ISLAMABAD, June 19: The Supreme Court on Monday wondered whether someone else behind the scene was sponsoring the Al Tuwairqi Group, a member of the three-party consortium which bid for the Pakistan Steel Mills.
“I may tell you that probably someone else behind the scene is a ‘kafil’ (sponsor) in the Saudi Al Tuwairqi Group,” Chief Justice Iftikhar Mohammad Chaudhry observed while leading a nine-member bench hearing petitions challenging the sale of the mills.
On the court’s query, Advocate Kazim Hassan, representing bidders in the absence of Khalid Anwar, told the bench that the Russian Magnitogorsk, also a part of the consortium, neither was incorporated nor had any office in Pakistan.
He explained that the consortium comprising the Magnitogorsk, Al Tuwairqi and Arif Habib Securities was guarantor in the agreement signed after the privatisation of the steel mills. However he kept silent when asked who was representing the PSMC SPV Mauritius, a joint venture company of ATG Holdings and MMK Holdings.
This meant that nobody was holding brief for the PSMC SPV Mauritius, the CJ observed.
The PSMC SPV Mauritius is the fourth company which has been mentioned as a lead buyer of the steel mills in the final agreement.
Advocate Abdul Hafeez Pirzada, the counsel for the federal government, however, explained that the PSMC SPV Mauritius was an off-shore company and a share holder in Pakistan. The company owned 80 per cent of the 75 per cent shares purchased by the three-party consortium, he said. The Russian company held 100 per cent shares of MMK Holdings, while Al Tuwairqi was 100 per cent share holder of ATG Holdings, he explained.
They had done it for taxation purposes, Advocate Pirzada said.
Whether off-shore companies were admissible under Pakistani laws and were they in consonance with the Companies Ordinance, the CJ inquired, adding that the court had no grudge against them but it was concerned whether it would be possible to get hold of them if some litigation started. This also became an important question when the agreement after the privatisation was signed between the government of Pakistan, the PSMC PVT Mauritius and Arif Habib, he observed.
It was acceptable under Pakistani laws, Advocate Pirzada replied, citing examples of Hubco and Container Terminal, owned by off-shore companies.
Local laws never restricted outsiders from buying shares in the country, even the government of Pakistan owned shares in companies all over the world, he said, but he did not mention any specific case.
The CJ mentioned that the agreement was silent on the guarantee that the bidders would bring investment to expand and raise the capacity of the mills and asked whether the privatisation commission had sought such a pledge from them.
Mr Pirzada read out a summary of a PC board meeting and said the City Global Group, the financial adviser, had evaluated the PSM’s worth at Rs17.43 per share.
At this the CJ observed that the cabinet committee on privatization had accepted less value at Rs16.8 per share despite the recommendation of the financial adviser.
The CJ asked why extraordinary measures were taken as the privatisation minister told the National Assembly that the letter of acceptance was issued on the bidding day and the CCOP’s meeting was not held to save the expenditure on air tickets for bringing its members to Islamabad.
While concluding his arguments, Mr Pirzada requested the court to consider the case very carefully in totality, saying that Pakistan was not at a comfortable position in the world and privatisation was needed for the betterment of the country. He said the courts should not jeopardise and shake the faith of the world for ever.
