Pakistan’s federal government made the report of Sugar Forensic Commission public on Thursday that revealed the involvement of six sugar mills groups in cartel activities.
Information Minister Shibli Faraz and Special Assistant to the Prime Minister (SAPM) on Accountability Shehzad Akbar gave details to the media in the capital Islamabad about the Sugar Forensic Commission (SFC) constituted to investigate and assign responsibility for the sugar shortage and price hike of the commodity in the country in recent times, according to English newspaper, Daily Dawn.
“They hold 51 per cent of the total supply,”the officials told newsmen.
“A mill called Alliance from Rahim Yar Khan — partially owned by Pakistan Muslim League Quaid (PML-Q) senior leader Moonis Elahi — was audited. It showed that between 2014 to 2018, farmers faced an 11-14pc systematic cut, which translated into Rs970 million and was a huge blow to them,” Akbar said.
He added that the mill under-reported sugar sales “for years” and sold the commodity to unnamed buyers and had committed violations under the Pakistan Penal Code.
According to the newspaper, Daily Dawn, Akbar also mentioned the JDW sugar mill in which PTI stalwart Jahangir Tareen has a 21pc stake. He said according to the report, the mill committed “double booking, under-reporting and over-invoicing”.
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“The report noted that the mill [JDW] under-invoiced sales from bagasse and molasses which resulted in 25pc cost inflation. They also committed corporate fraud whereby money was transferred from their PLC to their private company.
“Forward sales, satta (speculation), unnamed sales have all been associated with JDW too.”
The Al Arabiya mill owned by Salman Shahbaz Sharif was also audited, the SAPM said, adding that it was found to have committed fraud worth Rs400m through informal receipts and market manipulation.
“Whenever a businessman comes into politics, he will always do business even at the expense of the poor. So his [PM’s] thinking has been validated. A certain business community has captured the market and as a result, people are suffering,” he said.
He added that the report will be available online shortly for anyone to read following the prime minister’s orders.
Akbar said that the report revealed that certain sugar mills also used informal receipts. “It was ultimately the farmer who was crushed because there was no official record. The mill owners showed the price of production as more than the support price which meant that farmers earned less.”
He added that mill owners also engaged in informal banking with the farmers, which hurt the latter because it was an unregulated process. “This gave the mill owners a profit of up to 35 per cent,” he said.
Akbar said it was the first time that an “independent inquiry” had been conducted into the cost of production. “In 2017-18, sugar mills determined the cost of production at Rs51 per kilo whereas the report gave an estimate of Rs38 instead,” he said.
“In 2018-19, sugar mills calculated cost price at Rs52.60 while the report gave an estimate of Rs40. [The sugar mill owners] purchased sugarcane at a lower price but showed a higher price in the invoices,” he said.
The SAPM said the report also pointed out that the sucrose content as shown by Pakistani mill owners (9.5pc to 10.5pc) was less than the international standard.
“There are two injustices — inflated cost of production and market manipulation — being done against the people,” he said, adding that accounting fraud was also being committed by these mills.
“The report also showed that mill owners are maintaining two account books. There is an under-reporting on sugar procurement of 25-30pc, which is an absolute scandal. Tax is not paid because of this.”
Akbar said the report also revealed that the Omni Group in Sindh had “specifically benefited” from the subsidies the Sindh government provided, adding that it “specifically named Sindh Chief Minister Murad Ali Shah”.
“Why did the chief minister give additional subsidies to the Omni Group when it was already getting subsidies from the federal government?” he questioned.
Not long after Akbar and Faraz ended their press conference, Tareen took to Twitter to responded to the report, saying he was “shocked at the false allegations” levelled against him.
He said “all Pakistan knows I always pay full price to my growers.”
“I do not maintain two sets of books. I pay all my taxes diligently,” he said, adding that he would “answer every allegation and be vindicated.”
Separately, Elahi also took to Twitter to comment on the report, saying: “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.”