Submitting his reply over a call-up notice to the Federal Investigation Agency’s (FIA) Combined Investigation Team (CIT) in the sugar scam investigation, Pakistan Tehreek-e-Insaf (PTI) leader Jahangir Tareen has denied committing any offence.
"It must be pointed out that no offence has ever been committed by JDW, or by me, and no proof of any such offence has been brought forth either by the JIT or the CIT. In fact none of the queries and concerns raised in the call-up notices make out any offence under the Schedule of the FIA Act, 1974. Even otherwise, the offences as implied in the call-up notices have no nexus with federal government. All investment transactions, acquisitions, and payment transactions mentioned in the call-up notices were conducted for a lawful purpose. Neither was any acquisition conducted at an inflated or exorbitant price, nor was there any haphazard investment or payment transaction. In fact, all transactions were financially prudent under the circumstances in which they were carried out," said a five-page reply submitted by JDW Sugar Mills Limited CEO Jahangir Tareen to FIA CIT.
The PTI stalwart had been summoned by the FIA for the second time on September 24 but could not appear. He sent a letter along with a comprehensive reply to the CIT.
The FIA had sought details about Tareen’s assets here and abroad, bank transactions, especially transfer of money abroad, bank accounts of his family members and his employees and the sugar-related transactions of his firm JDW.
On the sugar crisis, the inquiry committee headed by FIA Director General Wajid Zia had prepared the report in April last. It had probed hike in prices and the subsidy obtained by sugar barons during last year in particular and past four years in general.
The report revealed that two main groups had obtained maximum benefit during the crisis; one of the groups, JDW, belonging to Tareen which had six sugar mills, obtained 12.28% of the total export subsidy amounting to Rs3.058 billion during 2015-18.
The report said that during 2018-19, Tareen’s companies exported 17.24% of the total production of sugar and availed 22.71% of total export subsidy, amounting to Rs561million.
It is learnt that renowned lawyer Salman Safdar has been engaged by Tareen to assist him in this matter.
"I am in the United Kingdom undergoing medical examinations and treatment. But in the spirit of cooperation, I have gone through and duly considered the queries raised by CIT in the said call-up notices and my response to them is contained in the attached statement, that may be treated statement u/s 161 of Cr. PC," said the letter sent by Tareen to CIT.
The reply stated that JDW provided employment to over 12,000 workers directly, and more than 50,000 farmers, goods transporters and workers were indirectly associated with the farming supply chain across Pakistan.
The JDW’s annual revenue stands at approximately Rs70 billion. The organisation generates annual tax revenue amounting to approximately Rs15 billion and is amongst the highest tax payers in the sugar industry as well as other industries. It has been awarded PSX (Pakistan Stock Exchange) top 25 companies award thrice during the past decade.
Tareen in his reply stated that all JDW personnel had cooperated with the JIT and CIT at every stage and provided documentary evidence to establish the transparent, legitimate, and bona fide nature of each transaction.
In the spirit of cooperation and to further assist the CIT, relevant record/documents in the form of 11 volumes pertaining to queries of call-up notices were produced along with this statement.
The reply reiterated that, no director, shareholder, or other stakeholder had ever been aggrieved, directly or indirectly, by any of the transactions mentioned in the call-up notices.
"Therefore, I request that the Inquiry No. 134/2020 be dropped."
About the concern regarding the due diligence measures undertaken by JDW whilst purchasing assets and liabilities of JK Farming Systems Limited (“JKFS”) – a sugar cane farming company – the reply emphasised that any question of financial irregularity in JDW's acquisition of the assets of JKFS simply does not arise.
"This investment was a highly practical, prudent, and beneficial investment which contributed immense value to JDW's operations, playing a significant role in the development of sugarcane. It was decided by JDW's Board of Directors (BOD) that purchasing sugarcane business operations of JKFS was a financially pragmatic step, since it enabled JDW to secure 15-18% of its sugar cane supply for all times to come. The valuation and survey of the assets of JKFS was carried out by an independent surveyor, namely Unicorn International Surveyors, which is a member of the Pakistan Engineering Council and is on the panel of approved valuators of Pakistan Banking Association. The acquisition transaction was also reviewed by one of the world's premier chartered accountancy firms, AF Ferguson & Co. Chartered Accountants. The reports furnished by these firms have previously been supplied to the Sugar Inquiry Commission,” the reply further stated.
Regarding Faruki Pulp Mills Limited (“FPML”), the reply said that “this was a unique project with a high potential for profitability. There is a misconception that JDW whimsically injected a lump-sum of Rs3.15 billion in FPML. In fact, the investment was carried out over a period of 8 years and during that time period technical and financial experts were repeatedly consulted regarding the project.
“In the meantime, JDW saw an investment opportunity in bagasse-based co-generation plants, and therefore FPML, for the time being, was put on the back burner. The co-generation power plants proved an excellent investment which contributed significantly to the profitability of JDW.”
The reply stated that cash withdrawals to meet expenses were a routine practice in most large-scale companies and do not run afoul of any law. These withdrawals were made from proper company accounts and no amounts were ever deposited in any personal account.
“Thirdly, in connection with the cash payments, it has been implied in the query raised that the cash payments were a lump-sum amount of Rs. 2.2 billion. However, it must be clarified that these payments were made over a period of 3 years. This is very normal for an organization of JDW's size and is a relatively insignificant amount given that it is below 1% of the overall turnover for the 3-year period, which was approximately Rs 200 billion.
“Fourthly, in response to the query regarding the source of cash deposits in the accounts of ATF Mango Farms (Pvt) Limited and JK Dairies (Pvt) Limited, please note that following the corporatisation of the aforementioned companies and subsequent handover of my shareholding therein, I ceased to hold any management or executive position in either company, nor do I any longer hold a stake in them,” said the reply.
Regarding the transactions between JDW and Deharki Sugar Mills (Private) Limited (“DSML”), the response noted that all transactions were fully documented and, contrary to what has been alleged, there was nothing haphazard about those.
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