ISLAMABAD, Aug 8: The Supreme Court on Tuesday held that the entire disinvestment process of the Pakistan Steel Mills reflected an ‘indecent’ haste, ignoring profitability aspect and assets of the mills by the financial adviser before its evaluation.
The transaction was the outcome of a process reflecting violation of law and gross irregularities, said the 80-page judgment in the PSM case.
On June 23, a nine-member bench of the Supreme Court had annulled the sale of the country’s largest industrial unit to a three-party consortium and had directed the government to refer the matter to the Council of Common Interests within six weeks. It had declared the $362 million transaction with the Russian-Saudi-Pakistan investors as null and void.
Authored by Chief Justice of Pakistan Justice Iftikhar Mohammad Chaudhry, the judgment said the entire exercise reflected an indecent haste by the Privatisation Commission (PC) and the Cabinet Committee on Privatisation (CCOP).
The PC had processed the March 30 final report of the financial adviser the same day and a meeting of the PC board and a summary had also been prepared the same day when a six-week time was mandatory to examine and fix a fair reference price for approval by the CCOP.
The financial adviser’s belated submission, just 24 hours before the bidding date, had deprived the PC and the CCOP to assess the report independently.
The verdict said the CCOP had considered the summary on March 31, fixed a reference price and authorised the PC to approve the highest bid.
“This unexplained haste caste reasonable doubt on the transparency of the whole exercise and reflects CCOP’s disregard towards mandatory rules and materials, essential for arriving at a fair reference price,” it maintained.
Besides, the cabinet committee had ignored the board’s proposal that the mill’s net assets should be included while valuing the project.
The board had proposed to value the share of the mill at Rs17.43 but it was reduced to Rs16.18 without assigning any reason, the verdict said.
The verdict said that keeping in view the annual net profit of the mill, its shares’ value should have been ascertained by offering 10 per cent equity of the mills on the stock exchange.
The value of inventories, it was admitted before the court, was not less than Rs12 billion, and Rs1 billion excess tax was also to be refunded to the bidder.
About the Arif Habib Group of Companies, the verdict said the PC knew that one member of the three-party consortium was facing allegations of involvement in the Karachi Stock Exchange crash and pending Rs18.2 billion damages suits.
It said the PC should have considered this before declaring Arif Habib qualified, adding a person involved in litigation and against whom a report had been issued publicly by a task force should not have been considered for handling affairs of the steel mills.
Besides, the bidders were different from the purchasers, the judgement noted, adding that names of the purchasers shown in the April 24 agreement had not been approved by the CCOP.
In the agreement, the holding period had been fixed three years, meaning thereby that after that there was no guarantee that the actual purchaser would not sell the shares of the industry against Pakistan’s interest.
“A constitutional court would be failing in its duty if it does not interfere to rectify the wrong, more so when valuable assets of the nation are at stake,” the judgment said.
