Last week, the Lahore High Court stopped relocation of the three sugar mills owned by Nawaz Sharif and his family from the central districts to the cotton-growing southern regions of Punjab.
Throwing out intra-court appeals challenging the 2016 single-bench decision against the relocation of Chaudhry Sugar Mills, Haseeb Waqas Sugar Mills and Ittefaq Sugar Mills, a division bench declared the attempt to shift the factories as illegal and ordered the appellants to move them back to their original sites within three months.
The relocation attempt was challenged in the high court by their business competitors, including Jahangir Tareen, one of Pakistan Tehreek-i-Insaf’s top leaders and a sugar producer himself.
He pleaded that the Sharifs had established new factories despite a ban on the establishment of new and expansion of old sugar companies in Punjab. The ban was imposed in 2006 under the Punjab Industries (Control on Establishment and Enlargement) Ordinance of 1963 in view of the excess crushing capacity in the province.
The ordinance is meant to ensure organised and planned industrial growth in the province.
The relocation underscores the old strong relationship between politics and business, and emphasises the manner in which policies and regulations are changed to maximise private profits — often at the expense of the common people and taxpayers.
The relocation of Sharif family’s sugar mills to south Punjab shows how wealthy businesses, backed by political patronage, flout the law
It also highlights how wealthy businesses, backed by political patronage, show a complete disregard for the rule of law as the three firms continued the construction of factories at new sites in spite of court orders to stop work.
“This is the bleakest aspect of the case, which tells tales of how court orders have been repeatedly flouted and (the) rule of law trampled upon by the appellants,” the judgment notes.
The case proceedings reveal that the family of the former prime minister, who was disqualified by the apex court in the Panama Papers case and is now facing charges of corruption and graft, didn’t bother to seek the provincial government’s permission for relocating their factories despite the 2006 ban, arguing it did not cover the relocation of an existing factory.
Nor did owners consider it necessary to obtain the requisite Environmental Impact Assessment (EIA) under the Punjab Environmental Protection Act of 1997.
In fact, the government of Chief Minister Shahbaz Sharif issued a ‘relocation notification’ under the 1963 ordinance in December 2015, quietly giving legal cover to, and allowing the relocation of, the existing factories from one place in the province to another, allegedly to rescue his family business from the difficult and untenable position in court.
Nonetheless, the single-judge bench hearing the case suspended the notification a month after its issuance and before the Sharif family companies could use it for their benefit.
The lawyer representing the provincial government in the case defended the issuance of the notification, claiming it was a bona fide exercise, catered to the economic exigencies of the time and was geared towards alleviating the faltering financial condition of the sugar mills in central Punjab.
But the division bench comprising Chief Justice Mansoor Ali Shah and Justice Shujaat Ali Khan expanded the court’s view on the relocation notification and ruled that it was beyond the scope of the 1963 ordinance, and the relocation of the factories was not different from setting up new sugar mills.
At the same time, the two judges observed that in case of a change in circumstances — for example, ecology, economics or environment — the government is free to reconsider the ban if so advised.
They also clarified that in the future if a sugar mill wished to relocate from one area to another in the province it could apply for permission under the ordinance if there was no ban on the establishment of new sugar mills.
“The nexus between politics and business is neither unique to Pakistan nor limited to the sugar business alone — though it is hard to distinguish between a politician and a sugar producer here because the majority of the factories are owned or co-owned by politicians or their relatives and in certain cases their ‘friends’,” a Karachi-based sugar industry analyst argues.
“Every business lobby has a right to push (with the politicians) for its growth and expansion. But the job of the politicians is to avoid a conflict of interest and frame policies for the long-term collective good of the industry, the economy and the people, and not for individual companies or for their personal profit as appeared to be the case in the Sharif family’s sugar mills relocation instance.”
Published in Dawn, The Business and Finance Weekly, September 18th, 2017