Sugar crisis probe report leaves ruling alliance red-faced

Updated April 05, 2020

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Reports say the exporters gained benefit in two ways — first they were able to gain subsidy and second they made profit from increasing sugar prices in the local market. — Dawn/File
Reports say the exporters gained benefit in two ways — first they were able to gain subsidy and second they made profit from increasing sugar prices in the local market. — Dawn/File

• Inquiry reports on sugar, wheat shortages made public on PM’s directives
• Tareen, Khusro, Monis among beneficiaries
• PML-N’s Chaudhry Munir, Omni Group also named

ISLAMABAD: Two much-awaited reports on the recent sugar and wheat crises in the country were made public on Saturday, exposing ruling Pakistan Tehreek-i-Insaf’s bigwig Jahangir Tareen and allied parties’ leaders federal Minister for Food Security Khusro Bakhtiar, Monis Elahi of PML-Q or their relatives as being involved in the scam.

The reports were made public on the directives of Prime Minister Imran Khan who, according to Special Assistant on Accountability Mirza Shahzad Akbar, had ordered stern action against those found involved in the crises 'irrespective of their status and party affiliation’.

The inquiry committee, headed by Federal Investigation Agency (FIA) director general Wajid Zia, had prepared the reports. One is about the sugar crisis, its high prices and the subsidy obtained by sugar barons during last year in particular and past four years in general.

In the second report, the reasons and persons behind the wheat or wheat flour crisis have been exposed. As soon as the reports were presented to the prime minister on Saturday, he issued orders to make them public.

“The prime minister was of the view that he had promised the nation that he will make the reports public so the time has come to fulfil that promise,” Mr Akbar said.

Meanwhile, a source told Dawn that the prime minister and members of the inquiry commission had been 'threatened with dire consequences if the reports were made public’.

The report on sugar revealed that two main groups had obtained maximum benefit during the crisis; one of the groups JWD belonging to Mr Tareen, which has six sugar mills, obtained 12.28 per cent of the total export subsidy amounting to Rs3.058 billion during 2015-18. Makhdoom Syed Ahmed Mehmood is a partner in this group.

The prime minister saw the report and was pleased to observe that the inquiry committee had probed the export and related subsidy for the year 2018-19. The report reveals that in the past few years the production of sugar was historically more than the local requirement, therefore it is imperative to probe and include this aspect related to export of sugar including any subsidy given, its impact on local sugar prices and eventually major beneficiaries of such export subsidies, if any.

According to the document, the production of sugar in 2016-17 and 2017-18 was more than the estimated domestic consumption, hence it was exported. The estimated domestic consumption of Pakistan is around 5.2 million metric tonnes (mmt) per year. In 2016-17, Pakistan had a record 7.08mmt production of sugar while the production in 2017-18 was 6.63mmt.

The other group, identified as RYK group, has four sugar mills owned by Makhdoom Umar Shehryar [a relative of federal minister Khusro Bakhtiar], Chaudhry Munir of the opposition PML-N and Monis Elahi of PML-Q, which is part of the ruling coalition. Among them, they availed of a total of 15.83pc export subsidy, amounting to Rs3.944bn during 2015-18.

The report said that during 2018-19, Mr Tareen’s companies exported 17.24pc of the total production of sugar and availed of 22.71pc of total export subsidy, amounting to Rs561million while companies in the RYK group obtained the export subsidy of Rs452m last year.

The inquiry committee found that the export of sugar was not justified as sugarcane production was expected to be low in harvesting season 2018-19 and with the export of sugar in Jan 2019, the prices of sugar sharply increased.

It said the exporters gained benefit in two ways — first they were able to gain subsidy and second they made profit from increasing sugar prices in the local market [the price increased from Rs55 per kg in December 2018 to Rs71.44 in June 2019, although the GST increase was implemented from July 2019].

It said that no government, except Punjab’s, provided the subsidy and financial layout of subsidy was Rs3bn.

The committee observed that the Sugar Advisory Board failed to take timely decision to ban the export of sugar.

The companies owned by Shahmim Ahmed Khan exported 29.60pc of total production and got the export subsidy of Rs406m last year.

According to the report, Omni Group, which owned eight sugar mills, obtained export subsidy of Rs901m during the last four years. Omni Group, is also facing a money laundering case along with PPP leaders Asif Ali Zardari and Bilawal Bhutto-Zardari.

Defence and criticism

Meanwhile, Mr Bakhtiar said in a statement that: “It is a well documented fact that I have always maintained a distance and refrained from attending ECC [Economic Coordination Committee] meetings related to any sugar related decisions due to any perceived potential conflict of interest.”

Besides, Monis Elahi, a senior leader of the Pakistan Muslim League-Q (PML-Q) and MNA, welcomed the inquiry report on sugar crisis.

In a late-night statement issued in Lahore, Mr Elahi pointed out that he indirectly held shares of the RYK sugar mills since he was not involved with the management of the company.

He said that as shown in the report the RYK sugar mills had only 3.14pc share in the national export of the commodity.

While welcoming the report, he expressed the hope that people would quote this report truthfully and responsibly.

Published in Dawn, April 5th, 2020