Corruption and intrigue surface in Pak Datacom saga

MoIT secretary and joint secretary involved in quagmire.

KARACHI: Pak Datacom Limited (PDL) – a leading Information Communication Technology solution provider – recently became a hot topic in the industry after its board of directors terminated their Managing Director and CEO Salman Elahi Malik on at least three occasions in less than a month.

The PDL board removed Malik on charges of forgery and acting beyond his authority. However, an independent investigation by The Express Tribune reveals a serious controversy behind Malik’s termination.

The Express Tribune has found strong evidence that the Ministry of IT and Telecom (MoIT) Federal Secretary Farooq Ahmed Awan went out of his way to remove Malik for not obeying his diktats.

The Express Tribune has learnt that, for the past few months, Awan – with support from MoIT Joint Secretary (Administration) Raashid Bashir Mazari – had been pressuring Malik to favour telecom companies SAR Telecom and Tech Global for a satellite bandwidth project and a satellite communication project respectively.

Apparently, the federal secretary wanted to benefit Shaukat Ahmed Reshi – the owner of the aforementioned companies – with an amount exceeding Rs130 million ($1.5 million).

The dispute

In September 2009, PDL had signed an agreement with Intelsat – a London-based satellite service provider – through its local agent SAR Telecom. Under the agreement, PDL had paid $6,34,608 as one-month service charges and security deposit to SAR Telecom.

The project, however, didn’t materialise. PDL claimed a refund, saying it did not receive any services despite making technical arrangements: SAR telecom, in turn, blamed PDL for using faulty equipment to receive the said service. With time, the matter was put on the backburner.

Salman Elahi Malik joined PDL in December 2011 and was directed by the board to resolve the issue. Malik decided to take the matter to the court, but Awan – who is also the board’s chairman – wanted him to resolve the problem amicably.

The secretary recommended that the matter be solved through arbitration and also proposed Raashid Bashir Mazari as arbitrator. In his arbitration award on May 3, 2012, Mazari directed PDL to pay an additional $6,34,608 to SAR Telecom within 30 days of the award, or pay the full cost of the project.

Malik faced resistance from Awan when he tried to seek the board’s approval in challenging the arbitration award. The former CEO sent a written notice, a reminder notice, and made several phone calls requesting Awan to call a board meeting. The latter ignored them.

With only a couple of days left in the deadline of the award, Malik issued a circular resolution on May 29, 2012. Six out of eight board members approved the resolution. Awan, however, did not sign it. He did not give a reason as to why he would not sign the document.

The deal breaker

What really annoyed Awan, our source said, was that Malik filed a petition in the Islamabad High Court against the arbitration. In its petition, PDL claimed that Mazari misconducted the arbitration on the grounds that the arbitration was initiated by PDL, but Mazari mentioned SAR Telecom as claimant instead. Secondly, the topic of arbitration was the refund of $6,34,608, but the arbitrator instead treated it as breach of contract, which had
never been agreed upon in the first place.

Malik then went a step further on June 1 when he shelved a satellite communication project in which Tech Global was entitled to receive 8% of the project’s revenue as its marketing agent, saying the company played no role in the project – a claim seconded by at least four PDL officials.

The secretary found no other option but to remove Malik. The PDL management has also taken to threatening PDL employees who supported Malik, say sources. The employees are being told to resign or be forcibly terminated.

When contacted, Awan denied allegations that he forced Malik to favour Reshi. Reshi, too, has denied receiving any favours from Awan or Mazari. “I have never met him [Awan]; I don’t even know what he looks like!” he claimed. However, he said he has met Mazari during the arbitration proceedings.

Mazari refuses to answer any questions, saying the matter is subjudice.

Published in The Express Tribune, July 6^th, 2012.