Govt shares in Sapico sold unlawfully: PC seeks legal advice
By Khaleeq Kiani
ISLAMABAD, Feb 8: In a rare show of ignorance, the government is dumbfounded about the sale of its majority stakes in a Rs10 billion investment company that has been sold by its foreign partners to a consortium without formal clearance by the Council of Common Interests (CCI) and the Cabinet Committee on Privatisation (CCoP), it is learnt.
The information came to light when the Saudi-Pak Commercial Bank recently told the Karachi Stock Exchange that the Saudi-Pak Industrial and Agricultural Investment Company (Sapico) (Saudi-Pak) had reached an “agreement to sell their entire shareholding to the Bank Muscat, International Finance Corporation and Nomura European Investment Limited at Rs29.30 per share in terms of a share purchase agreement entered between them.”
Prominent banker Shaukat Tarin has been negotiating the deal on behalf of the consortium.
Based on this notice, a Lahore-based law firm, Khan & Associates, has put the Privatisation Commission (PC) on notice to stop the transaction as it was in violation of relevant law and the privatisation process.
Under Section 2 (1) of the Privatisation Ordinance, any property, right, interest, concession or management, thereof, has to be cleared by the CCI and CCoP. However, neither of the two ever considered or approved the sale of stakes in Sapico.
When contacted, Privatisation Secretary Ahmad Jawad confirmed that the Commission had received a legal notice and had sought opinion and advice on the subject from the relevant authorities.
Sources in the PC said technically and legally no government asset or interest could be sold without the approval of the CCI or the said cabinet committee, and apparently a “lapse” had taken place by omission or commission on the part of the government.
He said that the legal advice sought by the PC would determine whether or not a transaction that has already been completed could be rescinded and what could be its consequences.
A source quoted the example of minority shareholding, ranging between five and 10 per cent, in oil and gas fields that were privatised by the government a few years back through a proper sale process.
The transaction relating to Sapico involves government’s majority interest to the extent of 34 per cent which should not have taken place without CCI’s clearance.
Sapico had last month sold 68 per cent stakes of the Saudi-Pak Commercial Bank to an international consortium.
Under the agreement, the buyers paid a price of Rs29.30 per share for 340,154,091 shares for a total consideration of Rs9.967 billion ($163m).
“We proudly announce the sale of our controlling stakes in the Saudi-Pak Commercial Bank which represents another successful exit from an investment made by Sapico, generating a healthy return for our shareholders,” Sapico chief executive Rashid Zahir had announced early last month.
Sapico is a joint venture wholly owned by the governments of Pakistan and Saudi Arabia on equal sharing basis.
Out of Saudi-Pak Investment Company’s 68 per cent shareholding, the Government of Pakistan’s proportionate share in the ownership of Saudi-Pak Bank is 34 per cent.
“Clearly the (sale) transaction would be considered a privatisation within the scope of the privatisation ordinance with the result that the mandatory procedures laid down in the ordinance are required to be followed while carrying out the transaction to the extent of GoP’s 34 per cent shareholding in Saudi-Pak Bank,” the legal notice said.
The bank’s assets in 2006 were Rs63.8 billion while it has been operating with 50 branches across the country. The Saudi-Pak Industrial and Agricultural Company Limited has 59 per cent shares in the bank.
The consortium planned to acquire the rest of the shares through the market as well as from groups holding the shares.
