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May 22, 2020

Forensic report blames sugar mills for irregularities

Top Story

May 22, 2020

ISLAMABAD: In a damning forensic report on the sugar crisis released on Thursday, the Sugar Inquiry Commission highlighted a host of irregularities in the sugar industry ranging from under- and double-reporting, over invoicing to tax evasion at the cost of farmers and consumers, and also institutional negligence and furnished recommendations ranging from institutional reforms to legal action.

The report blamed the sugar mills, a number of them owned by politicians or their relations, including the ruling Pakistan Tehrik-e-Insaf (PTI) leader Jahangir Tareen, Umar Shaharyar, the brother of federal minister Khusro Bakhtiar, and members of Shahbaz Sharif’s family for double accounts and other alleged malpractices.

The much-awaited forensic report was presented to the federal cabinet chaired by Prime Minister Imran Khan. The cabinet decided to immediately make the report public as promised by the Prime Minister earlier, said Shahzad Akbar, the Prime Minister’s Special Assistant on Accountability, at a joint news conference with Information Minister Shibli Faraz, here.

He said the sugar inquiry commission was set up because there had been a cycle of sugar price increases from December 2018 to August 2019, where prices were hiked up to 33 per cent, which, in rupee terms, translates to Rs17 per kilogramme. “In view of the rise in prices, the Premier set up a three-member inquiry committee under FIA DG Wajid Zia and which presented a detailed report to the Prime Minister, wherein problems associated with the sugar industry that were causing price hikes were highlighted,” Akbar said.

Spelling out the report’s findings, the PM’s accountability tsar told the media that sugar mills were provided Rs29 billion export subsidy in the last five years, but, he added, sugar mills paid only Rs10 billion net income tax. He said the mills earned Rs100 billion in windfall profits by market manipulation.

Akbar said the cabinet had sought a mechanism for the recovery of the stolen public money and reforms in regulatory system, besides calling for the forensic audit of more sugar mills. Akbar said the inquiry commission had suggested for sending cases to the Federal Investigation Agency, National Accountability Bureau and Anti-Corruption Establishment. The PM’s accountability tsar said he had been assigned the task to furnish recommendations. He said it would be seen which investigative institutions would be handed cases, as all data would be handed to investigative agencies for investigation. He further said recommendations for institutional reforms would be presented to the Prime Minister after Eidul Fitr. Information Minister Faraz also said the Prime Minister had sought recommendations for a strategy to bring reforms.

Giving details, he said Jahangir Tareen’s mill was allegedly found involved in double-reporting and over invoicing, while Shahbaz Sharif’s family’s mill was also reportedly caught committing double-reporting.

Answering a question, he said Khusro Bakhtiar had no shareholding in the sugar mill of his brother. However, he added, if something came up later then it would be seen.

Akbar said sugar mills inflated production cost, manipulated the market and 25 to 30 per cent under-reported procurement of sugar cane, ultimately making farmers and consumers suffer. He further said sugar mills were found involved in the unauthorised increase in sugar cane crushing capacity. He said all the mills had double accounting books.

He further revealed that discrepancies were found in exports to Afghanistan, which amounts to roughly 70 per cent of the country’s sugar exports, as the sugar export data held by both countries did not match.

The PM’s aide said it was found sugar mills offered very low price of sugarcane to farmers, and also deducted 15 to 30 per cent weight of sugarcane during procurement, and even some mills used ‘Katch Parchi’ (unofficial receipt) for payments to farmers, and declared higher cost of production. He said there was no independent assessment for the cost of one kilogramme of sugar which was the duty of regulators.

Akbar said there was cartelisation is the sugar industry and the report highlighted its adverse consequences which was regulator’s failure. He said the report revealed six major sugar mill groups were acting as cartels. He said they controlled 51 per cent of the supply. He said audit of a mill partially owned by Pakistan Muslim League-Quaid leader Moonis Elahi revealed farmers faced systematic deduction.

Akbar said the report found the Omni Group in Sindh had specially benefited from the subsidies provided by the provincial government.

Reacting to the report, PTI’s Jahangir Tareen rejected the allegations. Tareen twitted he was shocked at the “false allegations” against him. For his part, PML-N President Shahbaz Sharif said the report was “nothing but falsehood” and that the commission did not record the statement of the “real culprit Imran Khan”. Speaking in Geo News programme “Capital Talk”, he said “Imran Khan is behind the scandal”.

Reacting to the statement, Pakistan Muslim League-Quaid (PML-Q) leader Moonis Elahi, in a tweet, said: “As stated earlier I am not involved in the management nor am I on the board of any Sugar Mill. I strongly support the recommendation of commission to control satta/speculation including new legislation to help government control sugar price manipulation,” he said.

Sindh government’s spokesperson, Murtaza Wahab, said the report which Akbar presented was based on “false allegations”. “The inquiry commission had to probe the matters pertaining to the years 2019 and 2020,” Wahab said, adding: “2017 and 18 were not mentioned in the TORs or maybe they are trying to save some people.”