| September 8, 2002 | Sunday | Jamadi-us-Saani29,1423 |
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UBL privatization
PRESIDENT General Pervez Musharraf’s remarks during a BBC question-and-answer programme, broadcast on Friday night, have received extensive coverage in the media. The general answered questions from a selected audience on a number of issues of current concern. The president was characteristically frank in some of his replies, particularly on the question of the April referendum (which he admitted was not flawless). He reiterated his position on the role of the military as the deciding factor in the country’s politics, but there was no discussion on what gives the military the right to believe that it knows best. Gen Musharraf pointed out, correctly, that on several occasions in the past, politicians themselves had approached the chief of the army staff to intervene, leaving the chief with the choice of either keeping quiet or taking over the government. A few days ago, Gen Musharraf had said that he must have been called to the prime minister’s house at least a hundred times when he was COAS to sort out political issues. Such instances are cited as a reason for the creation of a National Security Council that will formalize the army’s role in the governance of the country.
Gen Musharraf should be the first to admit that if he was repeatedly called to the prime minister’s house, that was wrong. Similarly, if army chiefs were asked by politicians to intervene, that too was wrong. If it is wrong to involve the military in politics, which is what the general seems to be suggesting, then there is no rationale for institutionalizing something that is wrong and incompatible with the working and evolution of a democratic system of government. It is difficult to understand how the acts of omission or commission of individual politicians can provide a justification for the suspension of the entire political process. It can even be argued that it is a succession of military interventions since 1958 — two of them lasting more than a decade each and initiating arbitrary and far-reaching changes in the country’s systems and institutions — that has led to distortions in our political system and weakened democratic institutions. What compelled Ayub Khan to take over? There was political skullduggery and a lot of confusion no doubt, but we were then just 11 years old as a nation and were scheduled to hold our first general elections four months later. In spite of confused groping and blundering in certain situations, we could have surely worked our way to a stabler system like other democracies if the process had not been rudely interrupted by an ambitious and self-styled field marshal. Then, what was the reason which made Ayub Khan violate his own constitution and hand over power, not to the speaker of the National Assembly, but to Gen Yahya Khan in 1969? What made Ziaul Haq stage his coup in 1977 when an agreement had been reached between the prime minister and the opposition on the holding of fresh elections?
Gen Musharraf will find it very hard to justify these Bonapartist moves on the basis of the simple proposition that army chiefs were left with no choice but to step in and run the country. Nor is it easy to explain why military rulers have not stopped short at acting as referees but, believing themselves to be more knowing than elected representatives, have gone ahead and tried their hand at extensive political engineering, with results that are there for us to mourn and pay a price for. Admittedly, the blame for the existing situation is to be shared by many, including a section of erring, self-serving politicians. There are also historical factors, not least the strategic considerations created by India’s Pakistan policy, that have led to a position of dominance for our armed forces in our political life. But rather than accepting this dominance as inevitable or as a virtue, we should be seeking ways in which we can end it, so that we can ensure the supremacy of elected, civilian government.
THE Privatization Commission may claim credit for its success in selling off the United Bank Limited to a private consortium for a price Rs 350 million higher than what was offered in the first round of bidding. But the way it happened raises doubts about the method adopted by the Commission in handling the process. Indeed, the whole episode has left a bad taste in the mouth because of the way the Muslim Commercial Bank group, the winner of the first round of the bidding, was first made to match an undisclosed reserve price and when the group met that condition, the whole bidding process was reopened to accommodate the two losers in the first bidding. Of course, under the terms of bidding, the government had the right to reopen the bidding at any time and accept or reject any offer without assigning any reason. On the face of it, the government seems to be within its legal right to reopen the bid. But a legal right acquired through self-made rules does not make it morally justifiable. The PC should not have asked the MCB to match the undisclosed reserve price when it had fallen short of it in the first bidding by almost three billion rupees. Instead, the PC should have cancelled the bidding and called for fresh offers.
The open auction system adopted for the final bidding was also not in line with the originally agreed method for privatizing the bank. Resort to negotiations with the highest bidders in such cases gives rise to suspicion and speculation both of which are contrary to the requirement of transparency. Also, in such transactions the government should never arm itself with the prerogative to reject any offer without assigning any reason. This too impinges on the transparency principle. If an offer is being rejected for any reason other than its not being the highest, the government should explain the reason for public knowledge in order to avoid any unnecessary speculation as to the appropriateness of the method involved or any departure from the established practice that may have been warranted by valid considerations.
The group which has now bought the UBL is foreign-based. While one should welcome foreign investment with an open mind, one would certainly like at least the national banking sector to be owned wholly by domestic investors for obvious reasons. Bank Alfalah is an Abu Dhabi-based group, while its partner, the sponsors of Bestway Holdings Ltd., is a UK-based Pakistani group. One only hopes that the two would bring in as much investment and specialised banking practices to Pakistan as is possible and ensure against any move to siphon off UBL’s assets through repatriation of profits. In fact, one would expect the group to repatriate to Pakistan the profits it would be making through the foreign branches of the UBL. overseas networks of Pakistani banks have acquired a new pull for depositors in the insecure political and economic environment prevailing in the US and Europe following the 9/11 events. Overseas Pakistanis now find it increasingly safer to keep their life’s savings in the branches of Pakistan-based banks.