In fact interviews by the author, with present and former cabinet ministers and officials of the Privatization Commission have revealed that Meraj Khalid govt. in which Shahid Javed Burki, Senior Vice-President of World Bank served as Finance Minister took a conscious decision to sleep over the scandalous default in the payment of balance amount due to the Privatization Commission by new owners of privatized units.
According to an exercise undertaken by caretaker govt. Benazir and Nawaz govts. had privatized 88 industrial units till October 15,1996, for a consideration of Rs 15,409 million, of which Rs 4 billion was in default against owners of 30 privatized units. Of them 13 had not paid a single penny after assuming control of privatized units.
A federal minister dealing with economic affairs in the caretaker govt. of Meraj Khalid told the author that the cabinet was aghast at the amount in default to the Privatization Commission from the owners of privatized units but decided to let the matter pass to the elected government since they had their hands full. " We were already dealing with the scandal of Rs 120 billion bank loans default and could not afford another scandal of default in the payment to Privatization Commission", the minister said.
The cover up of default
of Rs 4 billion to the Privatization Commission pales into insignificance
in relation to the transfer of liabilities that have only been technically
passed over to the new owners. But first a look at the default of balance
amount due to the Privatization Commission.
|Name||Bid Price in Rs Millions||Date of Privatization||Amount Overdue in Rs Millions|
|1||National Cement Dandot||110||28.5.92||84|
|2||Pak PVC Ltd||63.57||8.2.92||46.37|
|4||Textile Machinery Corp||28.8||5.10.95||22.89|
|5||National Petro Carbon||189||-||37.45|
|10||Pak Hayee Oil||-||25.7.95||59|
|17||Naya Daur Motors||40.52||1.10.92||40.48|
|21||Sh Fazal ur Rehman Ghee Mills||64.28||25.1.93||30.37|
|22||Quaid Abad Woolen Mills||86||8.7.92||14.17|
|28||Pak Dyes & Chemicals||17||-||?|
(The above table was compiled from charts namely 1) Payment schedule up to October 15,1996 and 2) Statement showing balances up to and after October 15, 1996 prepared by the Privatization Commission under the caretaker govt.)
The cover up of corruption in privatization is also evident from the fact that both Benazir Bhutto and Nawaz Sharif considered the feasibility of " the repossession of privatized units" because of the gross irregularities committed in their privatization and breach of agreement by the new owners.
In a meeting on January 13, 1995 the cabinet presided by Benazir Bhutto considered the matters relating to the privatization of several industrial units by Nawaz Sharif and took the decision that " the Privatization Commission should submit a schedule for repossession of such privitazed public sector units which were now closed or abandoned".
In April 1997, the Priatization Commission headed by Khawaja Asif sought the advice of Ministry of Law whether or not the Privatization Commission can take over the privatized units in which the new owners have breached the contract. The letter sent by the Privatization Commission asked the Ministry of Law to examine;
A)- Whether the PC can repossess subject units, Naya Daur Motors Ltd. which is operational and other units, in which sales agreements contain the re-possession clauses and buyers have committed breaches in implementing the provisions of the agreement and the units are otherwise operating.
B)- The legal formalities which will be required to be completed before the re-possession action is taken and whether serving of a show cause notice upon the buyer is a necessary requirement under the law?
The Privatization Commission also asked the Ministry of Law " to examine the issue of promulgating a law empowering the govt. to repossess the privatized public sector units in the case of default".
its reply of May 28,1997, Ghulam Rasul, Joint Secretary, Ministry of Law
stated that the Denationalization Act of 1992 had provided that the govt.
can not "compulsorily acquire or take over privatized unit, for any reasons
whatsoever, once it has been transferred." However, Ministry was of the
opinion that the transfer deed is not complete until the new owners complete
the terms of agreement signed with the Privatization Commission. The letter
stated clearly that the Privatization Commission "enjoyed powers to repossess
Naya Daur Motors." The matter was discussed by the Cabinet which decided
to let the matter rest and continue with business of privatization, as
Brief History of Privatization
Table of Contents
How units are evalued
Barons of Pakistan