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Fathoming wealth of the rich

December 26, 2011

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THE “Occupy Wall Street” protest, starting out in the heart of America’s financial centre — the stock exchange on Wall Street — appears to have, all but collapsed. The movement was mobilised on the attractive slogan of fair share for 99 per cent dispossessed, against one per cent of the elite class that commands all the wealth and power. Yet, for the Americans it is easy to count the assets of the wealthiest citizens that mirror in various unchallenged documents.

The Forbes magazine’s list of billionaires is one such source. It measures the wealth of individuals by their stakes in corporate America, which is why, the phenomenal price of stock in Microsoft makes Bill Gates the richest man in the world and the share in Berkshire Hathaway—the most expensive stock on the Wall Street - leads its founder Warren Buffet to closely follow on the heels of Gates.

Even the richest Indian, Mukaish Ambani is able to build his billion dollars worth house in Mumbai, drawing his wealth from the exceptional growth in the value of his controlling stake in the largest Indian public listed company, the Reliance Industries.

However, no one in Pakistan can name, with absolute confidence, the richest tycoon. One man in the business from insurance to textiles is thought to hold that top slot, but to figure out his total assets would be a risky task. An authentic list of the richest Pakistanis is almost impossible to make.

It is difficult to count the assets of sponsors and corporate heads in companies listed and traded at the Karachi Stock Exchange, because many do not identify the major stakeholder, who is replaced by a proxy—a family member of a ‘benami’. Yet the stakes in the aggregate 638 listed companies on KSE may be only the tip of an iceberg.

Listed companies account for no more than one per cent of over 60,000 companies that are registered with the Securities and Exchange Commission of Pakistan, the corporate watchdog. And then there is the fiercely huge unorganised, unregistered, untaxed economy.The enterprising wealthiest countrymen spread out their wealth, from agriculture to industry to real estate, in both the organised and the unorganised sectors.

Invisible to the public view are the assets of major owners of privately held industries in such lucrative sectors as cellular companies, information technology, oil and gas exploration, fuel and energy, fertilisers, pesticides, pharmaceuticals, communication, services sector, food and beverages, transport, tourism, stock broking and real estate.

With no foolproof system to measure the amount of money that people command, even the Parliamentarians — mainly the big land owners and rich feudals, submit, their wealth statements under solemn oath, that shows them as no more than paupers.

Fast backward to April 21, 1968. The late Dr Mahbubul Haq, the then Chief Economist of the Planning Commission, first sifted the few rich and mighty families from the commanding number of poor in Pakistan. Dr Haq identified Pakistan’s 22 richest families that, according to his calculations, controlled 66 per cent of the industries and owned 87 per cent share in the country’s banking and insurance industry.

Dr Haq placed Adamjees on the third slot after the Dawood and Saigols. Among the other rich and mighty, he identified the following financial/industrial groups: Colony, Fancy, Valika, Jalil, Bawany, Crescent, Wazir Ali, Gandhara, Ispahani, Habib, Khyber, Nishat, Beco, Gul Ahmed, Arag, Hafiz, Karim, Millwala and Dada. And the big families went into big businesses in which they could summon the greatest expertise. The 22 rich and the mighty had flourished during the Ayubian era, only to be swept away by the wave of nationalisation that followed Z. A. Bhutto’s coming into power and loss of East Pakistan.

A veteran industrialist recalls that in the six years of his rule, Z. A. Bhutto nationalised as many as 31 key industries, 13 banks, 12 insurance companies, 10 shipping companies and two petroleum companies. Out of those, at least two dozen industries and almost all banks and insurance companies belonged to the 22 families. Some of those 22 have a record of surviving winds and storms that lashed across the corporate world.

Those who were unable to withstand the onslaught were cast into dustbin of history. The countable extraordinary huge fortunes of Fancy, Valika, Beco, Arag, Millwala, Khyber and Hyesons groups have vanished.

A friend often refers to the Chinese proverb that says: “Great fortunes do not see third generation.” The financial empires usually see disintegration and eventual collapse due to feuds on inheritances among third generation ‘cousins’.

A comparatively recent example is that of ‘Hyundai’. Founded by a peasant’s son Chung Ju-Young, the world renowned South Korean conglomerate, was destroyed on succession battles between his sons, even before the old man had gone (in the second generation).

A scion of one of the 22 families pointed out by Dr Mahbubul Haq back in 1968, now lives a quiet life in one floor of his family home in Karachi. Asked not to be named, he conceded that groups that were unable to escape the natural divisions and disintegration that follows one generation after another, faded into history. He says that the ravages of time sees grandsons and granddaughters of those who once hanged out at the then Karachi’s famous hotel ‘Columbus’—owned by the Dossa family, and drive around in sparkling ‘Chevrolets’ (the best car of the time) now toil quietly at nine to five jobs in the US and Canada.

But if nature abhors vacuum, it is nowhere more true than in case of Pakistan’s business, economic and financial world. As most of the old guards of communities (Khojas, Memons and Bohras) who had sown the seeds of business and finance in Pakistan, packed up of what could be salvaged of their wealth and migrated mainly to US, Canada and Africa, the top slots were quickly filled up by the new breed of largely unidentifiable class, who had amassed the multi-billions.

There is a perception (of the dispossessed of course) that much of the cash of the rich class is stashed away in foreign lands, the best known among them—the Swiss banks. That is not to say that all the assets of all visibly rich in Pakistan are an ill-gotten wealth. Many have worked hard and in the process made big fortunes for themselves and at the same time contributed to the country’s economy, to render it less poor.