Centre gives go-ahead for action against 'sugar cartel'

Seeks investigation reports from FIA, SECP, CCP, FBR, SBP within 90 days

ISLAMABAD:

Directing action against the sugar mafia, the federal government wrote to the Federal Investigation Agency, Securities and Exchange Commission of Pakistan, Competition Commission of Pakistan, Federal Board of Revenue, State Bank of Pakistan, and the chief secretaries of Punjab and Sindh governments, on Monday.

The letters, sent from the office of Special Assistant to the Prime Minister on Accountability Shahzad Akbar, reiterate action against the sugar mafia based on the report of the sugar inquiry commission at the behest of the prime minister, and enclose commission's report within.

The FIA and SECP have been directed to investigate instances of corporate fraud as indicated by the commission's findings. "Additionally, the SECP may also in light of findings of the Sugar Commission inquire, fix responsibilities and take cognizance of the failure of the external auditors/firms and also its own regulatory oversight mechanisms, as per applicable laws," reads the letter.

Akbar's letter to the CCP highlighted that the sugar commission conducted a forensic audit of nine mills and "pointed out clear evidence of cartelisation and anti-competitive practices by sugar mill owners and brokers which led to hoarding, orchestrated ex-mill and retail price manipulation through satta, abuse of dominant position by the sugar cartel and non-provision of utility stores corporation".

The PM's aide directed the CCP to investigate and "determine the reasons, magnitude and inordinate delay in taking action against the sugar cartel despite earlier internal findings regarding cartelisation". The authority was also directed to take "penal, corrective and mitigating measures" where mandated.

Meanwhile, the letter to the FBR stated that the commission's audit of the nine mills pointed out "various instances of concealment of business/financial turnover in sugarcane procurement, crushing, sugar production and sale through accounting fraud (over-invoicing, under invoicing, off the books activity and double book keeping etc) which led to sales/income tax fraud".

According to the letter, the commission also highlighted money laundering practices through benami transactions and "financial jugglery like fake advances from customers". The PM's aide directed the FBR to "undertake a comprehensive audit of all sugar mills in the country in light of findings of the Commissions to unearth every instance of concealment and tax-fraud," as well as the benami transactions in accordance with law.

The SBP, meanwhile, has been tasked with investigating all sugar mills in the country with respect to the offences indicated in the commission's report, which include loan defaults, suspicious exports proceeds realisation, disbursement of subsidy to exporters "despite payment to cane growers below the support price and misappropriation of pledged sugar stocks".

Akbar's letters to the chief secretaries of Punjab and Sindh state that the commission found "various instances of payments to cane-growers below the support price, interest-based loans to growers by sugar-mills and consequent profits and unauthorised enlargement in the crushing capacities of various sugar mills which are in derogation of the various provincial laws".

Both provinces have been requested to undertake "investigation to unearth full spectrum of offences committed under the relevant provincial laws and take penal and corrective measures as per law".

All recipients of the letters, with the exception of the provincial chief secretaries, have been directed to wrap up the investigation and submit their respective reports to the federal government within 90 days.

The letters mention that the federal cabinet had approved of the action plan against the sugar mafia on June 23.