Govt gets forensic report on sugar crisis today

ISLAMABAD: The Sugar Inquiry Commission (SIC) has prepared its final report which recommends a serious course of action against four dozen key middlemen, unregistered buyers, entities and sugar barons accused of earning illegal profits worth tens of billions of rupees through unjustified price hike, Benami transactions, tax evasion, suspicious sugar export deals, illegal power production, misuse of subsidy and purchasing cane out of the books.

(According to a separate Geo News report, Head of Federal Investigation Agency Wajid Zia will present the report to the federal government on Thursday.

Sources said the report made allegations of tax evasion against prominent political personalities and requested action against the culprits.

The much-awaited forensic report was to be presented to Prime Minister Imran Khan on April 25, however, it was given three-weeks’ time upon the request of the commission probing the matter.)

The SIC, in a 63-day marathon proceedings, met more than 220 individuals after march 18, 2020, revealed officials associated with the commission. the report may consist of an executive summary (150-pages) with some four volumes and more than 4,000 pages as supporting official documents.

The SIC is carrying record of details of growth of assets of sugar mills owners, their alleged shady cane and sugar businesses, millers’ connivance with middlemen and sugar dealers/ buyers/ exporters, revealed the officials. the report would be presented to Prime Minister Imran Khan anytime in next 72-hours.

The SIC has divided its findings into multiple categories i.e. forensic analysis of all sugar and cane dealings of millers, buyers and growers, fake entries of cane sellers and buyers, forensic of all accounts and Benami transactions of millers, analysis reports of transactions worth Rs700 billion of top 350 cash depositors, buyers and millers’ employees, alleged tax evasion record of millers, evaluation of record of entities and individuals remained under investigation in Security Exchange Commission of Pakistan (SECP), State Bank of Pakistan (SBP), National Accountability Bureau (NAB), Federal Board of Revenue (FBR) and Anti-Corruption Department Punjab, examination of record of subsidy given to all 36 sugar mills by the Ministry of Finance and provinces in past 10 years and analysis of sugar export record extracted from ministries commerce and industries and record of ongoing investigation against three mills owners.

The commission focused on JDW Group Sugar Mills, owned by Pakistan Tehreek-e-Insaf leader Jahangir Khan Tareen, Alliance Sugar Mill Pvt. Ltd, owned by Federal Minister Makhdoom Khusro Bakhtiar’s family, Al-Arabia Sugar Mills Pvt. Ltd, owned by Salman Shahbaz Sharif, Hunza Sugar Mills Ltd. owned by Chaudhry Idrees and Chaudhry Waheed, Al-Moiz Industries owned by Shamim Khan—a cousin of Jahangir Khan Tareen—and his son, Nauman Khan and a few other sugar mills.

Informed officials also revealed that the commission has discussed role of former Prime Minister Shahid Khaqan Abbasi, ex-commerce minister Khurram Dastgir Khan, Sindh Chief Minister Murad Ali Shah, Punjab Chief Minister Usman Buzdar, Punjab ex-chief minister Shahbaz Sharif, poor performance of SECP, FBR and CCP, incompetency of ministries of Industries and Commerce, role of Planning Minister Asad Umar, Adviser to Prime Minister on Commerce Razak Dawood, nine mill owners and their more than 70 employees by evaluating their role and responsibility. The commission also recorded statements of all the stakeholders of All Pakistan Sugar Mills Association, commerce groups and owners of different mills. The investigators also focused on doubling production capacity of mills, establishing of units in cotton growing areas and getting shady licence for installing new units, revealed the officials.

The probe commission also gave the reasons on sudden increase in sugar price by collectively implicating millers, middle men, brokers and sugar buyers by pointing failure of regulators like the concerned ministries, the CCP and local administration to control the hike. The probe commission has traced out 330 buyers who were involved in 'suspicious Benami transactions' worth Rs362 billion which apparently pertained to undocumented or out of the books sale of some 6.4 MMT of sugar by mill owners in past five years, disclosed the informed officials.

Nine investigation teams have engaged more than 89 officials from the Federal Investigation Agency (FIA), SECP, NAB, CCP, FBR, SBP, ministries of Finance, Industries and Commerce, Anti-Corruption Department Punjab, Intelligence Bureau (IB) and local administration from six different districts to get the task done.

The teams visited all nine sugar mills where they found serious irregularities in record of sale of sugar which apparently found out the malpractices of hoarding and manipulation of supply to the market to maximise profiteering, informed officials said. The teams during physical verification of stock found excess of stock as shown in the books with no sale record just in an apparent attempt to dodge sales taxes, added the officials. Two team members also submitted their separate notes/ observations with the commission. The observations are about the situation at the spot while conducting operations at Alliance Sugar Mills Pvt. Ltd and JDW sugar mills, officials said.

The SIC’s findings have had striking similarities with fake accounts case when it comes to trace Benami transactions where millers did transactions worth tens of billions rupees on names of either their front men or low grade employees, added the officials.

The commission’s forensic teams examined around 5, 700 main transactions which showed that around 6.4 MMT sugar was sold out of books collectively by allegedly evading tax of around Rs33 billion in five six years, officials revealed. Estimated 1.12 MMT sugar worth Rs55 billion sold out of the books in 2015-16, 1.55 MMT sugar worth Rs58 billion in 2016-17, 1.45 MMT sugar worth Rs56 billion in 2017-18, 1.15 MMT sugar worth Rs65 billion in 2018-19 and 1.1 MMT sugar worth Rs75 billion in 2019-2020, revealed the officials.

A special chapter focused on subsidy in this commission’s proposed report revealing 24 sugar mills in Punjab exclusively received Rs11.8 billion in freight subsidies from the federal and Punjab governments in 2017 and 2019 combined. Official data submitted to the commission probing the sugar crisis continued to disclose that nearly Rs9.4 billion was released in 2017—under the subsidy scheme on exports—by then prime minister Shahid Khaqan Abbasi and the then Punjab chief minister Shehbaz Sharif, notes data prepared by SBP for inquiry commission tasked with probing the recent hike in sugar prices.

The commission also focused on subsidy given by government of Sindh and role of Chief Minister Murad Ali Shah, first as Sindh finance minister in 2015 and then as chief minister in previous term has been discussed in details where some nine sugar mills owned by Omni Group remained major beneficiary of sugar subsidy which is around Rs8.4 billion in past five years, according to officials.

The SIC in its findings further observe that either the investigation would be further referred to NAB or it is up to the Prime Minister of Pakistan to decide in light of commission’s recommendations.

The commission was comprised of DG FIA Wajid Zia, head of the commission, SECP senior officer Bilal Rasool, DG Anti-Corruption Department Punjab Gohar Nafees, DDG IB Ahmad Kamal, Joint Director SBP Majid Chaudhry and DG Directorate General of Intelligence and Investigation FBR Dr Bashirullah Khan. The commission had 19 Terms of Reference with primary focus on to inquire reasons of hike in sugar prices out of sudden. The commission has also investigated whether the minimum support price of sugarcane was sufficient. The commission also probed market manipulation/ cartelisation by sugar mills and who are real beneficiaries of this increase. The commission members also inquired justification of sugar export along with the subsidy given on export and its impact and beneficiaries.