A roll call of scandal

April 12, 2020

PM Imran Khan’s decision to release the FIA inquiry report is likely to have serious implications for the ruling party

In a surprise move, the federal government on April 4 made public the findings of inquiries held to investigate the recent sugar and wheat crises in the country.

The two reports were released to the media on a directive issued by Prime Minister Imran Khan.

According to the reports, Pakistan Tehreek-i-Insaf (PTI) leader Jahangir Tareen, Federal Minister for Food Security Khusro Bakhtiar, Pakistan Muslim League-Quaid’s (PML-Q) Monis Elahi and their relatives benefited from the sugar crisis.

Both the general public and the politicos reacted strongly to the startling revelations about PTI leaders and allies, especially Tareen, who has been seen as the PM’s closest confidante and the most influential man in the ruling party.

Tareen, later, admitted in a televised interview that his relationship with the PM “has not been as cordial as it used to be”.

PM’s aide Shahbaz Gill next tweeted that Jahangir Tareen was no longer chairman of the Task Force on Agriculture. Tareen responded that he had never headed the taskforce in the first place. PM’s Spokesman Nadeem Afzal Chan then said that despite not holding any official position, Tareen had earlier been an integral part of the policymaking process, especially on issues related to agriculture. On many occasions, he recalled, Tareen had informed the media about forthcoming cabinet decisions.

PM Imran Khan’s decision to make the inquiry reports public seems to have salvaged his claim to being an upright leader. He later said that the government would take strict action against those involved in the wheat and sugar scandal after April 25, when the detailed reports are scheduled to be released.

Political ramifications from the report continued to be felt throughout the week, both in Lahore and Islamabad.

On April 6, the prime minister named Makhdoom Khusro Bakhtiar as the new economic affairs minister and Syed Fakhar Imam as minister for national food security and research.

Bakhtiar has replaced Hammad Azhar, who is now the minister for industries. The PM also removed his advisor on commerce, industry and investment, Abdul Razak Dawood, from his portfolio and from the Sugar Advisory Board.

Meanwhile, Food Secretary Hashim Popalzai was also removed from his post. In Punjab, Food Minister Samiullah Chaudhry tendered his resignation over his alleged role in the crises.

Tareen and other major stakeholders in the sugar industry have blamed an increase in the general sales tax (GST) for the price hike. However, the inquiry report, prepared under the supervision of Federal Investigation Agency (FIA) Director General Wajid Zia, rejected this claim. According to the inquiry report, retail prices of sugar went up from Rs 55 per kg to Rs 71 per kg between January and June, 2019.

During this period, the GST rate on sale of sugar remained unchanged at 8 percent for filers of income tax returns and 11 percent for non-filers. The GST rate was raised to 17 percent for the next financial year.

The inquiry report claimed that the government’s decision to allow sugar export was a major factor in the price hike.

JDW and JK Sugar Mills alone received Rs 561 million in government subsidy. Between them, RYK, Etihad and Two Star Sugar Mills received Rs 452.3 million.

In September 2018, the Sugar Advisory Board, headed by Abdul Razak Dawood, had allowed the export of 1 million tonnes of sugar.

This figure was later enhanced by 0.1million tonnes on the advice of the Ministry of National Food Security.

Asad Umer, the then finance minister, had refused to provide the subsidy on the exports. The All Pakistan Sugar Mills’ Association had then approached the Punjab government, saying that they would be unable to buy sugarcane from farmers if the subsidy was not provided.

Succumbing to their pressure, Chief Minister Usman Buzdar had eventually approved a subsidy package worth Rs 3 billion.

Tareen’s JDW Sugar Mills and JK (Colony-II) Sugar Mill received a major share of the subsidy - Rs 561.1 million (22.7 percent). RYK Mills, Etihad Sugar Mills and Two Star Industries owned by Khusro Bakhtiar’s brother, Makhdum Omer Sheryar, got Rs 452.3 million (18 percent). Monis Elahi and Chaudhry Munir too benefited as shareholders in sugar mills.

Ever since the release of the report, opposition parties have been demanding the resignation of Prime Minister Imran Khan and Chief Minister Usman Buzdar.

Special Assistant to the PM on Information and Broadcasting Dr Firdous Ashiq Awan has said that the decision to make the report public spoke of the PM’s resolve to punish those responsible for the price hike regardless of their political affiliation. “The subsidy to sugar mill owners was provided by the provincial governments of the Punjab and Sindh, not by the federal government,” she said.

“In 2017, the then prime minister Shahid Khaqan Abbasi had granted Rs 20 billion in subsidy to the sugar mills when Salman Shahbaz, son of then chief minister Shahbaz Sharif, met the PM with a delegation of the Sugar Mills’ Association and asked for the subsidy,” she said.“The Sindh government had also given subsidy to Omni Group’s sugar mills from 2014 to 2018 at the rate of Rs 20 per kg - a total of Rs 9 billion,” she said.

Special Assistant to Prime Minister on Accountability Shehzad Akbar said that FIA DG Wajid Zia and other members of the inquiry team had received threats from the sugar cartel. He also expressed his dissatisfaction with the performance of the Competition Commission of Pakistan which is mandated with checking cartelisation.

Pakistan Sugar Mills Association Chairman Aslam Farooq said that sugar prices had fallen from Rs 63 to Rs 55per kg in 2017 due to a bumper sugarcane crop that year.

“The provincial authorities estimated the per kg production cost to be Rs 63 last year. In 2018, the government had allowed the export of sugar because it desperately needed dollars to maintain the depleting foreign exchange reserves of the country. That was why it provided the subsidy,” he said.

The inquiry report on wheat crisis says that poor coordination between the federal government and the provinces had caused the flour crisis. The two-month delay in procurement of wheat by the governments of the Punjab and Sindh had resulted in the shortage of flour in the country. Khyber Pakhtunkhwa and Balochistan had also not informed the Punjab about their wheat requirements on time, the report said.

Political analysts believe that any action against Jahangir Tareen may ultimately damage the PTI as he has been instrumental in strengthening the party in the Punjab.

In the 2018 general elections, a majority of PTI members were issued tickets on Tareen’s recommendation. His departure can cause strong resentment among traditional politicians who joined the party on his assurances, the analysts say. Only time will tell whether the political gamble pays off for the ruling party or not.

The writer is a freelance journalist. He is based in Islamabad and can be reached at  hamzafarooq71@gmail.com

PM Imran's decision to make public FIA inquiry report may have consequences for PTI