Pak Datacom pays Rs15m to private company, but why?

Documents reveal payoff made to allegedly appease political concerns.

ISLAMABAD/ KARACHI: Pak Datacom Limited (PDL), an information and communications technology solution provider based out of Islamabad, is listed on all stock exchanges in the country, and is majority owned (55%) by the Telecom Foundation – which is managed by the Ministry of IT. Documents obtained by The Express Tribune reveal that company officials have been involved in siphoning off Rs15 million of shareholders’ money to a private company, in what seems to be a move motivated by political concerns.

The background

In late 2011, PDL had signed a marketing deal for a satellite communication project in late 2011 with Tech Global – another Islamabad-based technology company. As per the terms of the agreement, Tech Global was entitled to receive 8% of the project’s net revenue.

However, the contract was terminated by PDL on June 1, 2012 by then MD and CEO Salman Elahi Malik. The former chief – shortly after joining the company – had found that the previous management had ignored PDL’s interest in the deal and unjustifiably favoured the private company. He had ordered the agreement scrapped and invalidated.

The agreement under discussion is one of two projects that Malik had categorically opposed despite immense pressure from then IT secretary Farooq Awan and joint secretary Raashid Bashir Mazari. These two top bureaucrats in the Ministry of IT and Telecom were reportedly trying to please some politicians by extending favours to Tech Global. PDL’s former chief, however, had cancelled the agreement on the aforementioned grounds. He believed Tech Global was not entitled to monetary benefits as it had played no role in the project – his stance was seconded by at least four PDL officials. The Express Tribune had chronicled these developments in a report published on July 6, 2012

Top PDL officials confirmed on Monday that the agreement was terminated in letter and spirit. “PDL had terminated the aforesaid contract and it stands cancelled at present,” the current MD and CEO Muhammad Amir Malik told this correspondent on Monday – responding to a query asking him whether PDL had reconsidered the agreement. Company Secretary Sajjad Hasan Jaffri seconded his superior, and also added that the company has not undertaken any other project with Tech Global.

Hands in the cookie jar?

An independent investigation undertaken by The Express Tribune, following a tip-off received by this correspondent reveals that a questionable payment was made recently to Tech Global, which is strongly connected to Malik’s termination from PDL.

Despite their claims to innocence of all knowledge of misappropriation of shareholders’ money, the documents received by The Express Tribune as part of the investigation directly incriminate both Malik and Jaffri in what can potentially turn out to be a full-blown scandal.

According to the documents, Company Secretary and CFO Sajjad Hasan Jaffri and MD and CEO Muhammad Amir Malik approved a payment of Rs10,898,782 to Tech Global on October 22 last year. This happened despite their own statements on record that they had undertaken no new project with Tech Global or revisited the agreement cancelled earlier. The same officials also approved another payment of Rs5,165,748, which was transferred from PDL’s account to Tech Global on December 3, 2012, according to the information received.

The unofficial payment, denied by those who signed off on it themselves, serves only to shed light on the priorities of top civil servants in a sector wracked by controversies and abortive projects over the last year.

In his six-month tenure as PDL’s MD Salman Malik had opposed the top bureaucracy to protect shareholders’ interest. Sources say that he paid the price by falling victim to a conspiracy to eject him from his position as the company’s chief.

They also claim that the bureaucratic lobby that conspired against Malik had only been waiting for an opportune moment to close the deal with Tech Global, despite having no legal compulsion towards it whatsoever.

Published in The Express Tribune, January 22^nd, 2013.

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