Political anatomy of sugar scam

Islamabad: Pakistan’s sugar landscape seems to be who’s who of national politics, and even in extreme political polarisation, there is bipartisan consensus on one thing and that's sugar.

A close reading of the Federal Investigation Agency (FIA) inquiry report, displays that while documenting the political anatomy of the sugar industry, it either skipped certain officially-established, documented facts or ignored them. Some factual errors or omissions have been noticed in the overview of ownership of the largest exporters and recipients of sugar subsidy from the Punjab government in years 2019-2020, done by the probe body.

The JWD (Jamal Din Wali) Group and JK Group, both under the management control of Jahangir Tareen, have the largest share of sugar export and export subsidy. These groups exported 122,621 tons of sugar, which is 15.66% of total sugar export in 2019. In lieu of this, they received Rs561m export subsidy, which is almost one-fourth of the total subsidy.

The JDW is a public listed company, with largest share of production in sugar industry of Pakistan. Tareen is the CEO and Director of this group, while Pakistan People’s Party (PPP) Punjab President former Punjab governor and Tareen’s brother-in-law Makhdum Ahmad Mahmood is founder Chairman of the group. Ahmad Mahmood’s wife is also director of the company. Both husband and wife hold 27% shares.

Tareen holds 37% shares of JDW along with his son Ali and wife Amina. The mills falling under the JK Group are exclusively owned by Tareen. JDW and JK groups own six sugar mills and produce 20% of Pakistan’s sugar.

Chief operating officer of the JDW group Rana Naseem, who is a former district management group officer, holds 7.4% share in the sugar empire. Many credit him with the phenomenal rise of the group over the last two decades.

The official record reflects that the remaining shares (almost 28%) of the JDW group are held by institutional investors and general public through the Karachi and Lahore stock exchanges. The JDW is considered a blue chip of sugar industry. Its share was trading at Rs360/share a few weeks ago while its present value is Rs241/share. The 2018 annual report shows that the JDW group has assets worth Rs50b.

The second sugar producing cluster, declared by the FIA committee as the major beneficiary of export subsidy, is the RYK group, owned and led by Makhdums of Mianwali Qureshian in Rahim Yar Khan. The family is presently led by its young scion, Federal Minister Makhdum Khusro Bakhtiar. He was the minister for state for foreign affairs in Pervez Musharraf’s cabinet, and was elected a member of the National Assembly (MNA) in 2013 on the Pakistan Muslim League-Nawaz (PML-N) ticket. He left it just before 2018 general elections and formed the “Janoobi Punjab Shuba Mahaz” along with half a dozen other politicians, mostly associated with the PML-N. Before 2018 polls, the alliance was merged in the Pakistan Tehreek-e-Insaf (PTI). Khusro Bakhtiar and his younger brother Hashim Jahan Bakht made to National Assembly and Punjab assembly respectively.

Both were inducted into the federal and Punjab cabinet. Khusro Bakhtiar was made planning minister and Hashmi Jahan Bakht got the finance portfolio in Punjab. The elder brother was subsequently shifted to the ministry of national food security, a portfolio directly responsible for sugar policy.

The RYK Group was created in 2005 by Khusro Bakhtiar, Chaudhry Muneer [father-in-law of Maryam Nawaz’s daughter] and Chaudrys of Gujrat as a political antidote to the rising political influence of Makhdum Ahmad Mahmood and Tareen in Rahim Yar Khan District. At the time, Ahmad Mahmood was district Nazim and Tareen federal minister in the PML-Q regime. They fell out with the Chaudhrys of Gujrat in 2006.

Official record shows that the RYK group, which the inquiry report attributes to be owned by a relative of Khusro Bakhtiar is actually a family concern of his family.

As per the Security Exchange Commission of Pakistan (SECP), the group has a total of 15,000 shares and six family members of Khusro Bakhtiar’s family hold 2,500 shares each. They are Makhdum Rukunddin and his wife (parents of Khusro Bakhtiar), Hashim Jawan Bakht, and Omer Sheryar, both real brothers of Khusro Bakhtiar, and wife and mother-in-law of Omer Sharyar.

The RYK group has other sugar mills including Etihad in Rahim Yar Khan, Alliance in Ghotki (Sindh) and Two Stars in Kamalia. Other shareholders in these mills are Chaudhry Muneer, Chaudhry Monis Elahi, and Bhanero group of Faisalabad, who are in-laws of Omer Sharyar.

According to the FIA inquiry report, the RYK group and affiliates exported 146,515 tons of sugar, which is 18.7% of total exports, and got Rs452 million export subsidy.

The third major sugar producer benefiting from the sugar export and subsidy is the Shamin Khan group, which owns four mills - Al Moiz I, Al-Moiz II, Thal Industry, and Baba Farid sugar mills. Its directors are Shamim Khan, Nauman Khan, Mrs Shamim Khan, Adnan Khan, Mrs Sarah Hajrah Khan, and former civil servant Fariduddin Ahmad. The group also has stakes in textile and Pepsi bottling companies. The group, which is not in direct politics and is closely related to Hamuyun Akhtar Khan, exported 104,558 tons sugar and got Rs406m (13.5%) export subsidy.

The Indus Sugar Mill as mentioned in the report exported 53,000 tons of sugar and was awarded Rs148m export subsidy. A key factor not cited in the findings is that mills is owned by Sardar Nasrullah Dareshak and his son Hasnian Bhadur Dareshak, who is the minister for livestock in Punjab. The head of Dareshak clan and seasoned politician Sardar Nasurullah is the ruling party member of the National Assembly from Rajanpur.

The major shareholder in the Indus Sugar Mills is Izhar Group of Lahore. Its scion Izhar Yaqoob is a member of Prime Minister’s Task Force on Housing. The inquiry report attributed ownership of the Indus Mills to a minority shareholder Mehr Dastagir Lak of Bhalwal. Lakh has been member of the Punjab assembly (MPA) five times and twice provincial minister. He started his career as independent in 1985, then joined PML-N, became minister in the Manzoor Wattoo cabinet, and was last time elected an MPA on PML-N ticket in 2013.

Another principal beneficiary of the sugar export is Hunza Sugar Mills in Faisalabad and Jhang. The group exported 91,000 tons of sugar, almost 73% of its sugar production, and got Rs429m subsidy, which is 17.4% of total subsidy. Its directors include Chaudhry Muhammad Saeed, Chaudhry Idrees and Chahdhry Waheed, who have no political connections.

The Fatima Sugar Mills, another recipient of the export policy, belongs to famous political and business family of Multan. Its directors include Fawad Mukhtar, Faisal Muktar, Fazal Sheikh, and Fahd Mukhtar. Faisal Mukhtar has been Mayor and Nazim of Multan. He was a key associate of Pervez Musharraf and PML-Q in the 2000 decade. Mukhtars are third generation businessmen, coming from the famous Colony Group. The Mukhtar family has immense political and business in Multan, and all political parties try to cultivate them at the election time.

The Fatima group exported 72,000 tons sugar, which was 67% of their produce and got Rs248 million subsidy from the Punjab government.

Noon Sugar Mills, owned by Adnan Hayat Noon, who is grandson of the former prime minister of Pakistan Malik Feroz Khan Noon, exported 13,000 tons sugar and was given Rs48m subsidy. Adnan Hayat was the PML-N MNA in 1997, and his wife is presently MPA in Punjab on the reserve seat on the PML-N ticket. She was also elected to provincial assembly in 2013, and worked as the chairperson of the task force on livestock. Adnan Hayat hails from the political and landed aristocracy of Punjab, and is a collector vintage and classic cars.

The Husein Sugar Mills, Sheikhu Sugar Mills and Jauherabad Sugar Mills exported negligible quantities of sugar. They are owned by businessmen Ahmad Ali Tariq, Anis Sheikh, and Jamal Ahmad, having no political connections.

The inquiry commission established by Prime Minister Imran Khan to further probe into increase of sugar prices, has constituted one dozen forensic audit teams to deeply examine the sales, export, subsidy, tax and other aspects of the business.

The inquiry committee report reveals that ten sugar mills will go through deep forensic audit. They are three JDW mills, two mills of Al Moiz (Shamim Khan group), two mills of Hunza Group, Hamza Sugar Mill, only one mill of the Alliance Sugar Mills of Chaudhry Muneer, Monis Elahi and Khusro Bakhtiar family, and Al-Arabia Sugar Mill of Salman Shahbaz.

Questions have been raised over the fact that a number of mills, which got major share in export and subsidy in 2019, have been excluded from the detailed audit.

A review of sugar exporters and mills being audited exhibits that the Khusro Bakhtiar family’s mills - RYK, Ethihad and Two Star -, Indus Sugar Mills belonging to Dareshaks, Fatima Sugar Mills of Mukhtars from Multan, Noon Sugar Mills, and some others having exported more 150,000 tons of sugar, have been kept out of the forensic audit.

The Al-Arabia Sugar Mills, which neither exported any sugar in 2019 nor claimed subsidy from the Punjab government, has been included in detailed audit.

Some sugar mills, which have no concern with the Sharif family (Nawaz Sharif and Shahbaz Sharif), have been clubbed under the Sharif family mills. Of them, the Chanar Sugar Mills Faisalabad belongs to Javed Kiani family and Ittefaq, and Kashmir Sugar Mills is owned by the Al-Shafi Group, who are relatives of the political Sharif duo.

The Chaudhry Sugar Mills owned by Nawaz Sharif and his nephews is shut down for the last three years. The Ramzan Sugar Mills and Al-Arabia belong the Shahbaz Sharif family.