt for the scheme, then it will pay Rs. 15 billions. In other words, the buyer(s) are paying Rs. 21.68 billions whereas government is giving then Rs. 25.17 ( if half employees) to 32.67 ( if all employees) billions. The net transfer of national resources to the buyers would be Rs. 3.49 to 10.99 billions. Let me remind you, this simple calculus does not include the humble price of the 4457 acres of prime land which is of 100 billions rupees. All put together, the ‘clean’ government serving the poor toiling masses of the Islamic Republic of Pakistan has gifted, as a token of love, Rs. 103. 49 to 110.49 billions to one of its ‘poorest’ citizens in the ‘larger interest’ of the nation.

There are some issues which need to be pondered upon: (i) The honorable court has earned the laurels of the common citizens. It may lead to the restoration of confidence of the people into our judicial system as without proper dispensation of justice, we cannot survive as a nation. (ii) Does this damning judgment of the nine lordships of the highest court of the land will lead to the rolling of some heads? And it must. (iii) The government always claims ‘corruption free good governance’ and alleges corruption on part of the previous governments led by Benazir Bhhutto and Nawaz Sharif. At the most, there are still mere accusations that are still under trial in lower courts. Here the highest court of the land has given a final judgment of ‘acts of omission and commission’. Will the Goebbles of the present ‘savior government’ explain to the nation about their tall claims? (iv) There is ‘rule of cartels’ in Pakistan: cement cartel, oil cartel, sugar cartel, bank cartel, land cartel, stock exchange cartel, drug cartel, steel cartel etc. Have these cartels been created in ‘larger national interest or it is a mere coincidence? (v) The whole Pakistan appears to be on loot and boot sale. Previous governments sold ‘dead and sick’ units of lesser importance. This government is selling very profitable and strategic corporations without any clear cut policy considering national interests. Should there be a national privatization policy and legislation after a fair and thorough debate? (vi) National Accountability Bureau hounds petty officials on allegations of small corruptions. What would be the attitude of NAB about this proved corruption of not very small amount i.e. Rs. 103.49 billions? Let the NAB start action not only against the culprits involved in the

Steel Mill but also in other case like Habib Bank of Pakistan which has been sold at an amount equal to its just two years profits. ( Barrister Zafarullah Khan)

What a Steal?
Dr Farrukh Saleem: June 11, 2006: the News
Pakistan Steel Mills Corporation (PSMC) on the auction table. PSMC going for Rs21.68 billion. PSMC going for Rs21.68 billion. PSMC going for Rs21.68 billion. PSMC gone for Rs21.68 billion. Pakistan Steel Mills Corporation sold for Rs21.68 billion (75 per cent shares for an equivalent of $360 million). What a deal! What a steal? Our treasury now expects Rs21.68 billion in return for selling 75 per cent of Pak Steel's shares. Of the Rs21.68 billion, the Government of Pakistan (GoP) has agreed to pay a maximum of Rs15 billion in 'golden handshakes', 'special golden handshakes' and a voluntary separation scheme (VSS). According to Lieutenant-general (retd.) Abdul Qayyum, Chairman of Pakistan Steel Mills Corporation, around 50 per cent of the some 13,000 employees would "accept golden handshakes." If the chairman is right then the GoP will pay back an amount of Rs7 billion, leaving the treasury with Rs14.68 billion. Of the Rs14.68 billion left with the treasury, the GOP has already deposited a post-dated cheque in the amount of Rs7.67 billion to clear off past liabilities. That leaves the treasury with Rs7.01 billion. Of the Rs7.01 billion, the central board of revenue (CBR) has waived off taxes in the amount of Rs1.82 billion leaving -- mathematically speaking -- the treasury with Rs5.19 billion. For the benefit of the buyer, PSMC has an inventory of 'stores and spares' valued at Rs.1.86 billion. For the benefit of the buyer, PSMC has 'stock-intrade' valued at Rs9 billion. For the further benefit of the buyer, PSMC has a bank balance of Rs8.880 billion (as of Balance Sheet dated December 31, 2005). Its total current assets are valued at Rs21.78 billion; a wholesome Rs100 million over and above the price paid by the buyer (remember, the buyer has acquired 75 per cent shares). Wait there is more. Privatisation-related documents claim that PSMC sits on

4,457 acres of land. Depending on who the valuator is the value of land ranges from a low of Rs20 billion to a high of Rs45 billion. The fact of the matter, on the other hand, is that PSMC complex is spread over 10,390 acres while an additional 8,270 acres are reserved for future expansion. Then there is a massive 165 megawatt powerhouse with a replacement cost that ranges from a low of Rs5 billion to Rs10 billion. There also is a dedicated jetty, 110 kilometres metalled road, 70 kilometres railway tracks and a captive market (Pak Steel is the only integrated iron and steel works in Pakistan). Now a bird's eye view of how efficient our government machinery really is: The bidding for PSMC took place on March 30. The board of the privatisation commission approved it on March 31 (the board consist of the chairman, the secretary and six other members; one-third of the members constitute a quorum). The same day the board forwarded a summary to the cabinet committee on privatisation (CCOP). The CCOP met and approved the sale the same day. The same day, CCOP authorised the privatisation commission to issue a letter of approval (LOA) to the buyer. The same day, an LOA was handed over to the buyer. Wasn't Pak Steel established at a cost of $2.5 billion?

HABIB BANK

HBL is Pakistan’s second largest commercial bank, having countrywide and international branch networks. The bank has full service license including commercial, retail, consumer and investment banking activities in Pakistan and most of the other countries where it has branches • HBL has a domestic network of 1,425 branches with a market share of approximately 20 percent and an international network of 48 branches in 26 countries spread over Europe, Middle East, Far East, Asia, Africa and the United States. • It operates three wholly owned subsidiaries namely Habib Bank Financial Services (Pvt.) Limited, Karachi; Habib Finance International Ltd. (Hong Kong) and Habib Finance Australia Ltd., Sydney. • It has two joint ventures namely Habib Nigeria Bank Ltd. (40 percent) and Himalayan Bank Ltd. (20 percent). • HBL owns 90.5 percent shares in Habib Allied International Bank Plc. incorporated in United Kingdom. • HBL has two representative offices in Iran and Egypt.

ISLAMABAD: Ahsan Iqbal Secretary Information Pakistan Muslim League (PML-N) said that the Supreme Court of Pakistan’s verdict on the privatization of the Pakistan Steel Mills proves corruption in the privatization process demanding that the Prime Minister Shaukat Aziz and President General Pervez Musharraf must submit their resignations on this bogus privatization.

Speaking at a joint press conference on Saturday Senator Ishaq Dar and Information Secretary PML-N Ahsan Iqbal said here that the Apex Court verdict validates the opposition’s point of view and the adjournment motion that the opposition forwarded in the Senate and the National Assembly regarding the privatization. They said, "We will abolish the National Security Council after coming into power as it has no constitutional status and will launch nationwide protest demonstration against government’s lavish spending". They demanded the apex court to take suo motto action on the privatization of Habib Bank and Stock Exchange Scandal as well. Senator Ishaq Dar said, "I have expressed similar reservations regarding Habib Bank on the floor of the Senate. $ 382 million is not the price value of Habib Bank. The Bank’s one-fourth price was Rs 12 billion. The price should have been $ 600 million. I said it at the Senate’s floor". Giving details he said, "Due to adjournment of the Senate the approval letter was issued in a hurry. After receiving lesser price from UBL, Habib Bank was privatized. We have seen in the form of tax refund Habib Bank received Rs 9 billion and 800 million last year still the bank was privatized at a throw away price". Referring to misuse funds generated through privatization he said, "For covering up the budget deficit the government utilized Rs 54 billion gained through privatization from the year 2001 to 2005. During 2005-06 Rs 90

billion were used for the similar purpose. Government assets are being sold at throwaway prices. Government has set aside Rs 75 billion from the privatization programme for covering up the next year budget deficit". Reflecting on the lavish government spending he mentioned, "Government has asked for Rs 100 million for foreign trips. An additional amount of Rs 150 million have been sought for the Prime Minister’s foreign trip. An amount of Rs 577 million were spend on President’s and Prime Minister’s VIP aircrafts redecoration and Rs 330 million were facilitated in terms of duty for the purchase of Mercedes cars. The government’s economic governance has turned worse". Lamenting on the situation he said, "There is no concern for masses facing price hike. There is no change in prices after the budget speeches. Masses are being suppressed and on the other hand they (government) is spending billions on luxuries. Thanks God! That the Supreme Court by delivering justice has proven the opposition’s stance as correct". Criticizing the government, he maintained, "For 2006-07 Rs 1 billion and Rs 396 million have been allocated for transport. Ishaq Dar said that any unanimous decision taken by ARD would be implemented upon. The July 2nd London meeting is very vital and we will launch drive for democracy in the light of any decision taken in that meeting". Drawing a comparison he said, "In 1997 meeting of Council of Interest took place and its last meeting took place in December 1998. The government’s claims are false that there was a meeting only in 1997. In the previous seven years government doesn’t bother to conduct a single meeting". "In the 52 years till 1999, $ 1926 billion were the total amount of loans and in the last seven years the present government has taken loans amounting to $ 814 billion", he added. "We will monitor the privatization process considering it a matter of national interest. This is not about personal accountability. Suo motto action must be taken against the privatization of Habib Bank. Pakistan has been turned into a private limited company. National assets are being distributed. During the ’Qarz Utaro Mulk Sanwaron" drive foreign loans worth $ 356 million were taken. In this regard the government tried to mislead the masses all these loans have been repaid. Our privatization programme was aimed at giving ownership rights to the masses so that the asset remains within the country. Through our privatization programme we tried to give shares to the masses through the stock exchange. National Security Council has no role in the parliamentary system of government", he said categorically.

Ahsan Iqbal said that Nawaz Sharif government in 1990-91 established a good reputation through transparent privatization programme in the international circles. "We envisioned securing public interest through our privatization programme", he said further. Highlighting past PML government’s privatization scheme outcome he said, "We turned laborers into factory owners through privatization of Millat tractors. We never used privatization for looting public wealth. Government has committed such big dacoity that has forced the Supreme Court to take action and has damaged country’s reputation globally". Criticizing the government he maintained, "Present government is the most corrupt, inefficient government of Pakistan. Stock market scandal is a bigger scandal than the steel mills scandal". "Keeping these scandals in view a decision has been taken in the parliamentary board that on June 28 protest day would be observed nationwide", he said. "Protest camps would be erected in front of press clubs", he added (July 24, 2006: Pakistan Tribune)

PTCL

Government of Pakistan and Etisalat reached an agreement Tuesday towards successful completion of the privatization process of the Pakistan Telecommunication Company Limited (PTCL) with the respect to Etisalat’s acquisition of 26 percent shares in PTCL along with management control, says a message received from Abu Dhabi. It may be recalled that Etisalat had been declared successful bidder after it outbid China Mobile and Sing Tel by offering US$ 2.6 billion for acquisition of 26 percent stake of PTCL. Then bidder backed out. The government secretly negotiated the deal. Many concessions wee given to new management/bidder. One such unfair concession is that payment will be made in next five years rather than in one years as agreed earlier. The details are still secret in the ‘ larger national interest.’

Privatisation of PTCL challenged in SC

ISLAMABAD, May 25: PTCL employees’ union on Thursday moved the Supreme Court challenging the telecom giant’s privatisation. A petition, drafted by Ibrahim Satti, was filed under the apex court’s origional jurisdiction on fundamental rights by Haji Khan Bhatti, president of the Pakistan Telecommunication Company Limited (PTCL) Lions Union. It urged the Supreme Court to set aside the sale of 26 per cent shares of PTCL in the national interest. It terms the entire process of privatisation and handing over of its management illegal and against constitutional provisions.

Respondents include the federal government through its cabinet committee on privatisation, secretary of the ministry of information technology, the Privatization Commission, chairman of the PTCL, secretary of the Privatisation Commission, Abdul Rahim Al Nooryani of Etisalat International Pakistan, President Mohammad Addullah Bamakhrama president PTCL and Salem Al Akebary, Senior Vice-President of PTCL. The petition also questioned the legality of the Privatization Commission Ordinance, terming it to be against the Constitution and said that the entire procedure without proper legal backing. It also contended that the commission had no legal authority to offer PTCL’s shares for sale. The petition terms PTCL’s privatisation non-transparent and alleged that ‘secret deals’ had been struck to sell the profitable entity at a throwaway price which, too, was not paid in accordance with the agreement. Instead of cancelling the bid, it argued, the commission rescheduled the payment in a questionable manner.
(May 26, 2006: Dawn)

Critical issues in privatization

By Irfan Shahzad WHAT is going to be the fate of Pakistan’s much hyped privatization programme? This question is boggling many a minds in concerned circles both at home in Pakistan and abroad these days. With each and every passing day that is taking us closer to the end of this month, the clouds of uncertainty are darkening over the possible take-over (or in the worst case otherwise) of Pakistan Telecommunication Company Limited (PTCL) by Etisalat, the UAE’s telecom giant that gave the highest bid for it in June bidding. The extended last date given to the company for depositing remaining 90 of the bid money is October 28. What a difference a quarter of a year can make! Everybody at the helm of affairs in Pakistan’s Privatization Commission (PC), including Dr Abdul

Hafez Sheikh, Federal Minister for Privatization and Investment were seen in jubilation on June 18, when Etisalat offered $2.59 billion for 26 per cent shares of PTCL along with its management control. Huge claims were being made and people were being convinced to believe that it was an historic moment. It really was. Though still signed just on paper, the deal was single largest in history of Pakistan. Concluded on initial time framework by last month, it could well have been the largest transaction ever made in Pakistan. However, it has not materialized yet. The result is that privatization authorities, again including the minister himself, are reportedly trying their best to avoid the representatives of media. Why? The answer is not hard to come by. They doubtlessly have little to tell and explain. Etisalat says there are some “serious issues” to be discussed, before putting the seal on the deal. It is being argued by some that it will be least possible for Etisalat to let the deal fall flat, citing good relations between UAE and Pakistan, and its outward longer term expansion plans. One should always hope for the best, but it is needless to stress that in economic deals, profits and capital gains are the real decisive force. In fact, it has not been a smooth sailing since the bidding was held and the second thoughts of sheikhs are an open secret. As such, full payment by Etisalat and handing over and taking over of Pakistan’s largest company should have been completed by August 28, 2005. The final date kept moving ahead. And after its CEO’s meetings with higher ups in Islamabad recently, the company has now been given the date of October 28 to deposit the remaining money and take over PTCL. Despite this extension one can not say for sure what is going to follow on this regard. This is thus becoming second similar episode after Kunooz alWatan Group of Saudi Arabia disappeared after bidding highest price for Karachi Electric Supply Corporation, apparently because of some differences on billing system of corporation. The finalization of PTCL deal, whichever way it goes, holds a lot of importance for the economy, privatization process in particular. And this is because telecom, a rapidly expanding sector is closely linked with almost all sectors of economy. Specially two-third of next year’s FDI inflow target set by the government is directly dependent on PTCL deal. The uncertain environment caused by it is already taking its toll. KSE index

and investors of PTCL shares have been hit. It is however good to note that PC has been able to move ahead with privatization of Musthkam Cement, Bolan Textile’s machinery and 17 EoIs have been received for Pakistan Steel Mills. Secretary PC was quoted as explaining that the deal with Etisalat was a big one and some issues may arise in such big deals. He seems absolutely true. But even if the process comes to finalization after the delay that has already been caused, by one reason or other, the near repetition of Kunooz episode by Etisalat poses some critical questions. The foremost is that what really creates doubts in minds of international investors, even after biddings and paying initial amounts that too come in hefty sizes as has been the case with Etiselat. Are the procedures leading to privatization of sate enterprises not transparent enough? This is already under extensive debate in the country, including in the parliament. Do we create hurdles in the way of buyers, intentionally or un-intentionally, even after the deals are made? And finally, did we overplay the bid of Etisalat, way ahead of second runner up, giving signals that we have fetched too good a price and warning the buyers that it was not a right bargain for them? Privatization has always been riddled with problems and controversies, be it sale of a cement plant, bank or now an infrastructure company. What people are concerned about is the ways it has been carried out so far. All the above mentioned questions demand satisfying answers and indicate that we surely need to put our house in order if the intention is to run this process successfully in the longer run. It is time to ponder and act wisely.
(October 17, 2005: Dawn)

LAND MAFIA

The New Land Barons? Ayesha Siddiqa , Newsline, July 2006
Abdul Karim waited in the heat outside the Supreme Court for his case to be heard. Sitting miles away from his village in Bahawalpur, the poor peasant was contesting his right over three kanals (0.375 acres) of land that had already been awarded to him through an administrative decision. He had tilled the land for years and he was deemed to be the rightful owner. However, the land was subsequently transferred to Brigadier (Retd.) Muhammad Bashir, through another administrative order. The transfer of land to the army brigadier was part of the 33,866 acres of land given to the Army GHQ in 1993 in Bahawalpur by the provincial government. The Punjab government had transferred the land without checking its title. Out of the total land given to the army, the said brigadier got 396kanals (49.5 acres) of land, out of which about three kanals belonged to Abdul Karim. Brigadier Bashir contested Karim's ownership in the High Court, but the court upheld Karim's title. Not satisfied with the court's decision, Bashir filed an appeal with the highest court in the land. The Supreme Court of Pakistan also upheld Abdul Karim's ownership. The Supreme Court admonished the district collector for acting capriciously and for arbitrarily transferring land that was marked as land not available for allotment. While upholding Abdul Karim's right to cultivate the land, the court also reproached the retired brigadier for impinging upon the rights of a poor peasant. In a historic judgment passed in September 2003, the Supreme Court bench warned against greed and forcibly and illegally depriving poor people of their rights. Amazingly, Abdul Karim received justice not because he had the means to take legal action, but because Brigadier Bashir wanted his land and took the case to court. It's unlikely that this historic judgment will help many other poor villagers, though, as the only way for them to benefit from this landmark judgment would be to initiate expensive legal proceedings. The people of the small fishing village of Mubarik were not as fortunate as Abdul Karim. Situated near the Sindh-Balochistan border, their village adjoining the sea was once their territory. For over five years now, they have watched as their land has been slowly pulled away from under their feet. Generations of their families have lived there peacefully as fishermen, but no longer. A few years back, the villagers found that they could no longer move freely on their own land. The Pakistan Navy (PN) ordered the residents of Mubarik village to limit them selves to a small area. But that wasn't the only restriction. They were also told not to construct houses on the land because the adjoining land fell within the range of the navy's target-practice range.

However, one thing is clear: over the years, the armed forces have become major players in Pakistan's real estate business. Since the early 1950s, the military has acquired millions of acres of land throughout the country for distribution to serving and retired armed forces personnel. According to one estimate, the armed forces control about 12 million acres, constituting about 12 per cent of total state land. Out of this, 62 per cent is in the Punjab, 27 per cent in Sindh and 11 per cent in NWFP and Balochistan. About seven million acres of the total is agricultural land and has an estimated worth of Rs700 billion. Interestingly, only about 100,000 acres are directly controlled by the armed forces and its subsidiary companies, the Fauji Foundation, the AWT and the Bahria Foundation, and distributed amongst serving and retired personnel. The remainder was given (at highly subsidised rates) to army personnel as awards to be used for their personal gratification. Granting agricultural land as a reward to individuals is a tradition inherited from the British. Following the principle of rewarding the 'faithful,' the Alienation of Land Act specifically stipulated allocation of 10 per cent of colonised land to the armed forces. This process of land development was incorporated later in another law known as the Colonisation of Land Act, 1912, which was updated by the Pakistan government in 1965. For decades, land has been transferred to military personnel under the aforementioned law. The military was given 10 per cent of the approximately nine million acres of land reclaimed due to the construction of the Kotri, Guddu and Ghulam Mohammad barrages in Sindh. The government also gave land to some senior civil bureaucrats, who were the military regime's partners. Some of the prominent beneficiaries of the land reclamation scheme from the armed forces included General Ayub Khan (247 acres), General Muhammad Musa (250 acres), and Maj. General Umrao Khan (246 acres). After the military's takeover in October 1958, more land was allotted to army officers in the Guddu Barrage area. Also, agricultural land was given in the Punjab. What is even more important, however, is the fact that the land allotted to military officers was developed with foreign aid - military and economic aid from the US. Reportedly, the finance minister of Punjab, Nawab Iftikhar Hussain Mamdot, justified the use of foreign aid for land development because the money was meant for the army. The military's control of land feeds the largest social injustice in the country: widespread poverty. Like the feudal class, the military has been known to use its power to redistribute land amongst its own without any regard for the country's poor ethnic populations. In Bahawalpur, there are instances when land developed through years of hard work by landless

peasants has been snatched away for distribution to the military bureaucracy. In the tehsil of Nawazabad, the government awarded about 2,500 acres to various military personnel. Hundreds of landless peasants were evicted from state lands after occupying it for years without incident. In an interview, these peasants protested against being evicted from the land they had partially developed and reclaimed from the desert without even a fair hearing. When the peasants took their case to court, junior military officers threatened them, ridiculed the law and advised the peasants that even the courts could not save them from the army's authority. To the villagers of Nawazabad, there was no difference between the dominant feudal lords and the praetorian military. One local woman bitterly demanded, "If there is no place for us here then [the authorities] should put us on a truck and drop us in India." The case of Nawazabad is not an anomaly. Other places and people have also experienced the use of force by the military to obtain land for personal or operational purposes. In Yunisabad, near Karachi, the Pakistan Navy took forcible possession of the floating jetty - and the land on which it was built - that belonged to the village and was used to transport locals, especially the sick. For villagers from nearby Shamspir, the jetty was their only access point to land. A writ petition was filed with the Sindh High Court against the "illegal act of the navy" and several letters were written to the district administration highlighting human rights abuses by the PN. Across the country, there are many examples of the military wielding absolute authority to suppress landless peasants in areas where they directly control the land. In Okara, a conflict ensued between local tenants and the army that had unilaterally decided to change the terms of contract from share-cropping to rent-in-cash. While share-cropping pertains to an arrangement whereby the tenants share both the input and the output with the owner or whoever controls the land, the rent-in-cash arrangement dictates that land is cultivated in exchange for money, or rent. The additional benefit of share-cropping to the tenant is that his right over the land is recognised by law. The Okara farm tenants, who had resided on the land and were responsible for tilling it, feared the new system of contract would empower the army, who were not even the owners of the land, to displace the poor tenants from their homes. The Okara farms are part of the military farms group, Okara and Renala, which comprise 16,627 acres of land consisting of two dairy farms, seven military (oat-hay) farms and 22 villages. The prime proprietor is evidently the Punjab government, which leases the land to other people or institutions. In this particular case, the army had changed the terms of contract for land it did not own. Moreover, the land lease had expired before Partition in 1947 not to be renewed again. To enforce its authority, the Rangers besieged the villages twice, imposed curfew, restricted freedom of

movement, stopped supply of medicine, food and vegetables, and used numerous other pressure tactics. The report of Human Rights Watch has detailed testimonials of villagers victimised by the military authorities that were generally dismissive of the protest. Army personnel claimed that, rather than being a human rights issue, this was a local law and order issue incited by some NGOs. Commenting on the Okara farms case, the Director-General, InterServices Press Relations (ISPR), Maj. General Shaukat Sultan, said, "The needs of the army will be decided by the army itself, and/or the government will decide this. Nobody [else] has the right to say what the army can do with 5,000 acres or 17,000 acres. The needs of the army will be determined by the army itself." However, the Okara incident was not an issue of how the army determined the usage of its land. This, like many other cases, is about the illegal use of military authority to change the legal nature of the land under its control. The army follows the practice of changing the usage of A-1 land specifically meant for operational purposes, to profit-making or for personal gratification of the officer cadre and other elite. In the Punjab, farm land has been turned into golf courses and residential housing schemes. Debates in Parliament over the past couple of years have shown that some camping grounds that the army had arbitrarily turned into golf courses were not designed for public use, but only to please a select few. In its official response to parliamentary questions regarding the misuse of state land by the military, the Ministry of Defence (MoD) did not challenge the army's authority. The ministry upheld the army's jurisdiction over land under its control. This was done in other cases as well, such as the conversion of the firing range in Nowshehra into a citrus farm. The army vociferously defends its power over these assets and even controls information regarding these agricultural assets. Since 9/11, there has been a noticeable boom in the value of urban real estate in the country. One of the largest beneficiaries, of course, is the military, which has engaged in the practice of converting land titles from state land to private property. It does this via two methods. Firstly, there is the conversion of state land for private usage. A large amount of state land designated as A-1 land in various cantonments is distributed to military personnel. Here, it must be mentioned that the beneficiaries are the officers and not the soldiers. The 27 housing schemes built on state land in different parts of the country are reserved for the officer cadre, not the jawans. According to a report submitted by the MoD to the Senate, about 78,292 square yards, or16.3 acres, totalling 130 residential plots, were given to an equal number of officers in different cities in a period from October 1999 to 2003.

The report highlighted a series of cases where residential plots were carved out of state land meant for operational purposes. The cities included Karachi, Lahore and Rawalpindi, as well as smaller towns such as Kharian and Jhelum. The ranks of the beneficiaries varied from a full general to a captain. Quantitatively, the distribution was fairly even, with senior, middle-ranking and junior officers getting 46, 36 and 48 plots respectively. However, the plot sizes for senior officers were much bigger than what junior officers received. Generals of all categories received plots of 800 square yards, while plot sizes for captains were less than 500 square yards. The cantonment area in Lahore, which, up until the early 1980s, comprised a large segment of army training grounds and firing ranges, was almost entirely converted into a residential area. In effect, army exercise and training grounds were converted from public to private use without the consent of the government or the public for whose safety the land was initially provided. This was, of course, done through an internal decisionmaking process rather than through consultations with the government. In fact, a major complaint is that decisions involving major military housing projects are always made when Parliament is not in session. Such arbitrary redistribution raises concerns about misuse of state land, especially cantonment land. Major cantonments include Lahore (12,000 acres), Karachi (12,000 acres), Rawalpindi (8,000 acres), Kamra (3,500 acres), Taxila (2,500 acres), Peshawar (4,000 acres) and Quetta (2,500 acres). The fear is that most will ultimately be commercialised. In fact, Lahore, Karachi, Rawalpindi and Peshawar cantonments are no longer restricted army areas. Much property has already been resold to civilians. In Lahore, officers were given ownership of large residential properties in the cantonment area. A conservative estimate of the worth of the cantonment land in Karachi, Lahore, Peshawar and Quetta is approximately 300 billion rupees. The transfer of one portion of Karachi's National Stadium to the Karachi Cantonment Board is a prime example of military land-grabbing. The Corps Commander Mangla, Lt. General Tauqeer Zia, who was also the Chairman of the Pakistan Cricket Control Board (PCCB), was responsible for transferring the said land during his tenure as head of the PCCB. The financial dividends were superb. A minimum investment of 600,000 rupees netted a profit of about 15 million in a quick 60 to 90 days. Such manipulative capacity is only available to the most influential institutions or individuals in the country. President Pervez Musharraf, however, claims that all is fair in real estate and military governance: "So, what is the problem if they [the armed forces] are contributing to town development here, or anywhere in Pakistan, for that matter? In Lahore, in Rawalpindi - their output is the best. The defence societies everywhere are the top societies of Pakistan…now, why

are we jealous of this? Why are we jealous if somebody gets a piece of land, a kanal of land, cheap when it was initially, and because of the good work done by the society, the price rises by 100 times, and the man then earns some money. What is the problem? Why are we jealous of this? There's no problem at all." Consequently, most major cantonments have got into the habit of making markets and commercial plazas on state land for lease. Several senior retired generals have justified these ventures on the grounds that other armed forces, such as China's People's Liberation Army (PLA), are also involved in profit-making ventures. The PLA, however, was ordered to divest its commercial interests in 1998 to restore professionalism in the armed forces. Moreover, unlike the Pakistan military, the Chinese military is a revolutionary force that had to make 'both ends meet' since Beijing did not provide it with the requisite financial resources. The defence housing authorities in major cities, or the housing schemes run by the Bahria and Fauji Foundations, represent yet another method of dabbling in real estate. Contrary to the view held by military personnel that these housing schemes are welfare or private ventures that basically show the superior management skills of the armed forces, there is a lot of manipulation involved in the acquisition of land. The DHA in Lahore, which came under a lot of flak due to the stories of rampant corruption, acquired land through offering plots to the owners of farm land. Of course, the owners of the land had to pay development charges to get ownership of the newly developed urban property. The DHA, meanwhile, did not have to pay money to purchase the land. In the ever-growing DHA in Rawalpindi, there were even reports of the owners being forced to sell their land. The tehsil office refused to issue land revenue documents to the owners even six months before the land was finally purchased for the extension of the DHA, which is now worth billions of rupees. The dividends are phenomenal. In the case of DHA, Rawalpindi, land totaling 3,375 acres was acquired at a total cost of about Rs11 billion and later sold for approximately Rs135 billion. Referring to the compensation of land, private owners would, perhaps, consider themselves relatively lucky as compared to the state itself. The governments have not been able to exercise control over the transfer of land to the military at very low compensation. Referring to agricultural land, it is usually acquired at the rate of Rs 50 per acre. Similarly, very little is paid in the urban centres. One of the most recent examples pertains to the acquisition of 1,165 acres of land in 2005 for the Army's GHQ in Islamabad. The land was acquired at the throwaway price of Rs 40 per square yard,.

Urban and rural real estate is one sector used for personal gratification. The military's perspective is that it uses a system of merit to reward lands to individuals. This might be true, but the system does not explain how most senior officers end up piling up numerous properties worth millions of rupees.

* There are hundreds of thousands private housing societies/schemes which are ripping off thousands of billions of rupees from the general public. There is no land available with these societies but these are selling fictitious plots. There is no NOC available from any government department but the functionaries of this government are patronizing these greedy traders of the land. No authority is there to check this extraordinary fraud of unimaginable proportions.

How much is a general worth in real estate terms? By Ayesha Siddiqa Newsline, July 2006

According to an assessment based on the value of rural or urban plots, the worth of a general in the army in real estate terms is anything from a hefty 150 to 400 million rupees. And that is a conservative estimate. Many senior generals own up to seven to eight properties in rural areas and in the cities. This development of a land-rich military is the result of a decades-old policy of awarding land, particularly agricultural land, to loyal military personnel. However, a number of officers own more than just one piece of land due to the fact that every gallantary award is accompanied with a piece of urban or rural property. Subsequently, service chiefs were given the option of getting a plot of land in the city of their choice. This provision is traced back to General Zia-ulHaq's era. As such, many senior officers obtained prime properties. The list includes: General (Retd.) Shamim Alam Khan, Chairman, Joint Chiefs of Staff Committee (allotted a 1,066-square-yard plot in the costly F-7 sector on June 11, 1994), former chief of Army Staff, General (Retd.) Abdul Waheed Kakar (allotted a 1,200-square-yard plot, number 6 in sector G-6/4 on September 7, 1996), Air Chief Marshal (Retd.) Farooq Feroze Khan (allotted a 1,033-square-yard plot, number 13 in sector F-7/2 on January 29, 1995), former Naval Chief Admiral (Retd.) Saeed Muhammad Khan (allotted a plot measuring 1,066 square yards in sector F-7 on June 11, 1994), former Naval Chief Admiral (Retd.) Muhammad Saeed (allotted an 800-square-yard plot, number 19 in sector F-8/1 on August 30, 1987), and former Naval Chief, Admiral (Retd.) Yasturul Haq Malik, (allotted a 800-square-yard plot. number 551 in sector F-10/2 on November 4, 1991). The current market value of these plots varies from Rs. 70-100 million each. However, there is no limit to the land acquired by some other officers. For instance, according to a list of land awards to officers, eight plots were allotted in the name of the DirectorGeneral, ISI. The list placed before the Senate shows that five plots were allotted in the name of the DG, ISI on April 15, 1994 in sector F-11/2. The plots measuring 666 square yards, included plot numbers 193, 194, 261, 262 and 263. The DG, ISI was also allotted two more plots on November 16, 1994 in sectorF-7/4 and F-7/2, each measuring 1,600 square yards. Another plot, measuring1,244 square yards, was allotted in the name of the DG, ISI in sector F-7/1 on October 26, 1994.

Apart from the officially allocated plots, senior military officers get land in the defence housing schemes at concessional rates. However, developed, these plots add another Rs. 50-100 million each to the general's total worth. According to Lt. General (Retd.) Moinuddin Haider, the DHAs pay market value for the land. However, the concept of market rate is debatable. The market rate is charged for agricultural land, which is phenomenally cheaper than urban property. The profit earned on property converted from rural to urban by the DHAs is much more than what would have been obtained had the real estate been sold as rural property. While the price of 600square yards of agricultural property would be around Rs30,000-40,000, the same piece of urban land is worth approximately Rs50-100 million

Is cheap land for pricey Mercs a fair deal?
ISLAMABAD, July 21: The Punjab government, on the instructions of the centre, is all set to acquire by force about 1,200 acres of prime agricultural land in the Sheikhupura district at a much lower than the market price for a Mercedes-Benz assembly plant by a locally-registered but hitherto unknown firm under licence from the German manufacturer, Daimler-Chrysler. Discussions with officials in the federal and Punjab governments and company officials tell interesting stories of vested interests beyond stated objectives, unfair handling and even contradictions at all levels that reveal more mysteries associated with the project than proving it a pure automobile investment. The project that would necessarily result in the eviction of about 250 families — who were allotted this land in Kot Pindi Das in Sheikhupura against their lost property in India as a result of their migration in 1947 — is a classic example of overstretching of the Punjab Land Acquisition Act of 1894 in the name of ‘public interest’. The law allows the government to take over private land for public use against compensation at market rates but not for private business, lawyers said. Informed sources said the area under acquisition was beyond the needs of an automobile plant because it also involved 57 acres for a golf course, 50.5 acres for a five-star hotel, a 478-acre race track and 99 acres for expansion. A legal document of the Sheikhupura revenue department did mention these facilities as objection raised by the landowners but did not address the issue beyond that. “There is no precedent of the government acquiring land for a luxury hotel, racing track or business venture on behalf of a private investor,” one of the landowners said. The District Revenue Officer, Sheikhupura, notified in the Punjab gazette on February 7, 2006 that “the land is likely to be required to be taken by Coastal (Pvt) Limited … for the construction of assembly plant of commercial and military trucks and cars, it is hereby notified that land in the locality … is to be required for the above company and purpose.” Subsequently, on June 19, the board of revenue (Punjab) approved land prices recommended by the District Price Assessment Committee for the 1,200 acres and fixed Rs125,000 for 64 acres, Rs300,000 for 430 acres,

Rs350,000 for 657 acres and Rs425,000 for 47 acres. On June 24, the Deputy District Officer, Land Acquisition Collector, was directed to proceed further. Before the project could take off, the residents of Kot Pindi Das – who are on the verge of being forced to hand over the land to Coastal Private Limited for Rs484 million at the rate of Rs400,000 per acre — organised themselves under a newly-formed ‘Anjuman Kissan Mutasrin-e-Mercedes-Benz’ to protest in Lahore and Islamabad, says Rana Ehsanul Haq who is one of over 1,500 affected persons. Kot Pindi Das is an agricultural mauza along the motorway in Skeikhupura, just 18km from Lahore Courts. About two kilometres from this area in Kalar, Chamkey and Dargahi Gil, the government of Punjab acquired a 305-acre piece of land for the University of Engineering and Technology, Lahore, at a much higher price of Rs800,000 to 1.2 million per acre under the same act and did not raise any objection considering its clear nature of ‘public interest’ for providing technical education. This was only nine months ago and the prices have not suffered a dramatic fall since then. In brief, the government purchases 305 acres for Rs317.3 million for a public sector university at about an average rate of Rs1 million per acre and now compare it with 1,200 acres for just Rs484 million at an average rate of Rs400,000 per acre for a business concern in the same area. The owners of the land in Kot Pindi Das say that the government cannot acquire land on behalf of a private venture and that, too, at less than half the price. Mr Haq told Dawn that the market rate of the land ranged between Rs3-4 million per acre because it is right by the motorway and would go up further when a proposed inter-change is built at a later stage. Documents suggest the prime minister’s secretariat has already directed the ministry of communications to “allow and provide exit from the motorway (M-2) for Daimler Chrysler by the National Highway Authority”. “This is highhandedness. The government is not even providing alternative land to us,” says Mr Haq, adding that “we are ready to be killed instead of being evicted from where we have been living since Independence (in 1947).” “Why is the company not purchasing the land itself as a private transaction as the Honda Company did recently?” asks Mr Haq. The land being acquired by the government is much more than the requirement of an automobile plant. Honda Company purchased just six acres of land in Sheikhupura for

its plant and the government had no role in that. The total cost of the piece of land purchased by Honda was Rs12 million at a rate of about Rs2 million per acre and that too a couple of years ago, he said. Safdar Javed Syed, senior member revenue, Punjab, confirmed that the district price assessment committee had approved a price that has been challenged by some of the owners. The committee is led by the District Officer Revenue and detailed comments from the committee have been sought. He would not comment when asked if 1,200 acres were really required for an automobile plant. A senior revenue official, however, said the requirement of 1,200 acres was sought by the Chief Minister’s Secretariat on the request of the federal government and the relevant provincial authorities were required to determine the price and complete the acquisition process. The physical acquisition would start upon the receipt of Rs484 million from CoastalMercedes joint venture, he said. Nobody in the board of investment (BOI) – a federal agency responsible for investment promotion – is ready to discuss or defend the project. Senior officials contacted by Dawn said the whole file on Daimler-Chrysler project was not available with the BOI. A senior officer said: “The file is in the personal custody of Minister of State Umar Ghumman,” who has been in the United States for more than a month where he has family business interests. Dawn was informed that Mr Ghumman would be back on July 15 but he is yet to return. On July 19, this correspondent once again contacted the BOI secretary, Jehangir Bashar, and asked about the whole size of the investment, its components including the hotel, golf course, etc and the land requirement. He promised to provide the relevant information and said one of his officers would get back with the information. An official did subsequently establish contact but only with the information that the minister of state was expected to return in three to four days and a meeting would be arranged then. He expressed his inability to be of greater help. On June 15, Mr Ghumman had announced that Daimler-Chrysler and Coastal Group would invest $5.85 billion in Pakistan by starting production of Mercedes-Benz trucks, both commercial and military, buses and Mercedes cars of various types to create a vendor industry. The group would set up its plant on 1,200 acres near Sheikhupura provided by the government. The investment would create 5,000 jobs directly and

indirectly,

said

Mr

Ghumman

at

a

press

conference.

Hafiz Mohammad Taqi Rehman Lakhvi, a local representative of Coastal Limited, when contacted, said the company had been stopped from issuing any statement in the press about the Mercedes-Benz project. He, however, said President Musharraf was personally pushing the project and had informed the company officials during a meeting on May 10, 2006 that he would himself inaugurate the plant on completion perhaps in April-May next year. However, a company official, who requested anonymity, said the total investment to be made over a period of five years would amount to $1 billion and “not $5.8 billion as announced by Minister of State Umar Ghumman” and this would include the Mercedes-Benz plant for the production of trucks, buses and cars in addition to the whole vendor industry. The units would be imported in CKD form under the prevalent automobile import policy and assembled locally without application of a deletion programme. He said 100 per cent investment, and all this is foreign investment, would be made by the Coastal Private Limited and Daimler-Chrysler had no direct investment. The German giant, he said, would provide engines and technical know-how of the plant and the costly Mercedes trucks, buses and E and C class cars would be marketed by Coastal under licence from the German firm. He confirmed that Coastal and Mercedez firms have not yet signed any final agreement but have exchanged feasibility studies and initial MOU. He said the first truck would roll out from the plant latest by April next year and Pakistan army’s National Logistic Cell, Frontier Works Organisation and the army itself would be the major clients. “NLC alone has committed to purchase about 300-400 trucks every year for the next five to six years,” he said, adding the plant would produce 1,000 trucks on a yearly basis with a single shift that could be increased to 2,000 or more with double shifts. He said the company would achieve 50 per cent localisation in two years and was expected to start production of cars after three years. He said a delegation of Daimler-Chrysler was expected to visit Pakistan later this month. He said Coastal Private was registered locally with majority shareholding of Sheikh Yousaf Mohammed Najibi of the UAE, whose Coastal Trading & Contracting Company LLC, Dubai, is a big company of the Gulf. He claimed that in addition to a number of real estate, stock market and other

investments, Sheikh Najibi’s investments in multi-billion-dollar Dubai Sports City (DSC) were higher than Abdul Rahman Bukhatir’s. This, however, could not be verified through an examination of the DSC website. About the debt-equity ratio, he said the whole $1 billion would be foreign direct investment with no local financing and hence it did not matter whether the amount was raised through foreign banks in the form of loan or equity. The source confirmed that Coastal had also heard about the golf course, housing and hotel facilities, but claimed that his company could not do so under any agreement with the provincial government or the German autofirm. He said the process for acquisition of about 1,050 acres was about to begin but agreed that his company would not need more than 600 acres. Official documents of the District Officer Revenue, Sheikhupura, claimed that acquisition of land was taking place under section 4 of the land acquisition act of 1894 that made wishes of the public irrelevant in terms of “compulsory land acquisition.” Raja Shafqat Abbasi, a senior lawyer and member of the Punjab Assembly, said the government could not acquire land for private commercial projects or private housing societies under the land acquisition act. However, the Punjab government had adopted it as policy to forcibly take over 20 per cent land for housing societies provided such societies already possessed 80 per cent of land (By Khaleeq Kiani; 22.7.6 Dawn)

RAILWAY ENGINES

Weep Pakistan, weep
On Friday May 26 a sub-committee of the public accounts committee of the National Assembly took up investigations into the irregularities in the purchase of Chinese locomotives for $100 million. The locomotives were purchased in 2001 when a retired three-star general was the minister in charge, another retired three-star general was chairman railways and a former two-star general was general manager railways. The issue was first raised in the Senate last year upon which the prime minister ordered an inquiry. Investigations revealed that the purchase had been sanctioned despite the fact that the locomotives were unfit for Pakistani rail tracks --- they were too heavy. No international tenders had been floated either. Even the railway officials who attended the meeting said that it was a wrong decision. The chairman railways reportedly said: "If I were secretary Pakistan Railways at the time I would not have signed the agreement". According to Rauf Klasra's report in The News of May 27 the chairman railways also named the three generals involved and then challenged: "If you are serious in investigating the issue please summon them and proceed as you like". The sub-committee, headed by a retired serviceman Col Ghulam Rasool Sahi MNA demonstrated its seriousness, but how. A 'mistake' had been committed, it acknowledged, but quickly dropped the case because the mistake had been made in 'good faith'. A day before the sub-committee had taken a kinder view of another case of a questionable deal that involved retired military men including a brigadier. A 132 KV grid station had been set up at Kamra in 1995 at a cost of 64 million rupees. The committee learnt that the auditor-general was not satisfied because a similar 132 KV grid station set up at Taxila in 1994 had cost only 39 million rupees. The AG had also objected that the contract had not been awarded through open bidding in violation of government rules. Despite evidence and objections by the AG, the sub-committee chose to take a milder view and refrained from referring the case to NAB. On June 1 another sub-committee of the public accounts committee met to take cognizance of the non-utilisation of 36 million rupees provided during 1988-90 for the construction of low cost houses for the widows and orphans of defence forces. The money had not been utilised during the financial year. Instead of the returning the unspent amount to the government it was unlawfully withdrawn at the end of the year to avoid lapse.

When the irregularity was first brought to its attention in 1991, the services' headquarters approached the government for post facto approval for retention of the amount. The AG however refused to accept this saying that even the government was not competent to permit withdrawal and retention of unutilised funds, as it was a violation of constitutional provisions. When the sub-committee took up the case the defence ministry admitted that rules had been violated but insisted that the violation was in 'good faith'. The sub-committee however did not agree and refused to accept the 'good faith' plea. The chairman of the sub-committee Riaz Fityana, a non-serviceman, deserves to be commended for refusing to settle the case but this did not diminish the audacity of the defence ministry to invoke once again 'good faith' and seek exemption. The NAB law is applicable only to political leaders and civilians accused of corruption. Serving military officers are exempt from it because, it is claimed, the military has its own internal accountability mechanism. "We live in sweet prison because of the manual of the Pakistan Military Law during our service" is how a former NAB chairman, a three-star general as well, stoutly defended exemption to military officers in an interview published in this newspaper on June 20, 2005, after he had retired both from NAB and the military. The civilians and politicians hauled by NAB for real or imagined crimes are also promptly sent to jail. Investigations and proofs follow later at a pace determined by NAB. The accused has to prove his innocence. In an interview with The News on April 24, 2000 the then chairman justified the 'onus of proof' with great relish thus: "Yes, it does mean that the corrupt should prove himself innocent". But five years later in June 2005 as chairman of the Fauji Foundation, the same former NAB chief was directed to appear before the defence committee of the Senate to answer serious allegations in the sale of Khoski Sugar Mills that had come to light in the National Assembly in reply to a question asked by a female MNA belonging to the treasury benches. He refused saying that the Fauji Foundation was a private concern and that the Senate body had no business to ask him any questions. The yardstick of proving innocence appeared to have changed now as the hunted was a former senior military officer. "Judge not so that ye shall not be judged". Retired military officers, though not exempt from NAB, have also been exempted from effective accountability through the device of unending

investigations. In reply to a Senate question on December 5, 2003, NAB named fourteen uniformed officers working in civil departments that also included one ex-lieutenant general as being 'under investigation for accumulating assets beyond means'. Three years later when NAB was asked again about the status of the case it replied: "Investigations are still continuing". Meanwhile the accused roam free. To these familiar devices has now been added yet another device, 'good faith'. True, that 'honest mistakes' and 'good faith' must be recognised as basic to the concept of justice with compassion or 'adl bil ihsan'. But it seems that in the Islamic Republic only former generals are entitled to 'adl bil ihsan'. Those who seek reprieve on grounds of 'honest mistake' and 'good faith' must possess very high standards of morality. In 1995 a scandal broke out about the American chief of naval operations, Admiral James Boorda. The case was about whether the admiral should have won a small bronze star that cost less than a dollar. His supporters said he was entitled to wear it. His detractors however insisted that technically he was not entitled to wear it. Appearing before inquiry committee Boorda called it an 'honest mistake'. The inquiry committee agreed that Boorda had made a mistake in wearing the medal even if it was an 'honest' one. The admiral who had a great sense of honour saw a personal shame and dishonour in it and shot himself with his service gun. As I juxtaposed and placed together the admiral and the generals on my minds canvas, an anguished cry leapt from the depth of the heart and it said: "Weep Pakistan, weep".: (Farhatullah Babar: The news, June 11, 2006)

ISLAMABAD: The bosses of the Ministry of Railways apparently used on Friday the 9/11 terrorist attacks as an excuse to get a clean chit from the subcommittee of the National Assembly’s Public Accounts Committee (PAC) regarding a $100 million scam in the purchase of 69 defective locomotives from China. The multibillion-rupee scam was finally buried when the sub-committee members concluded that “the concerned people, retired army officers, had taken the decision to strike the deal in good faith; therefore, it should not be pursued further”. Even the auditors of the Auditor General of Pakistan, led by Zafrullah Khan, Rashed Ahmed Saleh and Sheikh Naseer, who otherwise never spare politicians at the time of their accountability by the PAC, remained silent and disinterested in the meeting while the scam was being settled. The swindle was first blown wide open in the Senate and later discussed in the PAC of the National Assembly. It was reported in the Senate that Pakistan had imported defective locomotives from China. An audit report also confirmed the allegations of senators and the issue was finally referred to the PAC, which constituted a sub-committee to decide the issue. Federal Railways Secretary Shakeel Durrani, who appeared before the subcommittee, got the whole scam settled within half-an-hour into the proceedings. However, he did not mince words when asked to tell the names of those who were actually responsible for the faulty multibillion-rupee deal. “Sir, Lt-Gen (Retd) Javed Ashraf Qazi was railways minister, Lt-Gen Saeed Zafar was secretary railways and Gen Butt was GM Railways at that time. If you are serious about further probing the issue, please summon them and proceed as you like,” said Durrani. But the two members of the PAC sub-committee, MNA Lt-Col Ghulam Rasool Sahi and MNA Asia Azeem, did not have the courage to accept the secretary’s offer to summon these top guns to hear their versions on the issue. They also remained silent when Durrani admitted that the deal struck with China in 2001 was not an ideal one. Durrani also admitted that there were many lapses in the deal and had he been the secretary in 2001 when the deal had been cut, he might have readvertise the tender to get more viable bids for the import of railway engines. But he too justified the deal with China on the grounds that after 9/11 things were quite different as no country was prepared to help Pakistan. He said

that in the given situation the only option left with Pakistan was to seek a loan from China to buy engines, as the condition of the railways engines was very bad. Surprisingly, not only did the PAC members get convinced about this unusual plea, the auditors remained tightlipped and did not point out that the deal with China was struck much earlier than the 9/11 incidents. The railways secretary claimed that the deal was struck in “good faith” by “these concerned gentlemen” who were then running the show at the Railways Ministry. The PAC members by accepting his plea about the retired military generals, who took the faulty decision, said: “OK gentlemen, we accept your plea ‘in good faith’ and settle the whole scam.” The AGP auditors also did not raise any objection, which they usually do when such kinds of words are said in the committee by other ministries. “Although there are serious lapses in the deal as admitted by the secretary, we are still ready to accept the plea in good faith and settle this scam once and for all,” remarked Lt-Col Sahi. (Courtesy: Rauf Klasra, 27 May

2006: the News)

CARTELS

Public money for private pockets; consumer rip-off on an unprecedented scale. First came the oil companies cartel. Then the automobile cartel followed by the cement cartel, the sugar cartel and the stockbrokers cartel. Where will it all end? Pakistan's oil cartel has ten members; Shell, Caltex, Attock Petroleum, Total, Bosicor, PSO, Attock Refinery, National Refinery, Pak-Arab Refinery and Pakistan Refinery. The cartel's original platform: Oil Companies Advisory Committee (OCAC). Under pressure, our policymakers have replaced the OCAC with OGRA (Oil & Gas Regulatory Authority). To determine oil prices OCAC used an overly biased formula tilted in favour of the OCAC members. OGRA now determines the price of oil but uses the same formula. As is always the case with cartels, the members are all interlinked through cross-ownerships. Attock Group of Companies owns Attock Refinery, Attock Petroleum and National Refinery. Shell, PSO and Caltex jointly own Pakistan Refinery. Total and Pak-Arab Refinery are partners. The cartel supplied the Pakistani market with inferior quality diesel and charged a higher price. Under OCAC, oil marketing companies commission, retailers margin and inland freight were all jacked up. Ten of Pakistan's richest companies managed additional inflows amounting to Rs38 billion a year. Ten are making tons of money. The other 165 million are getting ripped off. A post-September 11 liquidity and lease bonanza has made Indus Motor Company, Honda Atlas Cars and Pak Suzuki Motors laugh all the way to the bank (the Maruti 800 sells for Rs191,146 in India). Policymakers provided the cover and a few enriched private pockets with public money. Then came Attock Cement, Bestway Cement, Cherat Cement, D.G. Khan Cement, Dandot Cement, Fecto, Gharibwal, Javedan, Kohat, Lucky, Maple Leaf and Pioneer. The cement cartel managed to jack up the price of cement from Rs260 per 50 kg bag a few months ago to over Rs400 per 50 kg bag (a number of foreign suppliers had offered to sell at Rs125 per 50 kg bag). As a consequence, after-tax profits of listed cement producers have gone up by whopping 86 per cent. The deadly sugar cartel made its debut a mere few months ago and managed to take sugar from Rs20 per kg to over Rs40 per kg. Intriguingly, the sugar sector has an installed capacity to produce 6.7 million tons of sugar while the total annual demand for sugar stands at no more than 3.8 million tons. Our policymakers have a vested interest in the price of sugar and, once again, the cartel is making tons of money and the other 165 million consumers are

getting

ripped

off.

Where in the world can stockbrokers cough out enough cash to buy steel mills and banks? Answer: only in Pakistan. Arif Habib Securities, Jehangir Siddiqui & Company and Aqeel Karim Dhedi Securities now have more cash than the worth of Pakistan's steel mills and banks put together. In collusion with policymakers, they are the regulator as well as the regulated. It is certainly true that we are not a command economy. As a matter of record, we are inching towards a system whereby prices are to be determined by the forces of demand and supply. It is a recognised fact that free markets 'fail' (market failure is a "case where free markets fail to efficiently provide or allocate goods and services"). In order to keep free markets from failing, leading free markets have 'competition commissions' and 'competition regulators' that regulate competition laws, prohibit cartels and provide consumer protection. In the US, there is the Federal Trade Commission and Department of Justice (Antitrust Division). In the UK, there is the Office of Fair Trading and the Competition Commission. To be sure, we also have the Monopoly Control Authority (established August 17, 1971, under the Monopolies and Restrictive Trade Practices Ordinance). The ordinance was promulgated to "provide for measures against undue concentration of economic power, growth of unreasonable monopoly power and unreasonably restrictive trade practices." The Monopoly Control Authority hasn't achieved a thing. Maybe, it wasn't meant to. OGRA has, for instance, replaced the now-defamed OCAC but interestingly OGRA continues to use the same formula for the determination of the price of oil that OCAC did. Is the government on the side of the cartels or is it on the side of the consumers? On May 29, 2006, Dr Salman Shah, adviser to the prime minister on finance, announced that the Monopoly Control Authority was being "transformed into a 'Competition Commission' to be effective from the fiscal year 200607." The 'competition commission' is aimed at "promoting competition in various sectors of the economy and will have legal authority and teeth so that when it acts, it makes a difference." Monopoly Control Authority or a competition commission -- what's the difference? OCAC or OGRA? Our real problem is conflict of interest -- our regulators are the regulated. People in positions of trust have competing personal interest. Policy makers have personal business interests and policies are made to serve those interests. Public and private interests have collided. The two must now be separated.

Conflict of interest can be avoided in two ways -- disclosure and disqualification. A model to be followed is the Political Reform Act and the Fair Political Practices Commission (FPPC) of California. Under the Political Reform Act, elected public officials must disclose personal interests that "might be affected while they are performing their official duties." Additionally, a politician "may not take any part in a governmental decision in which he or she has a disqualifying conflict of interest." Under one of its sections, no "public official shall make, participate in making or in any way attempt to use his official position to influence a governmental decision in which he knows or has reason to know he has a financial interest". The FPPC "investigates alleged violations of the Political Reform Act, imposes penalties when appropriate, and assists state and local agencies in developing and enforcing conflict-of-interest codes." Ever wondered why our president sees prosperity all around? It's the cartels that have accumulated mountains of wealth (all at the cost of the consumer). And, cartels have direct access to the presidency, the consumer doesn't. Ever wondered why prosperity is not trickling down? Answer: the cartels have kept all the prosperity to themselves. Every wondered why our macroeconomic indicators are on a high but micro aren't? Ever wondered why a few cartels have managed to enrich private pockets at the expense of 165 million consumers? Here is why: Our military-led government is dependent on a democratic facade within which there are members out to make tons of money. There clearly is conflict of interest. The government is clearly being blackmailed. The consumer is clearly being ripped-off. It's the Rule of Cartels. Ever wondered who is really ruling the country? Ever wondered who our real rulers are? ( Dr Farrukh Saleem: July 9, 2006, the News)

Per capita income has doubled in the past four years. Last year, of the 184 member countries of the IMF, Pakistan’s rate of economic growth was second only to China. The rate of growth in our large-scale manufacturing sector is at a 30-year high. Construction activity is at a 17-year high. In Islamabad, a kanal of land has gone from $100,000 to $1,000,000. The aggregate value of the KSE-listed shares has gone up from $7 billion in 2002 to $50 billion. Is Pakistan richer now than ever before? Price of shares has gone up and the price of land has gone up. Yes, Pakistanis who own urban land are richer now than ever before. Yes, Pakistanis who own KSE-listed stocks are richer today than ever before. Remember, Pakistan does not become rich based on urban land prices going up or the KSE-100 Index breaking all records. Pakistan will only become rich when the real price of labour goes up (nominal wages minus inflation). And, that hasn’t happened. The other thing that hasn’t happened is the ‘trickling down’ of wealth and prosperity (‘trickle down economics’, according to one definition, advocates support of businesses that allows them to flourish and that this will eventually benefit middle- and lower-income people, in the form of increased economic activity and reduced unemployment). Ever wondered why the wealthy in our economy have become even wealthier but that wealth hasn’t trickled down? Here is why? Free markets fail. Market failure occurs when “market forces do not serve the perceived public interest”. Market failure results in “undue concentration of economic power, growth of unreasonable monopoly power and unreasonably restrictive trade practices”. Similarly, ‘government failure’ is when a government fails to keep the market from failing. Leading free markets, for reasons to keep the market from failing, have put in place elaborate infrastructure composed of ‘competition regulators’, ‘competition commissions’ and ‘fair political practices commissions’. These ‘competition regulators’ regulate commercial activity, prohibit cartels, enforce competition laws and provide consumer protection. Fair political practices commissions keep elected public officials from “taking part in a government decision in which he or she has a disqualifying conflict of interest.” Ever wondered why wealth is not trickling down? Answer: We have now become a ‘cartel economy’. First came the oil cartel: Shell, Caltex, Attock Petroleum, Total, Bosicor,

PSO, Attock Refinery, National Refinery, Pak-Arab Refinery and Pakistan Refinery. The Oil Companies Advisory Committee (OCAC), was their platform. The OCAC determined the price of oil whereby ‘cartel members’ made tons of money while the other 165 million got ripped off. Then came the automobile cartel: Indus Motor Company, Honda Atlas and Pak Suzuki Motors enriched private pockets at public expense. The cement cartel: Attock Cement, Bestway Cement, Cherat Cement, D.G. Khan Cement, Dandot Cement, Fecto, Gharibwal, Javedan, Kohat, Lucky, Maple Leaf and Pioneer. The stock brokers cartel: Arif Habib securities, Aqeel Karim Dhedi, Motiwala securities, Jahangir Siddiqui, Atlas Invest and DJM Securities (The official Stock Market Review Taskforce calls them the ‘badla providers’). Not to forget, the deadly sugar cartel. Why is prosperity not trickling down? There is a massive ‘conflict of interest’ in the upper echelons of power; the regulators are also those who need to be regulated. Decision-makers have personal business interests, and cartels keep prosperity to themselves. In 2003, India’s then-ruling Bharatiya Janata Party (BJP) spent a whopping $20 million on a national TV and newspaper advertisement campaign propagating the ‘Indian Shining’ slogan. BJP lost, Sonia won

(Dr Farrukh Saleem: 26 June 2006)

STOCK EXCHANGE
800 BILLIONS LOOTED only in 2005

Big fish’ allowed to escape net: Tariq: Ex-chief of SECP issues ‘white paper’
ISLAMABAD, July 7: Former chairman of the Securities and Exchange Commission of Pakistan (SECP) Dr Tariq Hassan on Friday issued a ‘white paper’ on the March 2005 stock exchange crash, and claimed he had reached close to a ‘few big fish” when he was shown the door. “The last orders on my table, when I was removed from my post on Eid day, was the appointment of forensic investigators to probe the few big brokers held responsible by the task force (for the crash),” Mr Hassan told reporters after presenting the so-called white paper to the National Assembly’s Standing Committee on Finance and Revenue. The committee at its meeting, presided over by Chaudhry Anwar Ali Cheema, ordered the appointment of another team of forensic investigators to probe reports about involvement of 11 high-profile brokers in the Karachi Stock Exchange crash. The team will be presenting its report to the committee within 10-12 weeks after which those found responsible might be brought to book. Their names are also likely to be put on the Exit Control List. “They (the government) have no other option but to continue with the reforms I had initiated but was not allowed to complete. The moral pressure on them is building and compelling them to get hold of the big fish. Otherwise, I fear form will prevail over substance,” said Mr Hassan while commenting on the committee’s decision to proceed with the probe. MNAs from the ruling party and opposition quoted Mr Hassan as saying in the meeting that he would never retreat from his stand that he had not been allowed to go ahead with reforms. The former SECP chairman asked how could he get hold of those powerful brokers who, he alleged, had access to the prime minister. During the nine-hour meeting, Dr Hassan faced tough questions from the Minister of State for Finance Omar Ayub Khan and Prime Minister’s Adviser Dr Salman Shah, apparently because he had mentioned their names

in letters he had sent to the prime minister and accused them of pressurising him not to replace Carry-over Transaction with margin financing, one of the main causes of the crash. When Dr Hassan was busy answering journalists’ questions after the meeting in the committee room, a government official approached him and asked him to leave as Dr Salman Shah, Omar Ayub and incumbent SECP chairman Raziur Rehman were to hold a news conference. “Dear, you people have invited me to this meeting,” said Dr Hassan to the official while leaving the room. Ruling party MNA Kashmala Tariq told reporters that there was a threat to Dr Hassan’s life because he had taken on some powerful people. For the first 50 minutes of the meeting, Dr Hassan was not allowed to speak and it was only after a protest by opposition MNAs that he was given an opportunity to do so. Starting his presentation, Dr Hassan quoted from Shakespeare’s Julius Caesar: “The fault, dear Brutus, is not in our stars, but in ourselves that we are underlings.” SECP chairman Raziur Rehman was asked by Dr Hassan and Ms Tariq why had the reform process had been stopped and why task force’s recommendations had not been implemented, which resulted in another market crash. Insiders told Dawn that at one point Mr Omar Ayub said he had taken strong exception to Ms Tariq’s remarks when she said “our prime minister also intervenes in our stock market”. Ms Tariq was replying to Mr Omar Ayub’s comment that even the US president had intervened in the stock market on various occasions. Former KSE chairman Yasin Lakhani and Aqeel Karim Dhedi (AKD) were present on the occasion. OPPOSITION’S DEMAND: Members of the committee from the opposition, Mujeeb Pirzada, Mohammad Laeeque Khan, Qurban Ali Shah, Khalid Iqbal Memon and Sardar Ayaz Sadiq, at a separate press conference later, said the government was responsible also for the market crash of May 2006.

They said the fresh crash took place because no action had been taken against the influential brokers involved in the March 2005 crash. The members demanded resignation of the prime minister for his alleged intervention in the stock market affairs and links with some brokers, first stopping the SECP chairman from taking action against manipulators and then sending him home when he initiated reforms. “During Shaukat Aziz’s era, first as the finance minister and later as the prime minister, the country’s stock market has crashed in 2000, 2001, 2002, 2005 and May 2006. Therefore, we demand resignation of the prime minister,” Mr Pirzada said. They said the committee had decided that the stock market reform process must go on. ( Sher Baz Khan: Dawn: 7-6-2006)

Sugar Crisis

The power of sugar cartel is evident from the fact that even the National Accountability Bureau had to shelve its probe into the sugar crisis within three days of its initiation. The cartel can increase prices, exploit farmers and break rules and seem to be above the law. The millers had procured sugarcane at an average price of Rs60 per 40kg. Because of the miller’s persistent failure to pay farmers for their produce, they had switched to other crops. Annual demand for sugar in Pakistan is 3.6 million tons. Our sugar mills (79 in number) have an installed capacity to produce 6.7 million tons of sugar annually; a massive excess crushing capacity over our annual demand. This year production was 2.6 million tons plus a stock of 0.708 million tons, (not included are unreported production of sugar plus the buffer market stock of 0.5 million tons) leaves a shortage of 0.3 million tons that could have easily been bridged. The sugar cartel managed to take sugar from Rs20 per kg to over Rs40 per kg. Why is sugar then being sold at a price 100 percent over last year’s? Our policy makers tell us that the international price of sugar has gone up. That is certainly true. What they don’t tell us is that the price of sugar in Pakistan has had no historical correlation with the international price. In 2003-04, when the international price of sugar was the equivalent of Rs13.80 per kg (landed) we were paying Rs19.26 per kg. Nine years ago, when the international price of sugar was the equivalent of Rs9 per kg we were paying Rs21.46 per kg

The Economic Coordination Committee (ECC) had allowed 20 mills to import 400,000 tons of duty-free raw sugar to control runaway domestic prices, which had climbed to Rs42 per kg. The production cost of purified sugar from raw sugar was Rs21-22 per kg but the millers not only sold the sugar at a price exceeding Rs42, but paid sales tax at the rate of Rs29 per kg. The government failed to check the sugar mills tendency to procure sugarcane through brokers and stopped publishing their fortnightly production reports from Feb 15, 2006 to keep the government in the dark about actual production figures. The mills unrecorded production of more than 400,000 tons was sold to non-registered buyers, adding that the millers had done this to avoid sales tax. CBR is investigating various cases of sales tax evasion by millers, running into Rs326 million. Why did the consumers not benefit from import of raw sugar? Why were the rich and powerful (sugar) mill-owners allowed to pocket huge profits without any check. PAC observed: “This is the most dismal response from the government we have ever come across”. The millers concealed the record of 314,000 tons of carry over sugar. Last year, the Trading Corporation of Pakistan had procured 400,000 tons of sugar from various mills and the stock was still lying with the sugar mills. When the crisis ensued, the mills had refused to hand the sugar over to the TCP despite the latter having paid the money a year ago. The millers had told the TCP that they would release sugar if all their bank loans were waived or if they were allowed to stop paying farmers. The ban on construction of new sugar mills under the Sugar Factory Control Act 1950 is being openly flouted and even after the imposition of the ban,

mills were set up in Rahimyar Khan, Khanpur, Jhang, Chishtian and Rajanpur districts.

Public money, private greed. Why a few have enriched private pockets with public money? Here’s why: Our President-General is dependent on a democratic façade composed of politicians some of whom are out to hoard money blackmailing the government and ripping off consumers. Please look at the figures: A total of 79 sugar mills with an installed capacity to produce 6.7 million tons of sugar as against the annual demand for sugar of a mere 3.6 million tons; a massive excess crushing capacity over our annual demand. This year we have documented production of 2.6 million tons plus a stock of 708,443 tons (as per ‘Fortnightly Millwise Statement of 31 January 2006). Not including unreported production of sugar plus the buffer market stock-estimated to be at least 200,000 tons and 300,000 tons respectively—leaves a shortage of no more than 300,000 tons (that could have easily been bridged). Why is sugar then being sold at a price 100 percent over last year’s? Our policy makers tell us that the international price of sugar has gone up. That is certainly true. What they don’t tell us is that the price of sugar in Pakistan has had no historical correlation with the international price. In 2003-04, when the international price of sugar was the equivalent of Rs13.80 per kg (landed) we were paying Rs19.26 per kg. Nine years ago, when the international price of sugar was the equivalent of Rs9 per kg we were paying Rs21.46 per kg (source: Pakistan Sugar Mills Association Annual Report 2005). Here’s the other major problem: A gigantic conflict of interest-our policy makers also have a vested interest in the price of sugar. Should the government intervene? It’s true that we are working towards a system whereby prices are to be determined by the forces of demand and supply and are not to be set by artificial means. It’s also true that free markets ‘fail’ (market failure is a “case where free markets fail to efficiently provide or allocate goods and services”). In

order to keep free markets from failing, leading free markets have ‘Competition regulators’ who regulate competition laws, prohibit cartels and provide consumer protection. The U.S., for instance, has the Federal Trade Commission and Department of Justice (Antitrust Division). In the U.K., there is the Office of Fair Trading and the Competition Commission. To be sure, we also have the entire anti-competition, antihoarding paraphernalia but the problem in our case is that the regulators are also the regulated. Just look at the figure: As of 15 May 2006 total sugar stock hoarded stood at a whopping 1,379,117 tons (Pakistan Sugar Mills Association, 2005-06 Sugar Production Sales & Stock). What’s the solution? My very own Sugar Daddy tells me that sugar is actually “grown in the fields it’s merely processed and refined at the mills.” My Sugar Daddy is upright, astute and rational. If our agriculture policy could somehow produce enough sugarcane the mills can actually crush and produce 6.7 million tons of sugar (an exportable surplus). That isn’t about to happen. The entire government machinery is engaged in extending the life of the existing democratic charade too busy to attend to deep flaws in the agriculture policy or issues related to market failure and conflict of interest of our Sugar Daddies. (The News by Dr. Farrukh Saleem)

OIL CARTEL

Shell, Caltex, Attock Petroleum, Total, Bosicor, PSO, Attock Refinery, National Refinery, Pak-Arab Refinery and Pakistan Refinery constitute a mighty oil cartel. Oil Companies Advisory Committee (OCAC) has become an instrument of exploitation. The members of oil cartel are interlinked through cross-ownerships e.g. Attock Group of Companies owns Attock Refinery, Attock Petroleum and National Refinery. Pakistan Refinery is jointly owned by Shell, PSO and Caltex. Refinery are partners. LOW QUALITY DIESEL AT HIGH PRICE The cartel suck in Rs 9 billion annually into their coffers by providing low quality diesel at exorbitant price through their refineries. In Europe, diesel contains 0.3 percent sulphur. Our refineries produce a far inferior diesel with sulphur content of 1 percent at the international price of superior diesel. The difference in price between the two diesels ranges from $18 per ton to $20 per ton. Considering that Pakistani consumers buy 7.86 million tons of diesel fuel a year the refineries make an extra Rs9 billion every year. The Oil and Gas Regulatory Authority (OGRA) can intervene on behalf of 162 million Pakistani consumers which could bring the price of diesel by Rs1 a litter just on this account alone. MANEUVERING THROUGH INLAND FREIGHT. Oil Companies Advisory Committee (OCAC) maneuvered to bring the price of petroleum products under its jurisdiction in July 2001.In November 1999, the freight component on a litter of diesel fuel stood at Rs0.65.‘Inland Freight’ had jumped by 95 percent by March 2005. Prior to 2001, ‘Inland Again, Total and Pak-Arab

Freight’ amounted to some Rs6 billion. Inland Freight now stands at Rs12 billion. Inland Freight on HOBC amounted to a scandalous Rs12.24 a liter. OIL MARKETING COMPANIES’ COMMISSION Six years ago, Shell, Caltex, Attock Petroleum, Total, Bosicor and PSO use to make Rs0.204 per litter as ‘Oil Marketing Companies Commission’. OCAC has jacked the same up a hefty 669 percent. In 1999, Oil Marketing Companies made some Rs2 billion as ‘Commissions’ and the same ‘Commissions’ now stands at a colossal Rs14.7 billion. INCREASE IN RETAILER MARGIN Retailers were allowed Rs0.163 per litter as ‘retailer margin’ in 1999; the same has since gone up by 544 percent. Thanks to OCAC, retailers have sucked in an additional Rs10.53 billion through the sale of diesel and motor gasoline.This results in a gross additional inflow of Rs38 billion a year into the treasuries of ten companies, namely Shell, Caltex, Attock Petroleum, Total, Bosicor, PSO, Attock Refinery, National Refinery, Pak-Arab Refinery and Pakistan Refinery. The retail price of diesel can be brought down by a hefty Rs4 per litter by adjusting just the above four factors. OCAC has served its ten members exceptionally well. In 2000, Attock Refinery made a paltry Rs56 million in Profit after Taxation. In 2005, profits stood at a whopping Rs1.2 billion. National Refinery made Rs707 million in 1999 and Rs2 billion in 2004-05. Pakistan Refinery made Rs733 million in 2004 and Rs1.7 billion in 2005. Intriguingly, some 60 percent of all gains made by OCAC members have been from ‘inventory gains’ (when OCAC increases the price of oil).

HIGH OIL PRICE DUE TO IMPORT REGULATORY DUTY AND GST In 1999, there was no ‘import regulatory duty’ on diesel and neither was there GST. The government now collects Rs21 billion in the form of import regulatory duty and Rs35 billion as GST, and that converts to around Rs6 per litter (of diesel).

Who is ripping us off?
Pakistan’s oil cartel has ten members; Shell, Caltex, Attock Petroleum, Total, Bosicor, PSO, Attock Refinery, National Refinery, Pak-Arab Refinery and Pakistan Refinery. The cartel’s platform: Oil Companies Advisory Committee (OCAC). As is always the case with cartels, the members are all interlinked through cross-ownerships. Attock Group of Companies owns Attock Refinery, Attock Petroleum and National Refinery. Shell, PSO and Caltex jointly own Pakistan Refinery. Total and Pak-Arab Refinery are partners. Here is the story on diesel: In Europe, diesel contains 0.3 percent sulphur. Our refineries produce a far inferior diesel with sulphur content of 1 percent but Pakistani consumers have no choice other than to buy inferior diesel and that too at the international price of superior diesel. The difference in price between the two diesels ranges from $18 per ton to $20 per ton. Considering that Pakistani consumers buy 7.86 million tons of diesel fuel a year our refineries suck in Rs9 billion into their coffers, money that doesn’t belong to them. If the Oil and Gas Regulatory Authority (OGRA) were to intervene on behalf of 162 million Pakistani consumers (July 2005 est.) the price of diesel can be brought down by Rs1 a litter just on this account alone. The next racket is on ‘Inland Freight’. In July 2001, OCAC maneuvered to bring the price of petroleum products under its jurisdiction, a classic ‘fox to guard the henhouse’. In November 1999, the freight component on a litter of diesel fuel stood at Rs0.65. By

March 2005, ‘Inland Freight’ had jumped by 95 percent. Prior to 2001, ‘Inland Freight’ amounted to some Rs6 billion. Inland Freight now stands at Rs12 billion (in December 2004, Inland Freight on HOBC amounted to a scandalous Rs12.24 a liter). Six years ago, Shell, Caltex, Attock Petroleum, Total, Bosicor and PSO use to make Rs0.204 per litter as ‘Oil Marketing Companies Commission’. OCAC has jacked the same up a hefty 669 percent. In 1999, Oil Marketing Companies made some Rs2 billion as ‘Commissions’ and the same ‘Commissions’ now stands at a colossal Rs14.7 billion. Retailers are also doing quite well. In 1999, retailers were allowed Rs0.163 per litter as ‘retailer margin’. The same has since gone up by 544 percent. Thanks to OCAC, retailers have sucked in an additional Rs8.33 billion and Rs2.2 billion through the sale of diesel and motor gasoline, respectively. Summing the above rip offs results in a gross additional inflow of Rs38 billion a year into the treasuries of ten companies, namely Shell, Caltex, Attock Petroleum, Total, Bosicor, PSO, Attock Refinery, National Refinery, Pak-Arab Refinery and Pakistan Refinery. The retail price of diesel can be brought down by a hefty Rs4 per litter by adjusting just the above four factors. Ten of the richest companies are getting even richer and that too at the cost of 162 million Pakistanis; foxes are doing it to the chicken and making money doing it.

In 1999, there was no ‘import regulatory duty’ on diesel and neither was there GST. The government now collects Rs21 billion in the form of import regulatory duty and Rs35 billion as GST, and that converts to around Rs6 per litter (of diesel). OCAC has served its ten member exceptionally well. In 2000, Attock Refinery made a paltry Rs56 million in Profit after Taxation. In 2005, profits stood at a whopping Rs1.2 billion. National Refinery made Rs707 million in 1999 and Rs2 billion in 2004-05. Pakistan Refinery made Rs733 million in 2004 and Rs1.7 billion in 2005. Intriguingly, some 60 percent of all gains made by OCAC members have been from ‘inventory gains’ (when OCAC increases the price of oil). Here is how Pakistani motorists consuming petrol are being ripped off: OCAC determines the price of motor spirit based on Arab Gulf FOB plus ocean transport, wharfage, bank services, handling charges, letter of credit commission and ocean losses. The funny thing is that we import not a drop of motor spirit (every litter sold in Pakistan is produced in Pakistan). Ten are making tons of money. The other 162 million of us are getting ripped off (Dr. Farrukh Saleem: The News

PAK AMERICAN FERTILIZER

Fairness of PAFL Privatization questioned
Third highest bidder wants to be issued offer to take over the plant The Pak American Fertilizer Ltd. (PAFL) a subsidiary of National Fertilizer Corporation of Pakistan, is located at Iskanderabad in District Mianwalai. It produces 1,050 metric tones of urea per day. The plant set up with a loan offered by Japan Bank of International Cooperation (JBIC) was commissioned in 1999 and offered for privatization in 2006. Eight parties participated in pre bid meeting (i) Associated Group, Lahore (ii) Bestway Cement Ltd. Islamabad (iii) Dawood HERCULES Chemicals Ltd. Lahore (iv) Ibrahim Fibers Ltd. Faisalabad (v) Jahangir Siddiqui Capital Markets Ltd. Karachi (vi) Kohinoor Textile Mills Ltd & Associates, Lahore (vii) Nishat (Chunian) Ltd. Lahore; (vii) Pak Arab Fertilizers Pvt. Ltd. Multan. Ibrahim Group (of M/s Ibrahim Fibers Ltd. Faisalabad ) was decled the highest bidder with an offer of Rs. 19 billion but it failed to make payment within the stipulated time. Consequently next highest bidder M/s Asgard-9 (of Jahangir Siddiqui Capital Markets Ltd. Karachi) with a bid of Rs.16.1 billion were offered to take over. But not Azgard-9 too has defaulted. It is learnt that an urgent meeting of Cabinet Committee on Privatization has been called here Wednesday to consider the request of M/s Asgard-9 owned by Hamayun Naseer Sheikh and Jehangir Siddiqui to seek extension in time limit to make payment of rs.16.1 billion and for exemption from penalties liable to be imposed under law on a defaulting party.

Under the law, if a party fails to make payment on time as agreed at the time of sale of a unit, not only the earnest money deposited with the bid but also any installment made to the PC are confiscated. Further the nest highest bidder is made the offer to come forward and strike a deal. It would be interest to not that M/s Azgard-9 were the second highest bidders and they were made an offer to take over the PAFL plant after M/s Ibrahim Group led by Sheikh Mumtaz Ahmed, the highest bidder, failed to make payment of Rs.19 billion on time. M/s Azgard-9 immediately accepted the offer and took over possession of PAFL. Now M/s Azgard-9 too has defaulted on making payment of Rs.16.1 billion, the amount of their bid. In all fairness following the law as applied in the case of M/s Ibrahim Group, M/s Azgard-9 should be penalized with confiscation of their earnest money and their request for an extension of period for payment of the amount be straightaway rejected. Not only that the third highest bidder be made the offer of negotiating for taking over the plant. After smelling some foul play and giving credence to reports that the privatization commission was inclined towards doing favor to M/s Azgard-9 by extending the payment period, Saigol Group of Lahore has warned the powers that be against any such favor and said that this would bring the entire process of privatization and transparency into dispute. While talking to the News from Lahore Tariq Syeed Saigol, Chairman M/s KMLC whose group was the third highest bidder with an offer of Rs.13.7 billion, said that after coming to know of these developments he wrote to

Minister for Privatization Zahid Hamid on June 5 Asking him to issue offer letter to his group under the law to negotiate for taking over the plant. He warned that if concessions were given to Azgard-9 group, it would not be in accordance with law and would go against the process of privatization. Saigol asked privatization minister to uphold law and follow a transparent policy and honor the conditions of its own tender documents. He said we now feel that M/s KMLG should be issued the letter of offer. Tariq Sayeed Saigol received no reply to any of the letters addressed to Zahid Hamid. After getting disappointed he wrote to Prime minister and also to his advisor on Finance Salman Shah, He requested that LOA earlier issued to M/s Azgard-9 be cancelled his earnest money of Rs.350 million be confiscated along with accrued profit/mark up, or the tender be altogether scrapped. No responses to these letters was received. This has raised suspicions in his mind and led Mr. Saigol to conclude in his letter to PM that perhaps M/s Azgard-9 had been given the favor by allowing him to make payment after some time instead of facing penalties. He warned that in such a case it might deal a blow to privzation process and tal claims of transparency.

(Rauf Klasra : The News 2006)

Pakistan Engineering Company (PECO)

FACT SHEET released by Ahsan Iqbal, Information secretary, PML-N on

Mega-Corruption Unlimited: after non-transparent Privatization of PSM, Musharaf Regime’s case of back door privatization – an another scam

Pakistan Engineering Company (PECO)
Released on 20th August, 2004, at Islamabad.
PECO, a public limited company having its shares quoted at Karachi, Lahore, and Islamabad stock exchanges, is the pioneering engineering industrial unit. Established in 1948, the company was nationalized in 1972 along with its works located at Badami Bagh and Kot Lakhpat at Lahore. PECO brand was the guarantee for quality and performance of its large variety of light engineering products, which were popular, competitively priced and economical in operation. Federal Government under Economic Reforms Order of 1972 acquired 976,336 nos of shares of rs 10 each, which included 761,731 shares of exowners of PECO. In order to maintain majority shareholding in the company, NIT, ICP, SLIC, PIC, NBP etc purchased shares of PECO from open market. The product range of pumps included various sizes and models of deep-well turbine pumps, submersible pumps, mobile pumping unit, and centrifugal pumps, single stage, multi stage and non-clogging types. The annual installed capacity was to produce 3,400 sets of pumps that competed well with reputed foreign makes. Machine tools, such as general-purpose lathe, precision bench lathe, heavy-duty centre lathe, shaper, drilling machine and hacksaw were manufactured in accordance with international standards. Automatic power looms were produced under license from a Japanese company, to meet the demand of domestic textile industry. The wide range of electric motors offered models up to 150 HP, having annual capacity of producing 16,500 sets. Its other products included high-speed diesel engines, concrete mixers of various sizes, electric overhead travelling cranes ranging 1/2 to 30 ton lifting capacity, mini hydel turbines, bank safe and strong room doors, etc. the works located at Badami Bagh were closed down in 1992, whereas manufacturing of machine tools and power looms at Kot Lakhpat works was discontinued in the year 2000. Almost 3,000 workers and staff were laid off under the Voluntary Separation Scheme (VSS).

In January 2002, the Cabinet Committee on Privatization decided the closure of the remaining production units of the company, i.e., the bicycle plant, furnace and rolling mill, pumps and motor production shops and general engineering section. The Privatization Commission accordingly terminated services of all the remaining regular and contract employees, totaling 1,500 in number, under the Compulsory Separation Scheme. Somehow, the management has decided to continue business of transmission towers through engaging temporary staff. Given the positive market conditions in general, the company has shown improved performance during the year ending 30th June 2004, as it achieved sales of Rs457 million and earned an operating profit of about Rs14 million (as against operating loss of Rs15 million approx. during 2002-03). PECO Badami Bagh is situated in South of Lahore Railway station measuring over 268 kanals while PECO, Kot Lakhpat is also located in main industrial area of Lahore with price of land in billions of rupees. Until recently, the government's shareholding in the PECO was approximately 56 per cent and the rest with private shareholders and companies. The position of shareholding of the company during the financial year 2003-04 however represented only 33 per cent shareholding of the government, whereas the majority of shareholding, about 67 per cent, was already with general public and private companies. Details are given below. The table shows that the government directly owns about 25 per cent shares, mainly through the Ministry of Industries and Production/ the State Engineering Corporation (SEC). Its remaining shares, about 31 per cent as on 30.6.2000, were held by the government indirectly, through government-controlled entities like the NIT, the Investment Corporation of Pakistan (ICP), the National Bank of Pakistan, State Life Insurance Corporation of Pakistan, Pakistan Re-Insurance Co. Ltd. and the nationalized banks including United Bank and the Habib Bank. The Finance Division letter no F 4(4) Inv III/98 dated 15th March, 2000 instructed NIT and ICP to consult Privatization Commission before disinvesting shares of any SOE, which is earmarked for privatization. In 1999, NIT held 1,179,532 shares of PECO. Between Aug-September, 2003 all of these shares were sold by NIC, which were mysteriously sold during Aug-Nov 2003. Thus, the total government holding in the company, as on 30th June 2004, accounts for only about 33 per cent, which is already a minority shareholding. Before this sale of shares by NIT, GOP had six

out of nine directors on PECO’s board. Now, GOP has only three directors out of nine. Six directors are from Private sector. As reflected above, it is an alarming situation for people of Pakistan. Private sector now holds majority strategic shares of PECO, the state owned enterprise still on Privatization Commission’s list for future transactions, virtually meaning transfer of ownership through back door of an another important strategic asset with total assets of over twenty billion rupees. It was just recently that the federal minister for privatization and investment had made a statement in the National Assembly that the PECO remains on the active list of privatization, and its Kot Lakhpat works and Badami Bagh land would be put up for sale in the near future. Understandably, there has been no schedule announced for the sale of PECO as yet but its ownership has passed out of Government of Pakistan’s hands through back door. This is yet another mega financial scandal facing the Prime Minister Shaukat Aziz administration and Musharaf regime. PECO shareholding Shares held by 30.6.2004 shares

As on 30.6.2003 No of shares % % 3,169,930 55.71 24.88 30.72

As on No of

Government-owned 1,899,200 33.38 State Engineering Corporation 1,415,723 1,415,723 24.88 Banks, insurance and invest cos. 1,748,062 477,332 8.39 Others (custodian of enemy property, adminstrator abandoned properties, etc) 6,145 6,145 0.11 Private, general public 3,791,045 66.62 Individuals + foreign 2,921,531 51.34 2,520,315 2,023,770

0.11 44.29 35.57

Banks, insurance and investment and modaraba cos. 494,465 8.69 867,434 15.25 ________________________________________________________ __________ Grand Total 5,690,245 100 5,690,245 100 (ordinary shares of Rs 10 each)

1. Some milestones:
a) 15th March, 2000 Ministry of Finance issued instructions to NIT and ICP to consult Privatization Commission before divestment of shares in such State owned Enterprises (SOE) which are earmarked for privatization so that government’s plan to privatize these SOEs is not adversely affected. b) Aug-Sept 2003 Without consulting either PECO or Privatization Commission NIT sells 1.179,530 shares and ICP 25,900 shares to the general public through stock exchange, which totally changed the ownership position of PECO. The matter was taken up by State engineering Corporation, parent company of PECO, with NIT which failed to give any cogent reason for selling shares of PECO. c) 2nd December, 2003 Ministry of Industries writes to Ministry of Finance to look into the matter and instruct NIT and ICP to buy back the shares sold in order to enable GOP to retain majority shareholding in PECO. d) 19th January, 2004 Ministry of Industries again writes to Ministry of Finance to enquire from NIT and ICP the position regarding sale of PECO shares. e) 6th March, 2004

Ministry of Industries writes yet another reminder to Ministry of Finance inviting its attention to the urgency of the matter asking for the report on priority basis. f) 19th April, 2004 Ministry of Industries again writes to Ministry of Finance reminding it of previous memos and requesting for a report on sale of PECO shares without clearance from Privatization Commission. g) 28th April, 2004 Ministry of Industries again writes to Ministry of finance to stop State Life Insurance Corp of Pakistan (SLIC) from selling 165,254 (2.90%) shares of PECO, which will further reduce GOP holding in PECO. h) 23rd September, 2004 Ministry of Industries once again writes a reminder to Ministry of finance for report on the matter.

2. List of Directors PECO as on May 11, 2006.
This list makes it crystal clear that PECO was sold to Mr. Arif Habib without even knowledge of Privatization Commission and also explains why Ministry of finance was not answering to Ministry of Industries. a) Government nominated Directors: i. Mian Sohail Aslam ii. Mr. M. Imtiaz ur Raheem iii. Nomination still awaited b) Private shareholders elected Directors: i. Mr. Liaqat Mohammad ii. Mr. Mohammad Shabir Malik iii. Mr. Muhammad Iqbal iv. Mirza Mahmood Ahmad v. Mr. Rashid Ali Khan vi. Mr. Muhammad Arif Habib.

The mission statement of privatization Commission reads as following: “Privatization in a fair and transparent manner for the benefit of the people of Pakistan in the right way, to the right people, at the right price.” My questions to Musharaf and Shaukat Aziz are:
Is it a transparent and fair manner? Is it for the benefit of the people in the right way? Has it gone to the right people? Has it gone for the right price?

It is not surprising that due to such large scale mega corruption of Musharaf regime, the report released by Transpareny international in August, 2006 places Musharaf government as the most corrupt government in the recent history of Pakistan with 67.31% score compared with Benazir second government 48% score and Nawaz Sharif second government 34% score.

CEMENT CRISIS

The cement factory owners with their monopoly increased the rates of cement. Monopoly Control Authority is silent on the present increase in cement rates and is not taking action on the unjustified raise. Duty free import of cement from neighboring countries should be allowed to provide cement on cheaper rates in the market and to save construction industry from crises. A bag of cement in Pakistan is available at Rs. 300/- whereas in its price in India and China is in the range from Rs. 100-150. Cement prices in Pakistan have doubled than that of the product in India following the recent price hike of the commodity on this side of the border. Indian cement manufacturers are reportedly marketing their product at Rs145 to Rs150 per bag; which is almost 50 per cent less than those in Pakistan even after inculcating the ‘currency exchange factor’. -------ISLAMABAD, May 29: The government on Monday decided to continue with the policy of duty-free and subsidised cement imports in view of ‘failure of cement manufacturers to honour their commitments’.

This was stated by economic advisor Dr Ashfaq Hassan Khan after a meeting of the Economic Coordination Committee (ECC) of the cabinet presided over by Prime Minister Shaukat Aziz. Mr Khan said it had now been established that the cement price hike was unjustified but said no punitive action was considered against them because the relevant summary had not proposed any action. He said the ECC noted that “there was justification for increasing the price of cement in Pakistan because there was no increase in input prices, no increase in international cement prices and there was no extraordinary demand in the country”. “Therefore, the increase in cement prices is totally unjustified,” said Dr Khan and added that prices had gone up to Rs400 per 50-kg per bag when the government last month had allowed duty-free import of cement on subsidized freight charges. (Dawn: 30-5-2006)

AGENCY RULE

ISLAMABAD: An elite intelligence agency of the country has ordered an inquiry against some of its senior officers for misusing the organisation’s muscles to kidnap a retired brigadier, his daughter-in-law and some teenaged boys to make them an “example” for others over a petty playground fighting among lads. An official of the intelligence agency confided to The News that the event that occurred in Islamabad’s I-8/4 sector on Saturday night had shocked even the top bosses of the agency, who took immediate notice of the situation and constituted a “board of inquiry” to identify those who acted like pharaohs and misused the clout of the agency against ordinary citizens in their personal matter. The top boss of the agency was contacted in his residence but he was not in the town to offer any comments on the incident that has also shocked many living in the neighbourhood. Following a trivial playground fight between teenage boys, including the son of an official of the intelligence agency in Street 86 of sector I-8/4, houses in the old Faizabad locality were raided late in the evening on Saturday last by armed men riding two separate cavalcades of double cabins.

In Street 86, an ailing teenager, who had a hole in his heart and is waiting for his heart surgery, was the target of the intelligence agency men. According to witnesses, he was dragged out of his house, beaten black and blue, rolled on the street and made to sit in one of the double cabins. His mother who tried to save her ailing child too was pushed aside and even her shirt was torn. The boy’s grandfather, a retired brigadier and a decorated war hero, also protested but he too was roughed up. Both the grandfather and the mother tried to block the kidnapping of their child without having any idea of the kidnappers. On this, they too were pushed into the double cabins that sped away soon afterwards. Neighbours who witnessed the action were simply flabbergasted and completely helpless to do anything. One of the neighbours informed the emergency police (15), which reacted promptly and succeeded in intercepting one of the double cabins but could not do much after being told that the police were stepping on the wrong toe. The mother and the boy were taken to the G-9 office of the agency, while the retired brigadier in a separate cavalcade was taken to old Faizabad residential area to identify the other “wanted” teenagers. There they got hold of the two more boys from two different houses and immediately dispatched them to the agency’s safe houses. However, because of the congested locality and thick population three of the double cabins, including the one carrying the retired brigadier were blocked by the protesting locals, who thrashed some of the armed men held under siege by the local protesters. According to the father of one of the kidnapped boys, hundreds of people had gathered there. The police were informed but instead of arresting the kidnappers police got the captured men and their double cabins released with the fake promise that they would be taken to the police station. Later hundreds of people, including the retired brigadier and fathers of the other two boys, went to the I-9 police station, where they were pressurised for a truce instead of insisting on filing an FIR, which was never registered. On the other side the kidnapped lady of Street 86, her son and the other two boys were released late in the night at different deserted locations after the kidnappers realised that they had committed a blunder. Late in the night the agency’s top bosses had also been contacted by some well-connected relations of at least one of the victim — the retired brigadier,

who expressed their annoyance and displeasure over the incident and assured justice to the victims. While the intelligence agency has ordered a probe into the matter, father of one of the teenage boys told this correspondent that had the grandson of the retired brigadier not been involved in the sordid case, their sons (for being ordinary folks) would have disappeared for months for unknown crime. (By Ansar Abbasi: Tuesday, July 04, 2006: the News)

By

Ansar

Abbasi

ISLAMABAD: Director-General Inter-Services Public Relation (ISPR) Major-General Shaukat Sultan on Wednesday regretted the kidnapping of a retired brigadier, his daughter-in-law and four teenagers by ISI personnel over a petty dispute last week. “The incident is most unfortunate and extremely regrettable,” said Sultan, who is also Press Secretary to President General Pervez Musharraf, while talking to The News. Referring to the incident that occurred in I-8/4 sector of Islamabad and its bordering Faizabad locality Saturday last, General Sultan said: “This (incident) has been taken note of at the highest-level.” He informed that the highest-level authorities had ordered a probe into this incident. “I assure you that we are very concerned about the incident and action will be taken (against the responsible),” he

pledged. Already the ISI top offices, perturbed by this incident, had constituted a board of inquiry to fix responsibility. According to sources, a senior official had actually ordered the illegal operation against helpless civilians. Today, he visited Brigadier (retd) Muhammad Taj’s place along with his wife to tender an apology after his son and others allegedly beat up the retired brigadier’s son. The official however denied he had ordered what happened in the aftermath of the incident. So far the focus of the authorities is only the influential victim whereas the others have not so far been approached either in connection with the inquiry or to assuage their injured pride. The father of another victim living in Faizabad, Taj Ahmed Abbasi, has also written a letter to Musharraf conveying his dissatisfaction over the authorities’ apathy towards them. His concern was that they have so far been ignored by the authorities. He wrote, “I am an aged and ailing citizen of this country, whose two sons are employed in PAF. I am living with one son and a wife. My whole family holds our defence forces in a very high esteem. I specially consider our forces as the protectors and guardians of this country. I have always taught my children to respect soldiers. But after what happened to my son namely Owais Taj on July 1, 2006, I am unable to face my own children in my own house. My son has been severely beaten by ISI personnel on a very petty issue. It was in retaliation to a brawl between boys in a playground. “My son wanders in the house, scared for his life and refuses to go out even to play with his friends. He is scared that he might again be hounded by ISI people if he goes out of the house. He even refuses to answer the door bell. Though we were ensured by a responsible officer of Pakistan Army, Brigadier Afrasiab Kiani, that justice will be done and that we will be informed of the findings of the Court of Inquiry within 8-10 days, after a lapse of five days no body has contacted us for any inquiry or investigation.

“Is this going to be anther investigation of elite people only where no ordinary citizen like me is allowed to present his case? Are the grandsons of the retired brigadier more important for even people holding the inquiry that they refused to come to us and only investigate from them? Are not we the citizens of Pakistan, who deserve better treatment from our forces? Is there no law for people like us in this country? We are not traitors nor are we proclaimed offenders that our houses are raided by our own people. “I assure you that respect for Army has not diminished even a little bit and I still hold a uniform personnel in very high esteem. But people like these who take impulsive actions would ultimately bring bad name to such great institutions of this country. “Mr President, I have been forced to approach you for solace because by the response of this Court of Inquiry so far, doubts has started creeping in my mind that only one victim is being provided justice. I hope and pray you will rid this old man of this tension and take proper action against the culprit. An aged father is approaching you in the hope that he is able to face his family.” ( Monday, July 24, 2006: The News)

DESTRUCTION OF JUDICIARY

CJ suspended, escorted home: • Justice Iftikhar summoned by SJC on 13th for reference hearing • Ex-judges call it a blow to judiciary’s independence; minister defends decision • Whither judicial activism?
By Nasir Iqbal ISLAMABAD, March 9: In a highly dramatic move that has the potential to change the course of judicial activism in the country, President General Pervez Musharraf on Friday virtually suspended the Chief Justice of Pakistan, Justice Iftikhar Mohammad Chaudhry, and appointed the available senior-most judge, Justice Javed Iqbal, as the acting Chief Justice of the Supreme Court. The president’s orders came in the afternoon, and within minutes took the country by storm. Many in the legal fraternity were shocked by the way the country’s top adjudicator had been treated. Among them was the President of the Supreme Court Bar Association, Munir A. Malik, who described it as a ‘blatant attack on the independence of the judiciary’, and former chief justice Saeeduzzaman Siddiqui. As speculations started to grip bar rooms and political circles about the fate of the judiciary, and the impact of the move on other key issues, the acting chief justice was sworn in by a brother judge, Justice Abdul Hameed Dogar, in an ‘uncharacteristically simple ceremony’. The traditional fanfare that has been the highlight of such ceremonies was missing and instead of the main hall of the Supreme Court, a small room on the third floor of the judges’ block was chosen for the occasion. The media persons and the accompanying cameras clearly outnumbered the officers of the court at the ceremony as most of the brother judges (as they are mostly referred to by their colleagues) were conspicuous by their absence. So was the Attorney General Makhdoom Ali Khan, even though he was seen in precincts of the court house, and also the veteran lawyer and Prime Minister's adviser, Sharifuddin Pirzada. Chief Justice Iftikhar Chaudhry's reaction was not known as since his "suspension" or being made "non-functional" he had remained incommunicado. After his meeting with President Musharraf, he remained inside the President camp office for a few hours, and was later prevented from going to the Supreme Court by the security officials. Informed

sources told Dawn that when late in the afternoon Justice Iftikhar Chaudhry was returning from the President’s camp office he tried to go to the apex court, but a strong police posse chased his car which was blocked near Serena hotel. In the meantime senior superintendent of police Tariq Yasin rushed to the spot, and escorted the chief justice to his official residence. The security outside his residence had already been increased, and it was not possible to even contact him on telephone.

SJC takes up Iftikhar’s objections today: SHC CJ ‘wants to be excused’ from proceedings
By Nasir Iqbal ISLAMABAD, March 15: Amid extraordinary security measures here, the Supreme Judicial Council (SJC) is meeting today to take up preliminary objections of Justice Iftikhar Mohammad Chaudhry to the composition of the council. On his first appearance before the SJC on Tuesday, Justice Chaudhry had submitted a four-page statement, calling for the reconstitution of the SJC with the exclusion of three members. Made 'non-functional' on March 9, 2007, Justice Chaudhry was accorded a rousing welcome by lawyers and opposition politicians at the time of his appearance before the SJC. In his statement submitted to the SJC, the ‘non-functional’ chief justice objected that the acting chief justice had been appointed contrary to Article 180 of the Constitution which provided that the acting chief justice could be appointed only when the office of the chief justice fell vacant. Moreover, under Article 209 of the Constitution, reference against the chief justice could be heard only by the senior-most judge who, in the ongoing situation, is Justice Rana Bhagwandas, he said, adding that there was no urgency to convene the SJC meeting in the absence of Justice Bhagwandas, who is abroad till March 22. He said that a reference was pending against Justice Abdul Hameed Dogar before the SJC in a case concerning the Shah Latif Bhatai University, Khairpur. He said the LHC chief justice could also not sit on the council because more than one reference of misconduct was pending against him before the same council. He said the LHC chief justice had also developed strong hostilities against him as he had not accepted his recommendations of advocates and judicial officers for elevation as judge of the high court. Moreover, his elevation as the judge of the apex court was also opposed by him in August 2005 for some reasons which could not be divulged now, he added. Former SCBA president Malik Mohammed Qayyum told reporters that there was no provision in the Constitution or any law to suspend the chief justice. He said the suspension was a virtual removal from the office and therefore contrary to Article 209 of the Constitution. "How can the president suspend the chief justice before the findings of the SJC?” he said. (Dawn)

‘An unprecedented occurrence’
By Reema Abbasi and Iftikhar A. Khan KARACHI/ISLAMABAD, March 9: Former chief justices of the Supreme Court, senior lawyers and human rights activists have criticised President Gen Musharraf’s decision to suspend Chief Justice Iftikhar Chaudhry on the charge of misuse of authority. Former chief justice Sajjad Ali Shah, who was unceremoniously removed during the Nawaz Sharif government, termed it ‘an unprecedented occurrence’. “This has created immense insecurity amongst other judges and is another step towards the ruination of an institution. A chief justice has never been sent to the Supreme Judicial Council, but other judges have been tried and action has been taken against them,” he said. Justice Sajjad Ali Shah observed that the Chief Justice cannot be removed, suspended or made ‘non-functional’ under Article 209 of the Constitution in its present form.He said under the relevant Article, the Chief Justice has to head the Supreme Judicial Council with two next senior most judges of the apex court and two senior most Chief Justices of the High Courts as its members. He said under Article 209 (3), if the inquiry is against a judge of the Supreme Court, the judge of the court next to him in seniority, and if such member is the Chief Justice of a High Court, the Chief Justice of another High Court next in seniority amongst the Chief Justices of the remaining High Courts shall act as a member of the Council in his place. He said the Constitution was silent on what to do in case the complaint was against Chief Justice of the Supreme Court. He said there was an ambiguity in the law and it was open to interpretation. He said it was the job of the lawmakers to spot a mistake and rectify it. He said the judge against whom a complaint is being considered by the Supreme Judicial Council, stops discharging his duties till the disposal of the case. He, however, said the orders for suspension or making a judge non-functional cannot be issued by the president. "This is against the principle of trichotomy of powers. He said all the organs of the state must function within their own scope and there should be no overlapping, interference or domination. Justice (retd) Sajjad Ali Shah accused the government of weakening the judiciary and stressed that the judiciary must assert itself at this point of time. "The constitution and the constitutional institutions cannot function in the absence of the judiciary," he remarked. He was of the view that the action against the chief justice had a nexus with the upcoming polls. He said the president wanted to be elected again by the existing assemblies, and there were speculations that elections might be postponed for one year. He said important cases were being heard by the larger bench headed by the chief justice, which also included the one pertaining to enforced disappearances.

He said the government wanted to create an impression that democracy had failed to deliver and only the army can save Pakistan from total disaster. “My fear is that chaos will grip the country and the government will come up with a new constitution.” In reply to a question, he said the bold decisions in the Steel Mills and the kite-flying cases may have prompted the action against the chief justice. Sajjad Ali Shah said the action against Justice Iftikhar Muhammad Chaudhry was different from his (Sajjad’s) removal as chief justice. He said in his case the judges and the government had joined hands in a conspiracy to unconstitutionally remove him from office. In reply to another question, he said even after suspending Justice Iftikhar Chaudhry, Justice Baghwan Das, who was the senior most judge of the court after him, should have been appointed the acting chief justice. He said `India is not far away. It takes just 25 minutes to reach Lahore from New Delhi," he remarked. Former chief justice Saiduzzaman Siddiqui, who ceased to hold office after his refusal to take a fresh oath in Jan 2001, said that under Article 209 of the Constitution, the president does not have the powers to remove any superior court judge except on the recommendations of the Supreme Judicial Council. He said only the president was empowered to make a reference against a chief justice or judge of superior courts if he is incapable of properly performing the duties of his office or was guilty of misconduct. But before taking any action, he must wait for the outcome of the inquiry to be conducted by the SJC. If the SJC rejects the reference, the judge would continue to hold office. Justice Wajihuddin Ahmed, who also stood retired in 2001 following his refusal to take oath, said the government action was illegal, unconstitutional and unethical. It would lower the country’s prestige. He said there was no vacancy in the office of chief justice and no acting chief justice could have been appointed. If at all an acting CJ had to be appointed, the senior-most judge, Justice Rana Bhagwandas, should have been given oath. He is on a visit to India and could have been recalled on short notice Nasir Aslam Zahid, a former chief justice of Sindh who was relegated to the Federal Shariat court during Benazir Bhutto’s second tenure, supported Sajjad Ali Shah’s condemnation. “This is a highly retrogressive step and is more serious than the PCO. It opens up actions against any judge. If someone does not agree with the president, he can just be accused of misconduct or something and removed," he says. Mr Zahid said that the power of removal can only be exercised after the preparation of a report. "My understanding of Article 209 is that action can only be taken after the necessary proceedings have been completed and the report has been submitted by the SJC to the President." He also said there is "no provision for suspension of any judge’.

But the retired judge is cognisant of the fact that the government may be armed with a counter argument. "They can say that a power to pass a final order includes a power to pass an interim order." However, former chief justice Saeed-uz-Zaman Siddiqui played it fairly safe with milder comments. "It is not good for the judiciary and its reputation has been greatly affected. But the president has the right to take such an action and whether it is right or wrong, can only be determined when the report is presented by the SJC." Mr Zaman also said that the SJC comprises the chief justice, two senior-most judges from the Supreme Court and two senior-most judges from the high courts. Abid Hassan Minto, a prominent senior lawyer, feels that Iftikhar Chaudhry's suspension may have come about because some of his decisions were viewed as acts of dissension. "He was involved in some judicial activism and it is said that the government was allergic to him and his actions were being perceived as anti-government. This move has created several questions and is controversial," says Minto. I.A Rehman, a leading human rights activist, also criticised President Musharraf’s decision. "In a country where such a thing happens, it is a symptom of something very rotten in the state structure. The state is faced with such utter collapse of everything valuable and the cancer eating into the vitals of a democratic state has reached a very dangerous stage," says an irate Rehman. "Sajjad Ali Shah was undone by his own colleagues. The state has been corrupting the judiciary for a very long time," he continues. Asma Jehangir, chairperson of the Human Rights Commission of Pakistan (HRCP), seconded Mr Rehman's opinion. "The removal of the Chief Justice of Pakistan is a bitter blow to the independence of the judiciary. There were rumours that the government wanted to remove him." "Such a dismissal can only be acted upon after the Supreme Judicial Council decides on merit against an accused judge. The speed with which the Chief Justice of Pakistan has been removed shows that the executive is nervous of an already tame judiciary." An official statement issued by HRCP doubts that Iftikhar Chaudhry’s removal was prompted by any misuse of authority "as such judicial practices are fully tolerated, if not encouraged by the Executive. The process adopted is also illegal and irregular. A reference by itself cannot grant the Executive the powers to dismiss a judge of the superior courts. “It is significant that the Chief Justice of the Sindh High Court was flown to the capital in haste and in a chartered plane to secure a prompt decision from the Supreme Judicial Council." ( Dawn)

CJ held incommunicado; lawyers slam ‘arrest’
By Nasir Iqbal

ISLAMABAD, March 10: Chief Justice Iftikhar Mohammad Chaudhry remained incommunicado on Saturday for the second consecutive day and a heavy police contingent was posted to guard his residence. The Pakistan Bar Council described the action as a case of ‘illegal house arrest’. “Yes, he is in illegal detention,” Ali Ahmed Kurd, vice-chairman of the PBC, told reporters outside the official residence of the chief justice. “There is no other way to describe the situation as no one is being allowed to meet him,” he said after police officials stopped him and other lawyers from going inside the chief justice’s residence. The views expressed by Munir A. Malik, the President of the Supreme Court Bar Association, were equally strong as he described it an attempt to pressure the chief justice into resigning. ( Dawn)

A big blow to the judiciary

WITH the Chief Justice of Pakistan having become “non-functional”, another sordid chapter has been added to the judiciary’s chequered history. Ghulam Mohammad began the process of destroying the foundations of Pakistan’s constitutional and democratic structure, but he is not known to have interfered with the judiciary. Now coming to Friday’s episode, one is appalled to see the photograph of a general in uniform calling the country’s Chief Justice to his “camp office” as if the latter were a ‘suspect’ in a case of embezzlement, thus stripping him of the dignity to which he was entitled to by virtue of the office he held. Chief Justice Iftikhar Mohammad Chaudhry was then not allowed to return to his office and was “escorted” home. Gen Musharraf has made a reference against him to the Supreme Judicial Council, and the media has published a list of the alleged acts of malfeasance by Mr Justice Chaudhry. Since the charges are sub judice and commenting on them would constitute ‘contempt’, one cannot but take note of the background against which the Chief Justice was made “nonfunctional” and the “judicial activism” that came to be associated with his name since he became chief justice in June 2005. More important, it is difficult to avoid the suspicion that some of his verdicts had irked the government and for that reason it did not wish an independent Chief Justice to be in office at a time when the apex court could be called upon to decide vital constitutional issues in the light of continued reports that President Musharraf will retain the two offices and that the existing assemblies will re-elect him as president for another term. In some other cases, too, he had been bold — like reversing the sale of Pakistan Steel, stopping the decision of the Capital Development Authority to turn a public park into a mini-golf course, and taking suo motu actions to make some highly progressive and popular decisions concerning human rights, women and environment. However, the decision that must have hurt the government relates to “disappearances”, of which there have been quite a few in the context of the war on terror. ( Dawn)

DEMOLOSHING CONSTITUTIONAL INSTITUTIONS

Bureaucracy is disillusioned: Nepotism, power-based influences abound: Kiani

By Baqir Sajjad Syed

ISLAMABAD, March 29: Transgression of merit by the government has made the bureaucracy a disillusioned, discouraged and disappointed lot, said Federal Public Service Commission Chairman Lt-Gen (retired) Jamshed Gulzar Kiani on Wednesday. He regretted that all the good work done by the Central Selection Board (CSB) in reviving the confidence of the bureaucracy had been lost. Speaking at his last press conference in his office, he quoted top bureaucrats as having told him that they were being treated as “dogs” by the government. Gen Kiani retires from his FPSC post prematurely on Thursday (March 30) after the government reduced his tenure by two-and-a-half years through a presidential ordinance last year. Gen Kiani, one of the key characters in the 1999 military takeover, had challenged the ordinance in Lahore High Court. However, the court rejected his petition. He vowed to fight it out in the Supreme Court.

The retired general alleged that favouritism, nepotism and power-based influences were abound in all institutions. He said he had made it his principle in the office to oppose out-of-turn promotions and irregular extensions. “Today I feel proud that while in office I challenged transgression of merit and rules and did not become party to any such violation.” The general, whose relations with the government became strained after he opposed certain promotions and extensions in contract including those of retired army officers, said he did not like to humiliate the government, but his conscience didn’t allow him to look the other way either. Regarding the FPSC-government row, he said it had become a purely personal affair. “I had pleaded to President Musharraf in the most humble

way not to drag FPSC into a controversy, but he conveniently ignored it.” On the issue of vacancies of FPSC members that were not filled by the government, Gen Kiani said the situation had aggravated and today there is a backlog of 2,000 candidates for general recruitment. “Vacancies are not being filled and ministries are crying hoarse, but FPSC feels helpless because of shortage of members,” he said and added that this time even the CSS interviews were conducted by smaller than usual panels. At one time immediately after the promulgation of the ordinance reducing the term of members, when quite a few members retired all of a sudden he recalled the working of FPSC actually froze for sometime. He also spoke of the reforms he undertook during his tenure specifically the reduction in overall time period of CSS cycle and general recruitment. The general who also chaired the Central Selection Board said he streamlined the working of the CSB. (March 30, 2006: Dawn)

FPSC Chairman regrets govt’s doublespeak on merit
Zubair Qureshi Islamabad—The outgoing chairman Federal Public Service Commission (FPSC) Lt Gen (Retd) Jamshed Gulzar Kiani has said that he upheld merit throughout his three-year tenure and was satisfied with his performance. He was briefing newsmen about FPSC three years’ performance, Wednesday, a day before leaving his office. “The most important improvement we brought in the FPSC culture was upholding merit at every cost. In spite of the heavy pressures I upheld sanctity of merit and that is very dear to my heart,” he said. Gen Kiani said at a time when nepotism, cronyism and favouritism have marred the performance of every department and organization in the

country, the FPSC fearlessly follows strict merit policy. “I will hold myself personally responsible if any loophole is found in the performance of the Commission during my tenure,” he invited newsmen. Referring to the Government-Commission row, Kiani said it had damaged nothing but an important national institution like Federal Public Service Commission. He said the ordinance promulgated by General Musharraf extending and fixing the tenure of the Chairman FPSC and members from three to five-year terms was a good step but revoking it later was indeed most unfortunate and unthinkable. “As far as I am concerned, I had commanded most prestigious posts in the Army including the 10-Corps, so three, four or five years do not matter to me,” he said. “Claims in public of following merit but not in practice irritates me”, he said. He, however, said that his stand was on principles and “I would not like to embarrass the government. When asked how his conflict with the government affected FPSC, he said, “It has nothing to do with FPSC.” He said he was not persuaded or influenced and always followed his conscience. Jamshed Gulzar Kiani produced a copy of a summary from the Prime Minister Secretariat regarding promotions in PSP cadre. He said the PM approved the proposal, but surprisingly refused promotion to two good officers with good record and no adverse remarks on their documents while another official who is facing NAB enquiry was promoted. He said the FPSC was collaborating with the World Bank for developing the capacity of FPSC. Highlighting Commission’s achievements made during last three years, he said under E-Governance Project the FPSC initiated, with latest equipment, Online Recruitment System, Online announcement of results and Online applications for jobs in the Commission. He said in the entire history of last 59 years the CSS examination was held every year and the results were announced next year, wasting precious time of the candidates, but during his tenure the process was

expedited and thoroughly overhauled to decrease the time period. ( Pakistan Observer: 30 March 2006)

Parliamentary bureaucrat

Secretary

beats

senior

From MEHTAB HAIDER ISLAMABAD - Parliamentary Secretary for Ministry of Finance Khawaja Shiraz has allegedly beaten a senior Joint Secretary Iftikhar Malik on the premises of Q Block (Finance Ministry building) along with his accomplices in the presence of ministry’s staff on Thursday afternoon. Iftikhar Malik is a senior Joint Secretary in the Ministry of Finance. Earlier, he had served as Secretary Finance in AJK and was also Deputy Secretary in Federal Finance Ministry. Iftikhar is currently serving in the Corporate Finance Wing of the ministry. The incident took place on Thursday afternoon when the Parliamentary Secretary was scheduled to attend a briefing regarding queries being sent by the Parliamentarians for question-answer session in the National Assembly. According to eye-witnesses, Iftikhar reached the meeting room with 10 minutes delay. On this, Parliamentary Secretary Khawaja Shiraz got infuriated and asked him to go out of the room. To be exact he said to the Joint Secretary “Get lost from the room.” Iftikhar Malik explained him that the ministry was going to arrange a workshop on PRSP-II from Friday and he was busy in sending invitations in this regard. However, Shiraz didn’t accept his argument and continued insulting Malik. The joint secretary asked him to behave but things went out of control. Later, Malik responded in the same manner saying that he is the ministry’s senior official and nobody can talk with him like that. Already charged Shiraz rose from his chair and started beating him. He thrashed him and pulled him out of the room where few other people, belonging to his constituency, were standing outside the committee room at second floor in

Q Block. He ordered them to beat the joint secretary and the ministry staff witnessed the whole episode. The joint secretary received injuries when ministry’s senior staff reached the spot and rescued him. Senior bureaucrats have strongly condemned the incident and demanded removal of the parliamentary secretary. ( THE Nation: May 5, 2006) A group of investigative journalists in Islamabad paid the price for this increase in friction. Amir Mateen, Rauf Klasra and Ansar Abbasi were harassed by the ISI, and the most famous of them, Shaheen Sehbai, had to flee the country. "Get in line, or you will feel some stick," the ISI warned him. The online news site he set up in the United States was a success thanks to his damaging revelations about the military. The authorities harassed his family and banned Pakistani journalists from picking up his reports. Gen. Javed Ashraf Qazi, a minister in the Musharraf government and former head of the ISI, was openly contemptuous of the press: "Pakistani journalists are of two categories. The left-wing, liberal journalist can be bought by India for two bottles of whisky while the right-wing journalists are patriotic. The job of the ’purchased’ journalist is to pick up disinformation published in India and print it in Pakistan as his own investigative work." Shahid Soomro, 26, father of two and correspondent of the Sindhi-language newspaper Kawish, was gunned down outside his home in Kandhkot (southeastern Pakistan) on the night of 20 October. He had been gone outside in response to a summons by Hundreds of journalists demonstrated in several cities in the province to demand the arrest and punishment of Soomro’s killers. Ghulam Hasnain, a Pakistani journalist working for the US news weekly Time, returned home on 24 January 2002 after being reported missing for two days. He refused to tell the press what had happened. A fellow journalist in Karachi said he was in a state of shock. No one claimed responsibility for this abduction and the authorities never commented on it. Several Karachi journalists said they thought Hasnain had been the victim of intimidation by the ISI. His wife, a journalist with the daily Dawn, said she had received a call on 23 January from the special police (government security service) who had questioned her about her husband’s past and political sympathies. Amir Mateen, an investigative journalist with The News, was the target of intimidation in early September after writing several reports on the government’s suspected intention of rigging the general elections on 10 October, a fear voiced by opposition parties. Mateen’s phones were tapped

and he was followed by ISI agents. His colleagues and relatives were also harassed.

ASSAULT ON MEDIA

Editor-in-Chief: Mir Shakil-ur-Rahman

Media under siege

ISLAMABAD: The press was under siege on a Friday that turned into a black day due to the use of brute force by the police. The office of The News, Islamabad and Geo’s capital headquarters located on the same premises were vandalised by the Punjab police without provocation, as Islamabad’s deputy commissioner and the senior superintendent police kept standing at the corner of the building. While we were preparing to evacuate to save ourselves from the thrashing by the police, which had entered the premises, the thick smoke of teargas enveloping the surroundings prevented us even moving an inch. Our Karachi office was insisting that we should leave the building immediately but that was simply impossible because of zero visibility. Initially, it was the Jang building’s main glass entrance that was smashed into pieces by the police. We never thought that the police would dare enter our office as well. But what happened later was that The News office was twice attacked by the police as if it was the main target. The first assault was launched by a contingent of three or four cops, when we were watching Geo coverage after being literally confined to our office. Suddenly, an office boy of the Jang group entered the room, followed by a few gun-wielding Punjab policemen. Two cops gatecrashed while others followed. We jumped from our seats to block this unlawful entry of the policemen and tried to push them back. When one cop tried to proceed further, he was stopped by us, while the other policemen were prevented from entering the office. “We are doing this on the orders of the SP,” the cop said. We finally shoved the policeman out of our office. In the scuffle, his cap fell in our room. Several staffers, including Ansar Abbasi, the Editor Investigations, were present in the office. However, none of the cops touched anyone there. Within a few minutes, a comparatively larger contingent returned with vengeance. They started smashing the windows — as shown in the Geo footage — repeatedly. We were just helplessly watching the scenario. With the windows completely smashed, we were preparing ourselves for a thrashing but to our good luck, this time none of the cops entered. From outside the room, one of the policemen asked us to give his cap back, which we did. As he got it, he and his other colleagues smashed the remaining windows of The News offices, while hurling abuse at us. But we did not react. Ironically, the policemen had destroyed The News offices, when Information Minister Muhammad Ali Durrani entered our corridor after visiting the adjacent Geo headquarters. He saw the attack with his own eyes but was helpless to do anything. Before that the glass of the back and main entrance gates of the Geo offices was smashed. The police manhandled the staff and beat the security guards. Geo staffers tried to prevent the trespassing by the Punjab police but failed. Sensing the attack, Geo Bureau chief Hamid Mir went live on air and said the police were about to attack the offices. Geo reporter and producer Asma Chaudhry came under severe assault while Durrani was entering the Geo offices.

At the same time, she was on air, while standing near the outer gate of the Jang building. The police threw stones at her, and she faced teargas shells while discharging her professional duty on the rooftop of the building. When she complained that she was being attacked, Durrani said he could not do anything except to apologise. Geo reporter Hassan Nasir was arrested but later released. Geo cameramen Khaliq and Alexander were injured by rubber bullets fired by the police. Without any provocation, the police broke the glass of the back door, while hurling abuse at the TV network. Hamid Mir tried to stop policemen, who wanted to enter the building through the front gate. Police also tried to take him away in a jeep, but security guards saved him. When Durrani visited our office a few minutes after the assault, he condemned the attack in the harshest terms. Deputy Inspector General of Police Shahid Nadim Baloch came to our office, but could not bear the heat of our arguments. He left the office saying there was no point in being here. Following him was Minister of State for Information Tariq Azim, who was briefed about the attack. He condemned it and expressed solidarity with us. Following the timely photo sessions of Durrani and Tariq Azim, The News and Geo offices saw a beeline of concerned sympathisers including politicians, lawyers and members of civil society. They offered their full support during this testing time and assured the media that they were only a call away if they were ever needed.

FOR THE LOVE OF THE POOR POPLE!
• PM House spends Rs. 7 lacs every day: one primary school can be built by this money • President House spends 7.2 lacs every day: one small dispensary can be built by this money • 58 crores spent on renovation of PM plane: one university can be built by this money • More than one billion spent on purchase of Mercedes cars: one district can be electrified • Rs.1. 5 billions on foreign tours: five world class colleges can be built

WHAT A PLUNDER?

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