Sugar probe

May 27 2020

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THE government of Prime Minister Imran Khan is being commended for sharing with the public the findings of the FIA-led inquiry commission set up last month to conduct a forensic analysis of nine sugar companies to determine the reasons for an abrupt and steep surge in the domestic price of sugar during the winter. Even the alleged involvement of some key politicians — or their close relatives — linked to the PTI government and its allies at the centre and in Punjab did not deter Mr Khan from ordering a more thorough probe and making its conclusions public. Some would argue that the factional differences within the PTI might have led the government to release the report. The recent statements by Jahangir Khan Tareen — who bankrolled the PTI’s election campaign in 2018 and was a close adviser of Mr Khan — that he was being victimised by the bureaucracy have lent some support to this argument. But that does not detract from the report’s findings or the government’s bold act of making it public.

The investigation was ordered by the prime minister to expand on the report of an earlier inquiry into the matter with the promise of stringent action against those involved in what is one of most publicised scams in recent years. The commission has done a good job in documenting the way the sugar business is conducted in Pakistan at a huge cost to the national exchequer, taxpayers and unsuspecting consumers. It also highlights the way politically powerful sugar barons use their clout to manipulate the market and government policies to steal from poor sugarcane growers, cheat the taxman, and secure large subsidies and export rebates — all in the name of consumers. The government, for instance, has been paying mill owners a subsidy of Rs29bn against a personal income tax of Rs9bn paid by them to ensure their factories keep crushing cane and producing sugar every year. In order to cheat the government and evade taxes, they conduct their transactions on paper slips, cartelise to inflate the cost of production, maintain two sets of accounting records, over-invoice exports and under-report their output. Sadly, all regulatory institutions from cane commissioners to the FBR to SECP to the district administration collude with the sugar mafia in its illegal enterprise to let them make windfall profits.

The commission has failed to pin responsibility for letting the industry export sugar and claim substantial subsidy. The official argument is that the ECC allowed the export of ‘surplus’ sugar and Punjab announced a subsidy on it in the wake of farmers’ protest against the mill owners’ refusal to start the crushing season on the appointed date. It does not hold much water because it is the government’s job to implement the law and not crumble under pressure from vested interests. Those who cannot withstand such pressure will only be looked upon as having failed the people.

Published in Dawn, May 27th, 2020