KARACHI, June 5: Justice Mrs Qaiser Iqbal of the Sindh High Court dismissed an Attock Group application against its exclusion from bidding for the Pakistan State Oil (PSO) on Tuesday.

Vacating the interim stay granted by her on March 30 by a 41-page order announced by Justice Sajjad Ali Shah, the judge said Dr Ghaith R. Pharoan, who is the chairman of the Attock Group and the beneficial owner of the Panama-registered Bay View International, which owns the Attock Oil Company and has shares in other concerns of the group, has been proceeded against on several counts in Pakistan and the United States, and this information was not disclosed by the group in its statement of qualifications (SOQ). Subsequently, he transferred his shares in Bay View to his children, again without intimation to the Privatisation Commission (PC), which was pre-qualifying the PSO bidders. Non-disclosure of information was itself sufficient to disqualify a bidder under the rules, the order said.

The order clears the way for early privatisation of the PSO unless the aggrieved group decides to go in appeal. The (dismissed) application for a permanent injunction against the PC was moved by M/s National Refinery Limits, Attock Petroleum Limited, Pakistan Oilfields Limited and Attock Oilfields Limited, members of the Attock Group, in their pending suit for declaration and permanent injunction filed through Advocates Khalid Anwer and Ali Sibtain Fazli. Advocates Wasim Sajjad, Anwar Mansoor Khan and Arshad Tayebali appeared for the PC, the federation and the PC’s financial adviser (J.P. Morgan), respectively. Arguments were heard for seven days and the order reserved for May 31. The judge proceeded on summer vacation, meanwhile, and the order was announced by Justice Shah.

Extensively referring to the arguments and the case law, the judge said the privatisation process should be open, fair and transparent. It should be in the benefit of the people at large. Not only the financial status of the bidder but also corporate governance material to post-privatisation performance had to be taken into consideration. The PC was rightly obliged to consider the corporate track record of Dr Pharoan in consonance with the Supreme Court’s verdict in the Pakistan Steel case. The apex court expressed its surprise how a bidder was qualified despite serious allegations against him. The PC, the judge said, is empowered by the rules to call for supplementary information. Justice Iqbal noted that an opportunity was afforded to the plaintiffs to appear before a PC panel to clarify its position.

Referring to the plaintiffs’ contention that they had furnished all the requisite information, the judge referred to the following allegations levelled by the PC in its letter of April 6:

1. The US Federal Reserve Board assessed in 1997 a $37 million fine against Dr Pharaon and permanently barred him from the US banking sector. An appeal against the fine was rejected by the US Supreme Court in 1998.

2. Dr Pharoan is a fugitive and faces BCCI-related criminal charges under indictments in Washington, New York, Georgia and Florida. A US court issued warrants for his arrest in 1991. He is also wanted by the FBI, which conducted an unsuccessful raid on his yacht in the Mediterranean in June 2006.

3. A Cayman Islands court gave an award of $ 2.1 billion against Dr Pharoan and in favour of the BCCI liquidators in 2001. A settlement for $175 million was, however, subsequently reached.

4. Six cases were instituted by the Pakistan Customs intelligence against Attock Petroleum Limited for fraudulent exports to Afghanistan. Another three cases were instituted in respect of the seizure of smuggled Iranian petroleum. Proceedings are still pending.

The Securities and Exchange Commission of Pakistan passed an order appointing an inspector under the Companies Ordinance to probe the transfer pricing in favour of the Attock Petroleum Limited. Proceedings were, however, stayed by the Lahore High Court.