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April 5, 2020

PM, DG FIA being threatened by sugar mafia

Top Story

April 5, 2020

ISLAMABAD: The sugar mafia has threatened Prime Minister Imran Khan as well as DG FIA and Chairman of the Inquiry Commission Wajid Zia to immediately stop the probe into the sugar scam otherwise the country will see a severe shortage of the commodity and its price may hit Rs 110 a kilogram.

In a rare but bold move, Prime Minister Imran Khan on Saturday made the report on wheat and sugar scandals public and there are strong indications that some major administrative actions may follow in the coming days. Informed sources said that not only heads will roll from within the bureaucracy but Prime Minister Imran Khan is also considering removing some of his key ministers from the cabinet besides expelling Jehangir Tareen from the PTI.

The role of a PM's adviser as head of the Sugar Advisory Board also came into question, whereas a top PTI leader is not only in the focus for being one of the leading sugar tycoons but was also head of the Task Force on Agriculture. The sources said that the prime minister was threatened that if the Sugar Commission continues its probe for criminal action against those involved, the country will face one of the worst sugar crisis. It is said that DG FIA Wajid Zia, who is heading the Commission, was also asked to stop the probe otherwise the sugar price will go up to Rs110. The DG FIA informed the PM’s Office about the threats he received.

The Sugar Inquiry Committee, led by Wajid Zia, had submitted to the prime minister its findings. On its recommendations, the committee was converted into the Sugar Inquiry Commission, which was assigned by the government to probe deeper into the operations of the sugar industry and unearth the mafia. The Commission, which has to give its report to the prime minister on April 25, is at present checking the ledgers, bank reports, export details, markets sales etc of the sugar mills. The Commission’s ongoing probe, it is said, is badly hurting the sugar mafia, which is now pulling all strings to stop it. The sources said that the Commission has already traced a number of fraudulent acts. For example, in some cases the brokers who were sold sugar by the sugar mills turned out to be truck drivers. The Commission report will enable the government to initiate criminal actions against those involved.

The findings of Inquiry Commission on the sugar crisis and price hike in Pakistan has put the blame on the decision of allowing sugar export in 2018 and the deal was further sweetened when subsequently the Punjab government provided a Rs 3 billion subsidy out of nowhere. According to the findings of the Commission when PTI government came into power in 2018 there was a sugar surplus in the country. Therefore, Sugar Advisory Board (SAB) under Chairmanship of Advisor Commerce, Industries and Production recommended exporting one million tonnes of the commodity, which was approved by the ECC despite the fact that Secretary Food Security had expressed serious concerns fearing a lower sugar production next year. However, the sugar was allowed to be exported and later Punjab government also provided subsidy for the export.

According to the findings of the Inquiry Commission from January 2019 till May 2019, sugar was exported availing subsidy given by Punjab. It has been highlighted that during this period sugar prices in the local market increased from Rs55 per kg to Rs71 per kg. Therefore, the sugar exporters benefited in two ways. First by availing the subsidy of Rs3 billion and secondly taking full advantage of the price hike.

The Sugar Commission also highlights the major beneficiaries of export subsidy and price hike. The maximum benefit of export was drawn by JDW Group (Jahangir Khan Tareen) by availing 22% of total subsidy worth Rs561 million. The second highest beneficiary was RYK Group run by Makhdoom Omer Sheheryar Khan (brother of Khusro Bakhtiar) availing 18 percent of subsidy worth Rs452 million. This group's ownership also includes Ch Munir and Moonis Elahi. Third highest was Shamim Ahmed Khan (Al Moiz Group) availing 16 percent of subsidy worth Rs406 million. The Commission suspects overall collusion of Sugar Mills and wholesale sugar dealers behind this scam. Constituted by the federal government, the Commission can unearth evidence and trace parties involved. It also reported that a subsidy of Rs25 billion was given to sugar mills in the last five years, while Rs3 billion was given in the last year alone. According to consolidated data RYK group is the single largest beneficiary with total subsidy of Rs4 billion, JDW over Rs3 billion, Hunza Group at Rs2.8 billion, Fatima Group at Rs2.3 billion, Sharif Group at Rs1.4 billion and Omni at Rs901 million.

The Commission has indicated conducting forensic audit of sugar industry to trace all such practices, which could lead to penal and regulatory actions, besides recommending a review of the future agriculture strategy.