HEC sale probe: Buyer had weak credentials, admits PC

Committee rejects claim of selling company for Rs1.095b including liabilities.

ISLAMABAD:

In a major breakthrough in the probe into alleged wrongdoing in the privatisation attempt for Heavy Electrical Complex (HEC), the Privatisation Commission (PC) admitted on Tuesday that the buyer had weak credentials and was not up to the mark.

“The transaction committee did notice that Cargill Holdings Limited had a weak profile and was not up to the mark,” said HEC Transaction Manager Azeem Haye, while giving a testimony in a meeting of a special panel of the Senate Standing Committee on Finance and Revenue.



“Had the PC implemented the statement of qualification for the prospective bidders in letter and spirit, Cargill Holdings would not have been declared eligible to bid for HEC,” said Haye.

Senator Saeed Ghani of the PPP had raised the red flag in the Senate, which led to the constitution of the special panel to probe the deal.

The transaction manager’s statement gives weight to reports of foul play in the privatisation of HEC that the government agreed to sell at a throwaway price of Rs250 million against the Rs1.4 billion price tag recommended by Deloitte Pakistan, the financial adviser.

The government was selling HEC - which is engaged in manufacturing electric equipment - to Kenya-based Cargill Holdings. However, the deal failed after the buyer’s Rs225-million cheque was dishonoured by the bank.

“There are a lot of things to worry about; the aim of the committee is to unearth bungling in the HEC privatisation and find out who are behind it,” said Senator Ilyas Bilour, the head of the sub-committee.

The committee also sought details of the board of directors of Cargill Holdings that the PC could not provide. It asked whether the PC took any action against Cargill Holdings when it came to know that US-based Cargill had served a legal notice on the HEC buyer for stealing its trademark.



Secretary In charge of the Privatisation Division, Ahmad Nawaz Sukhera, insisted that the trademark dispute was not a point to worry about. “If a thief brings money and the money is good for the country’s economy, the PC will accept it,” he said in reply to a question.

The PC claimed that it evaluated Cargill Holdings in technical, financial, legal and administrative due diligence but could not give pertinent answers to the committee.

The committee also asked about allowing a company registered in Kenya just one day after the PC decided to re-initiate the bidding process, to take part in the privatisation process. The secretary in charge could not give a satisfactory answer in this regard.

“A company that was registered in Kenya a day after the initiation of the privatisation process cannot be genuine,” remarked Saeed Ghani.

The committee did not accept the PC’s claim that HEC was sold for Rs1.095 billion, including liabilities.

“The contention that Rs465 million in liabilities were given to the buyer was absurd as these were running financing loans against which there must be running assets,” said Senator Mohsin Aziz.

The members observed that the forced sale value of HEC was higher than the Rs250-million price.

At one stage, Sukhera claimed that he was unwilling to serve as the Privatisation Division secretary in charge and was happy with his last posting as the Small and Medium Enterprises Development Authority chief executive officer.

“The evaluation committee and the transaction consultant could not perform their duties,” said Senator Mohsin Leghari.

Published in The Express Tribune, September 9^th,  2015.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.