May 25, 2006	Thursday	Rabi-us-Sani 26, 1427

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ISLAMABAD, May 24: The subcommittee of the Public Accounts Committee (PAC) here on Wednesday asked the Federal Investigation Agency (FIA) to present before it detailed findings of inquiry it had conducted into a multi-million rupees privatization scam during the second tenure of former prime minister Benazir Bhutto.

Investigations into the privatization of Spinning Machinery Company (SMC), Lahore, were shelved in its initial stages in 1994, reportedly on government’s directives, as it also involved the Privatization Commission (PC) headed by its chairman, Syed Naveed Qamar.

Headed by PPP MNA Chaudhry Qamaruz Zaman Kaira as convener and ruling party MNA Col (retired) Ghulam Rasool Sahi, the subcommittee met here at the Parliament House to investigate the issue of SMC privatization and the alleged involvement of the Privatization Commission for not including the price of 40 acres prime land in the evaluation of the company’s assets.

“This two liner summary stating that the FIA has closed the inquiry into SMC’s scam is not enough to satisfy the committee,” Mr Sahi observed.

“The FIA should bring before the PAC its detailed inquiry report so that I may clear my mind before reaching any conclusion on the issue,” Mr Kaira said.

While addressing the commission’s director-general, Javed Ali Khan, Mr Kaira observed that the Privatization Commission should remain alert for more inquiries in the near future as the PAC had reservations over its privatization policy, which, he said, protected the monopoly of few groups as it was evident in the case of Pakistan Steel.

He said it was the duty of the governments to break monopoly but the commission was rather encouraging it.

“We have serious reservations about the privatization of Pakistan Steel, but we are not supposed to discuss it in this meeting,” Mr Kaira said.

The subcommittee has also sought recommendations from the Cabinet Committee on Privatization (CCoP) and federal cabinet for approving the privatization of the SMC and holding the amount in no-trust bearing Privatization Commission account and later paying Rs6.153 million mark-up on the deposited amount of the successful bidder while refunding the money.

The highest bid of Rs75 million had come from Mian Mohammad Saleemullah and the letter of intent was issued to the bidder in August 1994. He deposited Rs30 million, 40 per cent of the bidding price in September 1994. But reports that the land cost in the sale price was not a part of the deal, not only stopped the deal from finalisation, but also made the FIA launch an investigation into the matter.

The deal was cancelled and the amount was refunded to the bidder with 16 per cent mark-up.

The Auditor General of Pakistan (AGP) is of the view that the deal was cancelled to save the involved persons from accountability, and that repayment of the bid money with mark-up was undue favour to the party as the money was kept in non- interest bearing accounts (PC fund account).

Syed Naveed Qamar had reportedly used his influence to stop the inquiry through Benazir Bhutto, the then prime minister.

Earlier, a representative of the National Development Finance Corporation (NDFC) informed the subcommittee that in 1981 NDFC had provided Rs130 million in loans to establish SMC to help the public sector’s fledgling textile industry.

The company was established to produce spindles required in the textile industry but could not succeed as the industry continued to import spindles.

The NDFC approached the court for recovery of the compound loans amounting to Rs1.48 billion in 2001 and the case was decided in its favour. The NDFC tried to recover the amount by called tenders in 2003.

No party submitted tenders and finally two companies, Arabian Sea and Pakistan Steel Mills, gave bids for Rs150 million and Rs160 million, respectively. The NDFC sold the SMC to Steel Mills, he added.

Javed Ali Khan, Privatization Commission director-general, insisted that the price of land was included in the evaluation process at the rate of 50 per cent of the market value despite the fact that the lease agreement had expired in 1993 and was not revised since the time of the company’s privatization.

He said the government picked up compounded liabilities of the company amounting to Rs460 million to make it a positive venture including the land value. He demanded that the National Accountability Bureau (NAB) should also be summoned to explain as to why it stopped the privatization process of SMC in 1994 only to be sold out at Rs160 million 10 years later causing more losses to the national exchequer.

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