Holds PC chairman responsible for wilful and criminal negligence. CREATIVE COMMONS
A parliamentary panel has recommended sending the privatisation case of Heavy Electrical Complex (HEC) to any of the two anti-corruption watchdogs besides seeking removal of the Privatisation Commission (PC) chairman and secretary due to “wilful and criminal negligence” in the sell-off process.
A report prepared by the sub-committee of the Senate Standing Committee on Finance and Privatisation found that “top management of the Privatisation Commission showed high level of incompetence and wilful error of judgments to conduct the complete transaction.”
These findings could have far-reaching implications for the government’s privatisation programme.
The sub-committee also found that the criteria set to declare a bidder eligible for taking part in a company’s privatisation were faulty. It recommended that all consultants working in the PC should be barred from undertaking any transaction in future and new recruitments should be made.
The sub-committee was conducting hearings in order to determine the reasons that led to the failure of HEC privatisation.
The office of Senator Saleem Mandviwalla, who chairs the Senate Standing Committee on Finance, released the report on Friday. The document was unveiled without taking it up with the main committee.
“It is strongly recommended to refer the matter to the National Accountability Bureau or the Federal Investigation Agency to investigate the HEC transaction to determine whether the chairman, secretary, top management and consultants were involved in corruption and embezzlement or not,” stated Mandviwalla.
The Cabinet Committee on Privatisation had approved the sale of state-owned HEC for Rs250 million to an unknown Kenya-based company. However, the deal failed after the bidder defaulted on payments.
The PC registered an FIR against the bidder, Cargill Holdings Limited, after its cheque bounced, showing it tried to do the job professionally, said PC officials when asked to comment on the report.
“The PC dealt with HEC privatisation in a highly unprofessional, callous and reckless way,” commented Mandviwalla.
According to the report, the secretary and top management of the PC were evasive and dodgy throughout the hearings and let the deal happened even after having an idea that the bidder was a fake company.
“The secretary and top management used a bizarre method to save their names and reputation once the deal was dead by sending PC officials to the bidder and then publishing different advertisements in newspaper and seeking relief from the court,” according to the findings.
It added it was obvious that all these steps were taken to hide their criminal negligence, which resulted in bad reputation.
The report stated that the valuation process of HEC, particularly the determination of liabilities, was not according to market standards. It recommended that the pre-qualification criteria for the bidder should be updated in line with international practices.
The panel found that the HEC transaction committee, in its January 27, 2015 meeting, despite knowing the fact that Cargill Holdings was incorporated on December 10, 2014 with no prior background in the relevant industry, approved it as a qualified bidder without conducting proper due diligence.
The PC totally overlooked the fact that the bidder’s nominal share capital was approximately $1,000. This was the actual standing of the company in the market, but it was considered for a multibillion-rupee transaction, noted the committee.
Not only that the company’s Articles of Association reflects that it was incorporated for buying the HEC, its main partner Sabur Rehman has 990 shares and two other members have 5 shares each and no one knows who the two individuals are and what role they play with such minimal shareholding.
Despite knowing that the bidder used the name of a US-based company, Cargill Holdings, the PC approved the bidder.
Published in The Express Tribune, February 20th, 2016.
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