• Home
• /
• Business

PAC orders probe into sugar scandal

"This is a yet another scandal in the middle of the ongoing sugar crisis. Had this happened in India, the Parliament would have taken it up as the most serious national scam," said PAC MNA Syed Qurban Ali Shah, a view point also endorsed by other members.

The committee headed by MNA Malik Allahyar Khan observed yesterday that the Economic Coordination Committee (ECC) had allowed the duty-free import of 400,000 tonnes raw sugar by 20 mills in order to control domestic prices, which had crossed Rs42 per kg . When the raw sugar was converted to purified sugar by local mills it cost Rs21-22 per kg. The millers were required to sell it at cheaper rates.

Ironically, the millers not only sold the sugar at Rs42 plus per kg to consumers but also paid sales tax to the government at Rs29 per kg. This was against the spirit of the ECC decision.

The committee observed that despite directives from the Central Board of Revenue (CBR) and the federal food minister, the provincial governments failed to check the procurement of sugarcane by mills through middlemen. Similarly, the millers stopped publishing fortnightly reports about their production since February 15, in order to keep the government in the dark about their actual production figures.

The unrecorded production, the PAC believes, was more than 400,000 tonnes which was sold to non-registered buyers. The millers did all this in order to avoid sales tax, the committee pointed out.

"Where was the government when the millers stopped reporting their production figures. The mills are required to send their fortnightly production reports to the stock exchange, Minfal and other concerned ministries and to farmers organisations," the committee asked.

A CBR representative said they had detected various cases of sales tax evasion by millers that ran into about Rs326 million. The board was investigating the issue, he added.

The committee asked the finance ministry's adviser, Dr Ishfaque Hassan and Secretary Ministry of Food, Agriculture and Livestock (Minfal), Ismael Qureshi why the benefits of the imported raw sugar did not trickle down to consumers and the whole money went to the pockets of the rich and powerful mill owners. Both the officials failed to provide any satisfactory answer to the committee on which the PAC observed, "This is the most dismal response from the government we have ever come across."

The government also criticised the Minfal secretary for not possessing the actual figures of the present carry-over stock available with mills. The Minfal secretary said mills had a carry-over stock of 577,000 tonness. However, PAC was of the view that mills possessed 891,000 tonnes sugar, which meant that the millers still kept a secret of the 314,000 tonness sugar from the government.

The committee said the Trading Corporation of Pakistan (TCP) had procured 400,000 tonnes of sugar from various mills last year including 27,000 from JDW Sugar Mills, which belongs to the federal minister for production and industries Jehangir Tareen. The sugar was lying at the stores of the sugar mills. However, when the crisis started, the mills refused to provide sugar to the TCP despite the fact that the latter had paid the money last year.

They told TCP that the sugar could only be released if all the loans they had taken from the banks were written off or they were allowed to stop paying money to the farmers.

The PAC observed that a ban on construction of new sugar mills imposed by the government under the Sugar Factory Control Act, 1950, was openly being violated under the very noses of the provincial authorities. Even after the imposition of the ban, mills were constructed in Rahim Yar Khan, Khanpur, Jhang, Chishtiyaan and Rajanpur district by influential elites. "We don't know how powerful this cartel of serving ministers and elites are. Even the National Accountability Bureau (NAB) had to shelve its investigation into the sugar crisis within three days of its initiation. They can raise prices. They can exploit farmers and break the rules. They seem to be above the law of the land," the PAC observed.