The federal cabinet on Thursday decided to make the inquiry report of the sugar inquiry commission public, which revealed that the major sugar mills groups – including those owned by Pakistan Tehreek-e-Insaf (PTI) stalwart Jahangir Tareen, Pakistan Muslim League- Quaid (PML-Q) senior leader Moonis Elahi and the Sharif family – had under-reported sales and committed fraud using different tactics.
Briefing newsmen after the special cabinet meeting chaired by Prime Minister Imran Khan, Minister for Information and Broadcasting Shibli Faraz, flanked by Special Assistant to the PM on Accountability Shahzad Akbar and SAPM Shahbaz Gill, said the present government was firmly committed to accountability and transparency in governance.
SAPM Shahzad Akbar said it was a very important day in the history of Pakistan, as no government had ever made the reports of such inquiry commissions public in the past. The commission’s report, he said, proved what PM Imran Khan had always maintained that “whenever a businessman comes into politics, he will always do business even at the expense of the poor”. The report would be available online following the prime minister’s orders, he added.
Shahzad Akbar said the report explicitly stated that the sugar mill owners not only purchased the produce from the sugarcane growers at the price less than the support price announced by the government, but also cut the weight of sugarcane by 15 to 30 percent. He said the commission also found irregularities in the form of giving advance payments to farmers in the form of cash or commodity, which was akin to unregulated banking and they earned up to 35 percent profit on the loaned amount. Shahzad Akbar said a subsidy of Rs 29 billion was given to the sugar industry in the last five years. He said it was found that the net total income tax paid by around 88 sugar mills of the country was mere Rs 10 billion after getting refunds. He said there were six big industrial groups of Pakistan, which had a 51 percent share of the sugar industry and were acting as a ‘cartel’, and that the forensic audit of their mills was conducted by the commission.
He said the audit of Alliance Sugar Mill from Rahim Yar Khan partially owned by PML-Q senior leader Moonis Elahi showed that between 2014 and 2018, it made a systematic cut of 11 to 14 percent of the amount it owed to the farmers, which translated to Rs 970 million. It was a huge blow for the farmers.
The said mill under-reported sugar its sales for several years and sold sugar to unnamed buyers, he said, adding the inquiry report mentioned violations of the Pakistan Penal Code committed by the mills.
Mentioning the JDW Sugar Mills in which Jahangir Tareen owned 21 percent shares, he said according to the report, the mill management was involved in double booking, under-reporting and over-invoicing. It under-invoiced sales from bagasse and molasses, which resulted in 25 percent cost inflation. The mill was involved in forward sales, satta and benami sales.
He said the Al-Arabiya Sugar Mills owned by Salman Shehbaz Sharif was also audited, which found to be involved in a fraud of Rs 400 million through informal receipts and market manipulation.
Shahzad Akbar said the report revealed that certain sugar mills used informal receipts and it was ultimately the farmer, who was crushed because there was no official record. He said it was the first time that an “independent inquiry” had been conducted into the cost of production. He said in 2017-18, sugar mills determined the cost of production at Rs 51 per kilograms whereas as per the calculations of the commission it was estimated at Rs 38. Similarly, in 2018-19, the sugar mills gave the cost price of one kg at Rs 52.60 while according to the report the estimated cost was Rs 40, he added.
The SAPM said the report also pointed out that the sucrose content as shown by the Pakistani mills owners (9.5pc to 10.5pc) was less than the international standard. He said on the one hand, the inflated cost of production and market manipulation were being done and on the other, accounting fraud was also being committed by the sugar mill owners.
Shahzad Akbar said the report of the commission had also shown that the mill owners were maintaining two account books – one for the government and the other for themselves. There was an under-reporting on sugar procurement up to 25-30 percent, which was a scandal, as no tax was paid because of that factor.
He said the report revealed that the Omni Group in Sindh had specifically benefited from the subsidies given by the Sindh chief minister. The Omni Group was already getting subsidies from the federal government, but the Sindh government gave it additional subsidy.