Meeting on FATF, circular debt called off due to lack of quorum

ISLAMABAD:

A meeting of the National Assembly Standing Committee on Finance, convened to discuss Pakistan’s two pressing issues - the Financial Action Task Force (FATF) and rising circular debt, had to be called off due to lack of interest shown by both the finance ministry and members of the committee.

Standing Committee Chairman Faizullah Kamoka and two other parliamentarians waited for over 30 minutes for at least three more committee members and senior finance ministry officials to start proceedings.

Neither members of parliament nor Finance Adviser Dr Abdul Hafeez Shaikh, senior finance ministry officials and Industries Minister Hammad Azhar turned up to attend the meeting.

“We do not have a choice but to cancel the meeting due to the absence of members and the officials concerned of the ministries,” said Kamoka while winding up the meeting even before it could formally start. Out of 21 members, only three came to attend the meeting, including Kamoka. The other two members were PML-N’s Ali Pervaiz and PTI’s Faheem Khan.

Owing to continued absence of the finance adviser from the standing committee meetings, the committee has already unanimously decided not to discuss the legislative agenda of the finance ministry until the de facto finance minister personally attends the meetings.

However, this time the entire top hierarchy of the finance ministry was missing from the meeting.

The joint secretary budget - a grade-20 officer - came from the finance ministry to attend the meeting despite having five agenda items related to the ministry, including four pieces of proposed legislation. These were related to the government’s saving schemes and financial institution-secured transactions.

“Senior ministry officials did not skip the standing committee meeting by choice, as at the same time Prime Minister Imran Khan took a briefing on the subsidy regime,” Finance Secretary Naveed Kamran Baloch told The Express Tribune.

A briefing by the minister for economic affairs about the FATF issue was also on the committee’s agenda. But the briefing had to be given by Hammad Azhar, said Kamoka.

Azhar had requested to postpone the briefing due to his other engagements with the prime minister, said the chairman. Azhar is the point man of the government on the issue of FATF.

FATF has given the September 2020 deadline to Pakistan to comply with the 27-point action plan. The federal government is in the process of meeting the remaining legal requirements and the cabinet is on Tuesday expected to approve new amendments to the Companies Act 2017 to meet the FATF requirements.

The Securities and Exchange Commission of Pakistan (SECP) has proposed amendments to the Companies Act aimed at prohibiting issuance of bearer shares, bearer share warrants and similar equity or debt securities of bearer nature, as well as the manner of registration and cancellation in case any such bearer securities have been issued. This amendment is aimed at preventing the misuse of companies from money laundering or terrorist financing abuses in line with the recommendations issued by the FATF.

Pakistan’s Mutual Evaluation Report issued in October 2019 by the Asia Pacific Group on Money Laundering also highlighted certain deficiencies in the regulatory framework relating to the misuse of bearer shares and bearer share warrants.

The government has proposed a new amendment for keeping record of ultimate beneficial owner to ensure compliance with the recommendations issued by the FATF to enhance transparency of companies. The SECP has also proposed amendments to the Limited Liability Partnership Act, 2017 to comply with the FATF requirements.

The finance secretary was also supposed to give a briefing on the circular debt to the standing committee, according to the meeting agenda.

The circular debt, which was less than Rs1.15 trillion at the end of the PML-N’s tenure, has alarmingly jumped to over Rs2.2 trillion. The Power Division has badly failed to contain the debt that is now threatening the country’s fiscal framework.

Amendments to the Post Office Cash Certificate Act and the Government Savings Bank (Amendment) Act 2020 were also on the committee’s agenda.

Published in The Express Tribune, July 21^st, 2020.

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