ISLAMABAD: The Inquiry Commission on Sugar (ICoS) has traced around 50,000 unregistered buyers who have been involved in transactions worth hundreds of billions of rupees — a move that may lead the investigators to trace the actual culprits who extracted over Rs120 billion as extra profit direct from pockets of consumers in past sixteen (16) months by increasing the sugar price by Rs23 to Rs27 per Kg.
This development came days after the ICoS teams traced hundreds of 'suspicious benami transactions' worth Rs362 billion which were linked to out of books sale of over 6 MMT of sugar by the mills owners during the past five years.
"We have detected 50,000 unregistered buyers. Out of those, around 40,000 have not filed their tax returns. We suspect that the millers evaded taxes worth billions of rupees through such practice," revealed a senior official who is part of nine teams conducting forensic audit (on behalf of the ICOS) of six (6) sugar producing companies.
"We are evaluating some exclusive data received from seven of nine (9) sugar mills which have allegedly been involved in purchasing out of the books cane from farmers through hundreds of brokers and middle men, and subsequently manipulating supply to the market to maximize profiteering," added the official seeking anonymity.
The exclusive details obtained by Geo News from sources associated with the ICoS revealed that Hamza Sugar Mills sold sugar to 31,000 unregistered buyers out of whom 28,000 had never filed their returns with the tax authorities.
The unit which is owned by late Haji Nisar also got around Rs213 million subsidy from the federal and provincial governments during 2017. JWD group mills owned by Jahangir Khan Tareen sold sugar to 4,000 unregistered buyers where 86 buyers were not filing their returns with the FBR, official documents revealed.
Mr Tareen's mills received Rs2.3 billion collectively from the federal and provincial governments during 2017 and 2019 as freight support on sugar exports.
Al-Moiz Sugar Mills sold sugar to 1,700 unregistered buyers where 75 were not registered as tax payers. Mr. Shamim Khan — a cousin of Jahangir Tareen — and his son Mr. Nauman Khan, also got Rs1 billion as subsidy from the centre as well as from the Punjab government in 2017 and 2019 combined.
Exclusive details also revealed that Al-Arabia Sugar Mills owned by the Opposition Leader in the Punjab Assembly Hamza Shahbaz and his brother Salman Shahbaz sold sugar to 1,289 non-registered buyers out of which 1,200 buyers had never filed their tax returns.
Alliance Sugar Mills, Ghotki, owned by Federal Minister Khusro Bhatiar's family, sold sugar to 900 unregistered buyers where 75 were not registered with the tax authorities.
Hunza I and Hunza 2 Sugar Mills Ltd sold sugar to around 1100 un-registered buyers where 117 were non-filers. The units got nearly Rs1.6 billion from the federal and Punjab governments in 2017 and more than Rs429 million from Punjab in 2019.
Chaudhry Idrees, Chaudhry Muhammad Saeed and Chaudhry Waheed owned those units.
The Inquiry Commission also identified 3,000 brokers and middle men who controlled monopoly over the domestic sugar market and helped millers to earn extra profit which was directly extracted from the consumers’ pockets.
"We've got details of 295 brokers from the State Bank of Pakistan. Brokers are also focus of our investigations. Majority of them are from Babar Center and Akbari Mandi, Lahore and Jurian Bazaar, Karachi who control complete monopoly over domestic sugar prices," a senior official involved in the exercise of compiling that data told Geo News.
The millers did not pay much direct tax (income tax) during past five (5) years and some even showed business losses and claimed refunds worth Rs7.8 billion, he said, adding that the Commission was contemplating to take more time to investigate tax evasion matter of millers who collectively sold 6.4 MMT sugar out of books and those brokers who in connivance with some of the industrialists evaded taxes, sales taxes in particular.
Investigators claimed that the millers and brokers have doggedly sold out of books (Tax evaded sales) sugar worth Rs33 billion during the past five years.
The breakup includes some Rs4.9 billion against 1.12 MMT sugar during 2015-16, Rs6.1 billion against 1.55 MMT sugar during 2016-17, Rs5.9 billion against 1.45 MMT sugar during 2017-18, Rs5 billion against 1.15 MMT sugar during 2018-19 and Rs11 billion against 1.1 MMT sugar during 2019-2020.
These sugar mills collectively sold sugar worth Rs905 billion in domestic and international markets by receiving subsidy worth Rs24.9 billion from provincial as well as from federal government during past three years.
The millers sold sugar worth Rs709 billion in the domestic market, while Rs196 billion was earned through the export of sugar.
During past four years, these mills held 38% of total sugar market in the country and received Rs262 billion in 2017-18, Rs335 billion and Rs172 billion by selling sugar in domestic market during 2019-20. The rest of 62% industry is not facing any inquiry or forensic audit, questioned owners of nine mills, now facing commission's wrath.
Interviews with some officials associated with the commission revealed to Geo News that probing teams had got details of around three dozen suspicious accounts opened in the names of employees of different sugar mills where transactions of over Rs500 billion were made during past five years.
Those were 'benami' transactions and officials claim that thousands of suspicious transactions could further come to light during the coming days.
Apparently, such transactions fetched sizeable cash tranches to the mills owners who entered into un-written agreements with potential buyers for more profit as well as to evade taxes.
Jahangir Tareen's concerns: PTI's leader Jahangir Khan Tareen has expressed his serious reservations about the formation of Commission which, according to him, is only focusing on his mills.
"Sugar Commission is only focusing on me. Why not on others who are also part of the PTI govt," he told this correspondent.
“I’d announce a decisive course of action on April 25, the day report of the commission comes out. However, I am in communication with PM Khan,” he further said, adding, "What’s the target of [sugar] commission as well as its ToRs? Why there was scrutiny of only nine mills? Why there was no forensic audit of other 80 sugar mills? What was the motive behind this selective audit?"
Neither inquiry committee nor the commission approached him for his version, Tareen told this correspondent. "I’d see the commission report and would decide what to do next. I supported PTI for the cause but today I’m disappointed. But I’m with the PTI as I sacrificed for the party to come to power."
Responding to a question, Mr Tareen further said he had paid his all the taxes. On Khusro Bakhtiar's mills matter, he said, "I don't want to comment until the report comes out."
On selling sugar to unregistered buyers, he told Geo News that it's FBR's fault, not the millers. “My sugar mills never made benami transactions and out of the books sugar transactions,” he added.
Pakistan Sugar Mills Association (PSMA) Chairman Aslam Faruque had earlier welcomed the release of the inquiry committee report on sugar by the federal government, saying that an open, fair and facts based discussion was exactly what the sugar industry wanted and that could not happen as long as the findings had not been disclosed. However, it was unfortunate that the minutes of the report were made public, media blew up the whole affair in the hunt for sensationalism.