In light of the sugar scam probe report, the federal government on Monday ordered relevant departments to launch formal investigations and where necessary take "penal, corrective and mitigating measures" against the "sugar cartel" implicated in the commission's report.
Adviser to the Prime Minister on Accountability and Interior Shahzad Akbar wrote letters to Competition Commission of Pakistan (CCP), Sindh chief secretary, Punjab chief secretary, State Bank of Pakistan (SBP), Federal Investigation Agency (FIA), Securities and Exchange Commission of Pakistan (SECP) and Federal Board of Revenue (FBR) to "undertake a comprehensive investigation" into the matter.
All recipients of the letters, barring the chief secretaries of Sindh and Punjab, have been directed to wrap up the investigation and submit a report to the federal government within 90 days.
In his letter to the CCP, Akbar highlighted that the sugar commission had conducted a forensic inquiry of nine mills and had found evidence of "cartelisation and anti-competitive practises" by mill owners as well as brokers "which led to hoarding" of stocks.
Furthermore, the letter said, the mill owners "orchestrated ex-mill and retail price manipulation through satta, abuse of dominant position by the sugar cartel and non-provision of sugar to the utility stores corporation".
Akbar directed the CCP to carry out an investigation to "determine the reasons, magnitude and inordinate delay in taking action against the sugar cartel despite earlier internal findings regarding cartelisation" and where mandated take "penal, corrective and mitigating measures".
He also directed the SBP to investigate offences committed by mill owners that have been mentioned in the report by the sugar commission, which include loan defaults, suspicious exports proceeds realisation, disbursement of subsidy to exporters "despite payment to cane growers below the support price and misappropriation of pledged sugar stocks".
Akbar also directed SECP and FIA to launch investigations into "instances of corporate fraud" that are detailed in the probe report of the sugar commission.
In a joint letter to the FIA director general and the SECP chairperson, the PM's adviser said that the inquiry commission had found instances of corporate fraud "through associated companies and inexplicable money transfers leading to money laundering".
Additionally, SECP has been told to "fix responsibility and take cognisance of the failure of external auditors/firms and also its own regulatory oversight mechanisms" in its reports.
In his letter to the FBR, Akbar said that the sugar inquiry commission had found instances of money laundering and sales and income tax fraud in their dealings. The sugar probe, Akbar said in his letter, found that mill owners had been involved in concealing business turnover by "over-invoicing, under invoicing, off the books activity and double book keeping etc".
The inquiry commission had also detected money laundering practices through benami transactions, as well as "financial jugglery like fake advances from customers".
Akbar also informed the Sindh and Punjab chief secretaries about the findings of the sugar inquiry commission including evidence of payments to cane growers that were under the support price.
Akbar further told the chief secretaries that instances of interest-based loans to growers by mill owners, consequent profits and "unauthorised enlargements" in crushing capabilities were also mentioned in the inquiry report. He noted that such practises were in "derogation of various provincial laws".
He noted that these offences were within the jurisdiction of the province's anti-corruption department and directed the chief secretaries to carry out an investigation to "unearth full spectrum of offences committed under the relevant provincial laws and take penal and corrective measures as per law".
Sugar probe report
The sugar inquiry commission, which was headed by FIA chief Wajid Zia and included officials from other institutions, was set up on the orders of Prime Minister Imran Khan to investigate the reasons behind the soaring price and shortage of the commodity in the country.
The commission's report, which was made public by the government in May, exposed multiple wrongdoings within the sugar industry and implicated key government and opposition political figures, including PTI leader Jahangir Tareen, PML-Q MNA Moonis Elahi, federal minister Khusro Bakhtiar and PML-N President Shahbaz Sharif's son.
The report detailed how over the years sugar mill owners had manipulated the market to make windfall profits amounting to billions of rupees, shedding light on the nexus between these owners and various government officials that led to unregulated practises bypassing laws and often exploiting the farmers.
It also revealed how the ‘sugar cartel’ comprising 88 mills had cheated sugarcane growers and consumers at every step starting from the procurement of cane, production of sugar, sale in the local market and export, all of which led to price hike of sugar as well as billions of rupees of tax evasion.