ISLAMABAD: Attorney General Khalid Jawed Khan is likely to conclude his arguments on Saturday (today) on the petitions filed by the sugar industry against the inquiry commission report that accused the sugar mills of cartelisation and misuse of public money that led to massive price hike of the commodity.

During the course of the hearing on Friday, a counsel for the sugar mills argued before the Islamabad High Court (IHC) that the government had notified six-member inquiry commission, but the report was signed by seven members. The counsel said it was still a mystery how an additional member from the Inter-Services Intelli­gence (ISI) was added to the commission.

The court heard the counsel for the Pakistan Sugar Mills Association (PSMA) and sugar mills owned by Jahangir Khan Tareen, his son Ali Khan Tareen, brother of federal minister Khusro Bakhtiar, Salman Shahbaz and others and asked the AG to conclude arguments by Saturday (today).

The petitions filed by sugarcane farmers before the IHC were disposed of on Friday, with Chief Justice Athar Minallah directing the petitioners to take up their grievances with the provincial government.

During the hearing, Justice Minallah also extended the restraining order till Saturday against inquiry commission recommendations, which included registration of the criminal cases against the sugar mill owners over shortage and price hike of the commodity.

Millers’ counsel wonders how ISI official was made part of probe commission

Justice Minallah remarked that as the institutions that would proceed against sugar mills were already part of the inquiry commission, they had made up their mind and how they could remain impartial in further proceeding.

The AG, however, assured the court that the proceeding against the sugar mills would be fair and impartial. He explained that the representatives of the Federal Board of Revenue (FBR) Securities and Exchange Commission of Pakistan (SECP) and Federal Investigation Agency (FIA) were part of the commission because of their expertise in probing the financial crimes.

Makhdoom Ali Khan, the counsel for the petitioners, argued before the court that the inquiry commission prepared the report in order to please the government. The government through media trial of the sugar industry had created such an environment in which fair trial was not possible, he said.

He said the prime minister and his aides had already been calling the sugar mill owners ‘mafia’ and all the exercise against the industry was ‘discriminatory’ and ‘biased’.

IHC Chief Justice Athar Minallah on June 16 granted stay against the recommendation of the inquiry commission on sugar scam that urged registration of criminal cases against sugar mill owners with the condition that they would supply the commodity to common man at the rate of Rs70 per kg.

According to the sugar commission’s report, Pakistan exported more than four million tonnes of sugar over the past five years and more than Rs29 billion had been given to sugar mills in terms of export subsidy. “Exporting sugar with subsidy means that we are exporting at international rates which are lower than the cost of production claimed by sugar mills and the differential cost is being paid from the taxpayers’ hard-earned money,” the report said.

The commission, headed by FIA Director General Wajid Zia, which was formed to probe the sugar crisis, observed that during 2017-18, a subsidy of Rs10.7 per kilo was granted by the Economic Coordination Committee (ECC) of the cabinet only for export of two million tonnes of sugar (Sindh was granted additional subsidy of more than Rs4bn). According to the report, a decrease of Re1 per kg of subsidy meant the saving of more than Rs2bn. Even if observations of the finance division were to be ignored and only adjustments of Rs5.10 per kg considered, this would have saved more than Rs10bn. As the major export subsidy was availed after January 2018, timely intervention could have saved billions of rupees for the national exchequer, it observed.

According to the petition, the scope of the report “exceeds to the constitutional mandate and limitations of a Federal Commission of Inquiry constituted under the 2017 Act, as it trespasses into matters within the exclusive legislative and executive domains of the provinces.”

It claimed that at the relevant time, the federal government and the government of Punjab decided that it was in the best interest of the country that sugar export be allowed and encouraged through grant of subsidy to earn foreign exchange. The sugar manufacturers were at various times obligated to charge extra sales tax over and above the normal rate of sales tax for sales or unregistered persons and to deposit the same in the government treasury, which they fully complied with, it said.

The petition said this was done because of “lack of understanding of its members as regard to normal transactions that take place in the markets for all commodities. Forward contracts are the norms not only in the national and international markets for sugar but in the markets for all tradable agriculture commodities and minerals including petroleum and natural gas”.

Published in Dawn, June 20th, 2020