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Monday, April 15, 2024

The great plunders in the name of privatization

The greatest plunder that broke the back of the economy was carried out in the 1990s when public sector companies were sold at a value that was contested by many and the then Finance Minister kept defending the value that was much lesser than the assessed value by professionals.

The greatest plunder that broke the back of the economy was carried out in the 1990s when public sector companies were sold at a value that was contested by many and the then Finance Minister kept defending the value that was much lesser than the assessed value by professionals.

Pasrur Sugar mill was sold at Rs. 1 only in 1985 to one Shaikh Saleem who agreed to pay off Rs.200 Millions of liabilities of the mill. The dollar rate was Rs. 14 then. The new owner never paid that liability till the next 15 years while Privatization Commission must come up public regarding those dues. As such that liability accrued to the government in overall liabilities. Adding salt to the wound was the fact that the same Shaikh Saleem was also made Chairman of PIDB (Punjab Industrial Development Board) which used to manage the industries and what favors he might have extended to his circle, one can imagine.

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As per book written by Shahid  Rahman titled “Who owns Pakistan”,  48 companies sold in UK under Margaret Thatcher fetched US$ 100 Billion to the UK treasury while 88 companies including banks and cement factories were sold in Pakistan and the country got mere half a Billion US$. The writer went on to write that “Assets were transferred to buyers and liabilities transferred to people of Pakistan”, the same has now bulged into a huge tumor in the form of accumulated liabilities for successive governments.

The key deal

MCB bank was sold within a couple of months to the third highest bidder though the 2nd highest bidder M/s Adamjee group was also the previous owner of this bank and under law should have been given priority. The bank was sold at the price of 2.5 billion Pak Rupees, however, the management was handed over upon payment of less than one billion PKR. The same bank then issued Rs. 300 Million for the purchase of DG Khan Cement. Further, 5 cement plants were bought by maneuvering MCB cash. Finance Minister Sartaj Aziz, who has been awarded the highest civilian award the other day, used to justify that the government still owned 49% of shares and would reap profit as a dividend later. The next decade did not see a penny paid to the government as a dividend though several mills were hauled through MCB.

One Mr. Jatoi was awarded Metropolitan Steel at the price of 150 millions, however, he paid only Rs. 30 Million and grabbed the mill. The Privatization Commission returned Rs. 25 Millions to him as part of 50% payment from govt side for the golden handshake scheme. So the lucky man only had to spend mere Rs. 5 Million to have the mill. It was in 1992 when Mr. Nawaz Shareef was PM and was in a hurry to throw away all nationalized companies. As per the writer, the Nationalization damage was enormously outweighed by this Privatization.

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A lesser-known mill “Karachi Pipe Mills” located near Shershah SITE, Karachi, spread over 18 acres of land was sold in 1993 at the price of 2.5 crores to one Mian Sahb from Lahore. The new owner mortgaged the mill with the bank and defaulted on loan. The bank auctioned the mill for 26 crores within 3 years proving the actual worth of the mill. How much loss was caused by selling a property at a price 10 times lesser than market value?

Rescue offers were put aside

As per Privatization Commission rules, if a company bought by a private entity is shut down instead of making it efficient for economic benefit to society, the government could repossess the company. And there were several of those companies shut down by new owners after extracting most of these factories like Zeal Pak Cement and Karachi Pipe Mills etc. During the period of 1997 to 1999 when Khawaja Asif was Chairman of the Privatization Commission, an officer raised a case of repossessing all those companies in govt custody, however, the Commission referred that note to a ministry or in other words, put under the carpet as the govt did not want to punish a few friends while the nation was to bear the liabilities of those plundered companies later.

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The inefficient and corrupt justice system fails to punish those plunderers causing the masses to face inflation and bearing those rulers again at the helm many times.

 

The writer is an Ex-Airliner and Management Consultant. The views expressed in this article are the author’s own and do not necessarily reflect the editorial policy of Global Village Space.