Unfinished business

December 22, 2013

Unfinished business

When Rizwan Ahmed Masawal, an employee of Pakistan Tourism Development Corporation since 1992, moved to Rawalpindi from his hometown Attock a decade ago, he rented a house in the city’s high-end neighbourhood. He thought "the best thing about public sector employment was job security and getting salary on time every month," he says, adding PTDC was one of the better paymasters in the public sector. He basically felt secure working for the Corporation.

Life treated him well till the passing of the 18th amendment -- when PTDC, along with its subsidiaries, was placed under the Ministry of Inter-Provincial Coordination (IPC) to ensure a smooth transition of power to the provinces.

But, caught in the midst of a bureaucratic tussle, the Corporation’s transfer to the provinces is yet to see the light of day. The federation says though provinces agree to take charge of the physical assets, they refuse to accept the liabilities and employees. The provinces, on the other hand, accuse the federation for creating hurdles in way of easy transfer of power.

As a consequence, the PTDC employees seem to be suffering the brunt of this federation-provinces scuffle.

Masawal is one of 450 regular employees of PTDC who have not been paid their salary for the past 15 months. He has been forced to leave his house since he has not paid rent. Presently, he is living with his family in his uncle’s house in Rawalpindi. Though, he has managed to pay the tuition fee of his son, he says, "Life is tough. I have a serious kidney infection. I got a kidney transplant with the help of my relatives. I spend Rs30,000 to 35,000 every month on medicine. If something happens to me my family will hold the government responsible for it," he says.

PTDC was incorporated on March 30, 1970 under the repealed Companies Act 1913 (now the Companies Ordinance 1984) as a Public Corporation Limited by shares. It has share holders both from private and public sector. However, under the Benazir Employees Empowerment Scheme, 12 per cent shares of PTDC and its subsidiaries were transferred to its employees. Under the rules of the Companies Act 1984, assets of PTDC can be handed over to provinces only after hiring a liquidator to evaluate the market price of all motels and resorts -- and paying the liabilities.

In April 2011, the PPP government appointed Shahjahan Khaitran as managing director of PTDC and issued an ad, seeking the appointment of a liquidator to evaluate the market value of PTDC motels, resorts and liabilities. But, the top management of PTDC not only managed to stop the process, it also violated the Implementation Commission’s directives -- that "devolving ministries/divisions shall not create liabilities including manpower or dilute their assets."

Despite restrictions on ban on recruitment, PTDC hired 705 new employees.

The finance ministry also imposed a ban on recruitment in PTDC in a letter dated March 18, 2010 -- which the PTDC management violated blatantly.

A special audit of PTDC completed and submitted on October 7, 2013 termed the new appointments illegal. It stated that these appointments caused a loss of Rs29.160 million to PTDC in the first two months of their hiring in shape of salaries. "This unlawful act further resulted in creation of future liability of Rs131.219 million on PTDC," reads the special audit report.

The financial affairs of PTDC are rather sad -- by June 2010, the accumulated losses incurred by PTDC had crossed Rs300 million.

The special audit report has proved 24 allegations of corruption and illegal activities in PTDC. National Accountability Bureau (NAB) is investigating charges against PTDC officials allegedly involved in financial mismanagement, illegal recruitment and illegal leasing of PTDC properties.

PTDC Employees’ Union President Majid Yaqoob Awan tells TNS that total liabilities of PTDC, including salaries and other benefits of 450 regular employees amount to Rs970 million. "Whatever grant PTDC received from the government was distributed among 705 employees," he says, adding that the 18th amendment safeguards the fate of employees and without covering the liabilities of employees PTDC cannot be devolved.

PTDC owns and operates 40 motels and facilities, totalling more than 700 rooms in areas where the private sector would not invest. "Despite higher operational costs and short operational period of three to four months a year due to extreme cold weather, PTDC was a profitable entity before 2002 when tourist activities got disrupted due to law and order," Awan says.

According to him, the courts have restrained the devolution of PTDC unless salaries, legal benefits and protection of service is paid or assured.

Awan’s Union has set up a protest camp in Islamabad and claim that most of the newly appointed employees paid handsome amounts to agents of ex-MD to get jobs.

"They will have to either return the money we paid as bribery or consider us as part of PTDC employees," warns Riaz Ahmed from Sindh who was appointed as Assistant Tourism Officer in January 2012 after paying Rs1.4 million to an agent.

A senior official of PTDC tells TNS that PTDC Board of Directors has held three meetings since April this year to resolve the issue. According to him, in its 76th meeting in April 2013, the Board approved liquidation and winding up of PTDC and decided to appoint a liquidator. "However, during its 77th meeting the Board in May 2013 realised that the process of liquidation under the Companies Ordinance 1984 could take a minimum of 18 months. So, it was decided that assets and employees may be transferred to provinces, as a first step towards devolution. But employees went to court against the decision which gave a stay order on the issue," he says.

Ahmed adds that during the 78th meeting of the Board in October 2013, it was decided that the evaluation of the assets on market rates should be carried out within 30 days after establishing asset-liability perspective at the juncture of transfer. "The meeting also approved right-sizing in PTDC. It also decided that employees and assets would be transferred to the four provinces and Gilgit-Baltistan after payments of pending salaries," he says.

PTDC-owned 25 motels and 1 restaurant are included in the privatisation list.

Mian Riaz Pirzada, Federal Minster IPC and Chairman Board of Directors of PTDC agrees that the situation is complicated. "We will pay liabilities and dues of PTDC employees before their transfer to provinces along with management of PTDC properties," he says.

Pirzada adds that around Rs26 million per month is required to pay salaries, whereas the non-development grant available is only Rs6.6 million per month. "The pending liabilities of the employees have crossed Rs930 million," he says, adding, the ministry of IPC has requested the government to sanction a one-time special grant of Rs930 million to clear the liabilities of employees before their transfer the province or approve the sale or mortgage of PTDC properties located in Islamabad to clear liabilities and salaries of the employees.

Salman Javed, ex-MD PTDC, criticises the 18th amendment and says, "There is no central entity in country for promotion and publicity of tourism. World Travel Mart was held in London recently, where all the countries set up stalls except Pakistan.

For him, the best solution is to auction the PTDC assets and clear the liabilities -- and then divide them among the shareholders according to their share.

Unfinished business