Is Sugar Inquiry Commission having the right direction?

ISLAMABAD: Although the investigations by the much drummed Sugar Inquiry Commission headed by Federal Investigation Agency (FIA) chief Wajid Zia are going on with some bigwigs appearing almost every day in Islamabad. However, the ongoing inquiry has generated some serious questions whether it would help or it would ultimately damage the sugar industry. These key questions emerged amid the investigations at least four Sugar Mills owners (though not under investigations) are silently moving towards selling their businesses thus signaling to another crisis for next fiscal year.

“Yes, we are selling our sugar mills because we had to shut due to market crisis. The crisis would surely deepen, as things are moving towards another accident. It is not ours only there are some others who are also leaving this business,” said Waqar Banday, Chairman of Colony Sugar Mills while talking to The News. The Colony Group has been in the industries since 1890s. It also owns sugar mill located at Phalia, Gujrat, now being sold due to the ongoing crisis in the sugar market.

As the investigations are underway, at least 7 sugar mills are closed. Out of these, 3 sugar mills namely Colony Sugar Mills, Phalia, Abdullah Sugar Mills Okara, and Brothers Sugar Mills, Chonian are shut due to industry and market crisis. Whereas Chaudhry Sugar Mills, Haseeb Sugar Mills, Ittefaq Sugar Mills and GB Sugar Mills are shut due to a Lahore High Court order in relocation dispute case.

Both the investigators and stakeholders are yet unaware why the investigations are being carried out only against 10 out of total 86 sugar mills working across the country. The sources in the Interior Ministry claim that the names of sugar mills against whom investigations were ordered, came from the Prime Minister Secretariat, which directed the investigations apparently following some intelligence reports. However on last Saturday , May 3 when the Sugar Inquiry Commission met the representatives of the Sugar Mills Association, on their query a key member of the commission claimed that they picked the names of the sugar mills as per their capacity after going through the list of the exporters.

The sources claim that there are some other mills that are also having their exports but not included in the investigations, which reflects a serious flaw on part of the government, which ordered investigations targeting a few.

Although it is in public domain that Jahangir Khan Tareen owned three sugar mills of JDW group and Reliance Sugar Mills linked with Federal Minister Khusro Bakhtyar are also among the ten mills under investigation. However, a few would know that Nauman Khan (owner of two under investigations sugar mills of Al-Moiez Group), Ch Waheed (owner of two sugar mills of Hunza Group also under investigation) are also known for their close links with Prime Minister Imran Khan as owner of these groups remained regular donors for Shaukat Khanum Hospital etc. Mian Tayab headed Hamza Sugar Mills group is also considered as close to the current setup however only one sugar mill namely Al-Arabia linked with Shahbaz Sharif and Hamza Shahbaz is among the opposition or critical to the current regime.

The official sources claim that the Inquiry Commission, probing above mentioned ten sugar mills for allegedly creating a fake price hike, tax evasion and fake entries also have some capacity issues. Apparently, the tax issue of the industries is also directly linked with the performance of the Federal Board of Revenue (FBR) whose representative Dr Bashirullah is also part of the Inquiry Commission. At yet commission has not inquired or questioned the FBR working as its inspectors already appointed in each sugar mills for monitoring.

Under the law, these FBR inspectors give clearance certificates to the sugar mills when the sugar is sold. It is also pertinent to note that a senior officer of the FIA Sajjad Mustafa Bajwa who was also part of these sugar investigations had raised the issue of the FBR data and record. Bajwa in his letter to the FIA Chief Wajid Zia had also mentioned that it was FBR which was not giving him the record and the representative of the FBR in the Inquiry Commission Dr Bashirullah sent him a message that his letter seeking the record (of a factory) from FBR was not taken in good spirit. Although Mr Bajwa was removed from the sugar investigations after leveling serious allegations against him however even after passing weeks Interior Ministry and FIA both have yet not furnished any charge sheet against him apparently proving his points and also raising the questions about the performance of FBR as institutions and its inspectors appointed in the sugar mills.

According to officials in the inquiry commission and the close study of the first report the sugar mills sale the product to “bainamidars” or unregistered fake dealers. In this regard when this question was posed to a sugar mill owner (who is also among those being investigated by the Commission and wants not to be named) he claimed that FBR needs a copy of the CNIC of each buyer. According to him," whenever some unregistered dealers purchase sugar from us they pay three percent more tax as this is a legal way of selling sugar to such unregistered dealers whom commission is calling “bainamidars”, so technically we don’t violate the law rather help generating more taxes”.

For ensuring a proper tax collection and monitoring while by passing the role of FBR inspectors, a man named Iskandar M Khan who is Chairman of Pakistan Polypropylene Woven Sack and also an owner of a sugar mill in KP had also written a letter to FBR dated January 22, 2020, a copy of which is also available with The News. In the letter, he proposed that a computer generated barcode must be introduced with the polypropylene bag for sugar bags coming out of each mill or other industries. According to his advice, this would help FBR properly monitor the sale of each sugar mill. It is yet not clear whether Inquiry Commission would give such guidelines to the government in its final report or not?

During the investigations, one key difference also emerged regarding the cost of per kg sugar by the sugar Mills. According to one source, a member of the Sugar Commission claimed that the cost of per kg sugar is almost Rs50. This claim was made on Saturday (May 3) during the meeting with the Sugar Mills Association members. After hearing this claim one key member of the Sugar Mills Association, Ch Waheed answered if Rs50 per kg is proved, he would give prize of Rs10 million to the one who would do this. After the statement of Ch Waheed a silence was visible among the Commission members who were apparently not well prepared about the cost of the sugar.

In this regard when this correspondent asked the exact price of per kg sugar to the same sugar mill owner who is not facing any investigation he claimed that the case of per kg sugar varies from Rs80 to Rs83 as per the situation of each sugar mills. He said the cost of per kg sugar is also linked with the price of sugar cane being purchased by the sugar mills. According to the said mill owner the Commission is measuring all the sugar mills with one formula and one cost whereas it’s practically not possible to apply the same formula on all the sugar mills. According to him, sugar industry is not a cartel if it were, it would have been having a similar price (like cement industry) however the sugar price of each industry varies. He said that the commission thinks that Rs70 was the fake price whereas this price was once Rs90 and later it fell to Rs50, too.