The government has started a probe into alleged involvement of top-ranked officials of Pakistan Steel Mills in corruption and embezzlement including receiving illegal perks and privileges, which have caused losses of billions of rupees to the giant state-owned enterprise and made it sick.
The investigation came following directives from the Economic Coordination Committee (ECC) of the cabinet in a meeting held on July 30, sources say.
The ECC asked the Ministry of Industries and Production to submit in the next meeting a fact sheet on the steel mill, giving details of income and expenditure, losses suffered, staff position and perks and privileges given to employees.
According to the sources, the ECC members expressed concern over the poor financial position of the mill and decided that all facts should be presented to the committee to help it determine the factors that had led to the financial collapse of the mill.
Sources alleged that the previous government had hired thousands of employees in the mill, adding to its financial burden.
In an effort to cover heavy losses suffered by the mill, the new government approved a bailout package of Rs10 billion comprising a term loan of Rs8 billion and running finance on a rollover basis of Rs2 billion. National Bank of Pakistan provided the two facilities to the mill.
The government has been issuing guarantee to the steel mill for Rs2 billion running finance on yearly rollover since January 2010.
In October last year, the ECC extended the guarantee to January 4, 2013. The ECC members underlined the need for continuing the vital running finance facility, arguing that with expiry of the government guarantee, NBP would discontinue the facility. As a consequence, the steel mill will be asked to repay Rs2 billion, which will not be possible to meet at this stage.
The ECC members told the meeting that the Finance Division had endorsed a proposal for extending the guarantee for one year from January 5, 2013. The ECC, which was requested to approve the proposal, considered the summary submitted by the Ministry of Industries and Production for the renewal of government guarantee and gave the go-ahead.
Published in The Express Tribune, August 8th, 2013.
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