ISLAMABAD, March 8: The implementation and monitoring committee of the Public Accounts Committee of National Assembly on Tuesday directed all departments concerned to recommend specific actions against anyone found involved in illegal trade of National Investment Trust shares that caused a huge loss to the national exchequer.

The committee, headed by Yasmin Rehman of PPP, asked all government departments, including NIT, Securities and Exchange Commission of Pakistan (SECP), finance division, the privatisation commission and industries to come back to the committee within one week and inform it how they were going to handle this case in which the ownership of a public sector organisation worth billions of rupees had been transferred to the private sector for a song.

Talking to Dawn, Ayaz Sadiq of PML-N, who attended the meeting, said secretaries of finance, industries and privatisation commission had accepted PAC’s findings into illegal transfer of shares of Pakistan Engineering Company (Peco) by former NIT bosses to the private sector.

He said the case was also being looked into by the National Accountability Bureau (NAB). The lawmaker said that time had come to take strict action against influential people otherwise they would keep on looting public assets.

A three-member special committee of the PAC, headed by Mr Sadiq with Rukhsana Bangash of PPP and Bahadur Ahmed Khan Sihar of PML-Q as its members, has comprehensively investigated the issue relating to the transfer of shares of Peco.

According to the committee, the government back in 2002 held 54.49 per cent shares of Peco, whereby it was a public-sector entity.

But later, in complete violation of the Finance Division’s orders, the NIT offloaded its 20 per cent shares in August 2003 at a nominal value of Rs80,27,145 at an average share price of Rs6.81.

About 30 per cent of these shares were offloaded through M/s Arif Habib at a nominal value of Rs4 per share. The sales of shares under suspicious circumstances changed the shareholding of the government from 54.48 per cent to 33.3 per cent.

As a consequence of the deal, the number of its private directors out of a total nine, increased to six, which effectively turned the government holdings into minority. More alarmingly, as a result of this decision, recovery of loans worth Rs3.314 billion which Peco owed to the government became doubtful.

Since then, Peco and the State Engineering Corporation, have had been taking up the matter with the Finance Division through a series of letters via the ministry of industries to buy back the shares, but the issue has remained unresolved and ultimately a windfall was allowed to be reaped by investors without transparency and sharing of profits with small shareholders.

The committee further noted that the main interest of private investors was in Peco’s land in Badami Bagh and Kot Lakhpat, both prime locations of Lahore.

In Badami Bagh, there is about 247 kanals of land owned by Peco, while it has about 1,349 kanals in Kot Lakhpat as per the revenue record of the Punjab government.

The total value of the land as per recent calculations stood at Rs14.024 billion, the committee noted in the report.

The fact which made this entire deal suspicious is that until August 13, 2003, private investors were not aware of the worth of the company because of the unclear status of its land. However, the 117th meeting of Peco’s board of directors held on Aug 9, 2003, was informed that the Punjab government had issued a no-objection certificate for the sale of its land in Badami Bagh on June 28 the same year. NIT Director Asif Jameel was present at the meeting.

It is interesting to note that the first sale of shares by the NIT took place on Aug 13, 2003, just three days after the meeting. The NIT sold 20.73 per cent of its total share-holding to private investors within the next three months without getting an approval from the Privatisation Commission.

The Finance Division, through a letter sent on March 15, 2000, in reply to a letter by the NIT, had given clear instructions to the chairman and the managing director of the trust that due to strategic nature of its shareholdings in state-owned enterprises, the Privatisation Commission should be consulted before any disinvestment of shares to ensure that the government’s holding did not drop below 51 per cent.

The NIT was advised to explore the possibility of transferring its shares to government-controlled entities holding NIT units, but the NIT preferred offloading the 1,179,530 shares of Peco to private investors for Rs8,027,145.

The PAC’s implementation and monitoring committee wants action against everybody, whether they belong to private or public sectors.