Information Minister Shibli Faraz and Special Assistant to the Prime Minister (SAPM) on Accountability Shehzad Akbar on Thursday revealed details from a report issued by the Sugar Forensic Commission (SFC) constituted to investigate and assign responsibility for the shortage and price hike of the commodity in the country in recent times.
Addressing a press conference in Islamabad alongside the information minister, Akbar said the commission’s report, which had already been discussed by the federal cabinet earlier today, revealed that six major sugar mill groups were acting as “cartels”.
“They hold 51 per cent of the total supply,” he added.
“A mill called Alliance from Rahim Yar Khan — partially owned by Pakistan Muslim League Quaid (PML-Q) senior leader Moonis Elahi — was audited. It showed that between 2014 to 2018, farmers faced an 11-14pc systematic cut, which translated into Rs970 million and was a huge blow to them,” Akbar said.
He added that the mill under-reported sugar sales “for years” and sold the commodity to unnamed buyers and had committed violations under the Pakistan Penal Code.
Akbar also mentioned the JDW sugar mill in which PTI stalwart Jahangir Tareen has a 21pc stake. He said according to the report, the mill committed “double booking, under-reporting and over-invoicing”.
“The report noted that the mill [JDW] under-invoiced sales from bagasse and molasses which resulted in 25pc cost inflation. They also committed corporate fraud whereby money was transferred from their PLC to their private company.
“Forward sales, satta, unnamed sales have all been associated with JDW too.”
The Al Arabiya mill owned by Salman Shahbaz Sharif was also audited, the SAPM said, adding that it was found to have committed fraud worth Rs400m through informal receipts and market manipulation.
Akbar said the report had proven what PM Imran Khan had always maintained.
“Whenever a businessman comes into politics, he will always do business even at the expense of the poor. So his [PM’s] thinking has been validated. A certain business community has captured the market and as a result, people are suffering,” he said.
He added that the report will be available online shortly for anyone to read following the prime minister’s orders.
Akbar said that the report revealed that certain sugar mills also used informal receipts. “It was ultimately the farmer who was crushed because there was no official record. The mill owners showed the price of production as more than the support price which meant that farmers earned less.”
He added that mill owners also engaged in informal banking with the farmers, which hurt the latter because it was an unregulated process. “This gave the mill owners a profit of up to 35pc,” he said.
Akbar said it was the first time that an “independent inquiry” had been conducted into the cost of production. “In 2017-18, sugar mills determined the cost of production at Rs51 per kilo whereas the report gave an estimate of Rs38 instead,” he said.
“In 2018-19, sugar mills calculated cost price at Rs52.60 while the report gave an estimate of Rs40. [The sugar mill owners] purchased sugarcane at a lower price but showed a higher price in the invoices,” he said.
The SAPM said the report also pointed out that the sucrose content as shown by Pakistani mill owners (9.5pc to 10.5pc) was less than the international standard.
“There are two injustices — inflated cost of production and market manipulation — being done against the people,” he said, adding that accounting fraud was also being committed by these mills.
“The report also showed that mill owners are maintaining two account books. There is an under-reporting on sugar procurement of 25-30pc, which is an absolute scandal. Tax is not paid because of this.”
Akbar said the report also revealed that the Omni Group in Sindh had “specifically benefited” from the subsidies the Sindh government provided, adding that it “specifically named Sindh Chief Minister Murad Ali Shah”.
“Why did the chief minister give additional subsidies to the Omni Group when it was already getting subsidies from the federal government?” he questioned.
Not long after Akbar and Faraz ended their press conference, Tareen took to Twitter to responded to the report, saying he was “shocked at the false allegations” levelled against him.
He said “all Pakistan knows I always pay full price to my growers.”
“I do not maintain two sets of books. I pay all my taxes diligently,” he said, adding that he would “answer every allegation and be vindicated.”
Separately, Elahi also took to Twitter to comment on the report, saying: “As stated earlier, I am not involved in the management nor am I on the board of any sugar mill. I strongly support the recommendation of commission to control satta/speculation, including new legislation to help government control sugar price manipulation.”
‘Stronger regulatory system’
The SAPM said that the report noted that basic regulation was lacking and urged improvement in the regulatory system. The state’s regulatory institutions — State Bank of Pakistan, National Accountability Bureau and Federal Investigation Agency should step up their regulations, it said.
It recommended that assistant commissioners and deputy commissioners ensure that farmers were paid their full due.
It also recommended that technology be used for bookkeeping and a mechanism be developed to “recover the looted amount”.
“This stolen money should be used for the welfare of the people,” Akbar said.
He added that Prime Minister Imran Khan also wanted the regulatory framework to improve and strengthen further in this regard.
“Making this report public is just the start,” he concluded.
Last month, the commission had asked for an extension of three weeks’ time to submit the report — a move that was met with much criticism by the opposition.
The SFC had been constituted by the government in the first week of April following the release of two separate inquiry reports of the FIA on the issue of artificial shortage of sugar and wheat in the country and sudden increase in their prices last year.
The inquiry report on sugar had revealed names of many bigwigs, including Jahangir Tareen, the former secretary-general of the ruling Pakistan Tehreek-i-Insaf (PTI) and a close confidant of the prime minister, who had allegedly benefitted from the crisis.
After the release of the report, the opposition had demanded that the premier take stern action against those who had been declared responsible for the crisis by the FIA committee.
Prime Minister Khan had vowed to take action, but said he would do so after receiving the forensic audit report from the commission that he had constituted on the recommendation of the ‘initial’ reports. The commission comprises officials from a number of agencies and departments including the Intelligence Bureau, FIA and the Federal Board of Revenue.