"There is no business in Pakistan today which can be run without paying bribes to the ministers and secretaries".Bulk of the wealth today owned by 22 families was grown on govt trees, rooted in bureaucratic corruption and fertilized by tax evasion, bulk loans, rebates and a bit of sweat and tears of the founding fathers.Yusuf Haroon.
The leaders of Karachi-based businessmen today, the Khojas, the Memons and the Isamaeelis are particularly a far cry from the great achievers of the Gujrati communities described by Dwijendra Tripathi, as " exceptional men, with extra elements (of) that touch of talent, preservence and ability which made them what they were".
Lawrence White fond in 1974 that the fortunes of the 22 families had resulted from a combination of "ability, initiative, influence and luck" rather than any extra elements. But it was G M Adamjee who spoke out a great truth when he said that creation of Pakistan was " like the gold rush in USA" that opened new opportunities for Muslim businessmen of the sub-continent, catapulating several of them to the commanding heights of the Pakistani economy."
This is exactly how biographers of Rockefellers had described his success to " random collision of a man with an opportunity, as if a door had stood open for a brief historical moment and Rockfeller who just happened to be passing by, managed to squeeze in before it closed". To use the analogy of Rockefeller's biographers, 22 families were thus produced by a collision of an opportunity in history, that was Pakistan with a class of businessmen who just happened to be around when the door opened or when the gold rush took place.
But among the founding fathers of the 22 families, one can not fail to spot towering personalities like M A Rangoonwala, C M Latif and Yusuf Saigol who would have left their imprint on the sands of time, even if the collision of history and opportunity had not taken place. If one was to weigh, present-day members of the 22 families, on the scales of that touch of talent, perseverance and ability that abounded in their forefathers and " the combination of ability, initiative, influence and luck", found in them by Lawrence White then perhaps only few of them, Nasim Saigol, Syed Babar Ali and Razak Dawood might deliver few ounces of these ingredients.
But there are no rag-to-riches stories, no self-made men," trained in the sternest but most efficient of schools called poverty" and almost all of them inherited fortunes which were multiplied, in most cases dubiously and unscrupulously. But it appears that plucking fruits from the govt trees, rather than planting one's own started immediately after the creation of Pakistan.
Saeed Shafqat in his book, Political system of Pakistan and Public policy, as well as Lawrence White concluded that PIDC and Pakistan Industrial Credit and Investment Corporation (PICIC) were instrumental in the creation of financial / industrial groups that came to be known as the 22 families in the 1970s. According to Lawrence White, top 43 groups over Karachi Stock Exchange received 11 of 43 units divested by PIDC in East Pakistan and eight of 17 units in West Pakistan. Several big units of these families like Karnaphuli Paper Mills and Burewala Textile Mills of Dawood, Jauharabad Sugar Mills (Now Kohinoor Sugar Mills) of Saigols, Karachi Gas Company of Fancy, Charsada Sugar Mills of Hoti, Adamjee Chemical Works, Adamjee Industries, Adamjee High Grade Paper and Board Mills, Nowshera and at least six Jute Mills were built by WPIDC and divested in their favour. Habib Ullah Khattak of Bibojee claimed to have lost four units in Bhutto's nationalization, all of them divested in his favour by PIDC.
Divestment of these units was never advertised and no account is available at what terms and through which process they were sold to the new owners. But an illusteration of the manner of their whimsical delivery to the private sector is found in the biography of Ahmad Dawood. The biographer, Usman Umer Batliwala has narrated how Ahmad Dawood was asked to take over the management of a major unit from PIDC.
According to the Batliwala, Ahmad Dawood invited president Ayub Khan to inaugurate a school set up by Ahmad Dawood at Jessore, in East Pakistan, in 1959. At the ceremony, Nawab of Kalabagh, Chairman, WPIDC was disturbed by a report about the death of an official of Karnahuli Paper Mills in a clash between management and the workers. The govt had already decided that the project will be divested but no private sector enterpreneur was interested in taking over such a big project, chronically ill and in a dismal financial shape.
After the ceremony, Nawab Kalabagh invited Ahmad Dawood to a meeting and asked him to take over the paper mill. Initially Dawood refused but upon great persuasion, promised to consider the proposal. After pondering over the proposal for several days, Ahmad Dawood agreed to take over Karnaphuli Paper Mills and it was affiliated with Dawood group of Industries. A reorganization and modernization of the project was launched, cordial relations were hammered out with workers and within a short time, Karnaphuli Paper Project was on the way to become a profitable organization.
While PIDC was divesting industrial projects set up with tax-payers money and govt-contracted loans, to big industrial groups, its sister organization, Pakistan Industrial Credit and Investment Corporation (PICIC) was dishing out loans to the same people to launch new indutries.
PICIC's board of director included 13 members from the private sector and seven of them belonged to the leading families including Dawood, Adamjee, Bashir, Fancy, Jalil, Rangoonwala and Valika. It was headed by A W Adamjee with Ahmad Dawood as vice chairman. Heavily representated on the board of PICIC, these families made sure that loans sanctioned by the corporation rotated within same people. The dominance of the industrial families on PICIC board continues to-date.
Dr Mahboob ul Haq, then Chief Economist in the Planning Commission revealed in his famous study that 22 families were controlling 80 % of banking and 70%of insurance assets in Pakistan. According to Lawrence White, 43 families received 51 % of all industrial licenses issued by govt of Pakistan during second plan period and 64 % of all industrial credit sanctioned by PICIC. Rashid Ahmad is quoted by Saeed Shafqat to have noted that " 70% of loans sanctioned by PICIC went only to 11 industrial houses" and that five houses controlled 80% of the Jute industry and 50 percent of cotton textile production in Pakistan.
The divestment of PIDC, control of the 22 families on the banking assets, their ability to monopolize the loans sanctioned by PICIC played an important role in the concentration of wealth in few hands but it would be naive to ascribe the growth of the 22 families, simply to corruption or their collusion with politicians and bureaucrats because these empires were founded by rugged, srtong-willed single-directional people, obsessed by the smell of big money.
Mohammad Ismaeel, founder of the Colony group started as a helper (Munshi) in a Soda Wate factory set up by the Maratib Ali family in Ferozepur but rose to be the pioneer Muslim industrialist in textile in the area now comprising Pakistan. He lost his speech in a paralysis attack but continued to work till his death by issuing directives in writing.
When the Packages group was planning the setting up of Abbasi Textile Mills at Bahawalpur, they came to Mohammad Ismaeel to seek his advice and guidance.
" My father wrote on the paper that the people seeking his advice were his long-time employers for a few rupees", Farooq A Sheikh reminisced in an interview with the author.
Sheikh Fazal Hussain of Fazal (Fatima) group of Industries was working as a helper on grocery store of a Hindu merchant and launched his own business after he was sacked because of loss of eye sight.
Yunus Brothers is Pakistan's biggest Export House, accounting for annual turnover of several billion rupees but its founder and Chairman, Yunus Taha has never been to the United States.
In 1972 when Bhutto nationalized Ittefaq Foundary, the House of Ittefaq decided to set up a steel re-rolling mill in the United Arab Emirates. Mian Mohammad Sharif, father of Prime Minister Nawaz Sharif vowed that he would not return to Pakistan till the project was completed. Eye witness said he used to stand in the scorching heat with the labourers and the factory was completed in record time.
Monnoos have grown on tax holidays and exemptions but have the reputation that they take care of their employees as welfare states take care of their citizens. The building for their industrial projects bespeak of great architectural tastes and aesthetic sense of their builders.
Crescent, perhaps the soundest of all the industrial groups today has the reputation of being " the exemplary taxpayers" in Pakistan.
Both M A Rangoonwala and C M Latif emerged as towering personalities among the 22 families of the pre-1971 era and had an abundance of " extra elements, that touch of talent and ability" which Dwijendra Triparthe had found among the biggest achievers of the business communities in 17-18th century India. But more about them and their likes, later in these pages.
Like buildings built brick by brick, several of the present day empires owe their existence to a small trading company, set up way back in the early years of Pakistan. Thus Crescent has grown around Mohammad Amin, Mohammad Bashir & Company and Dawood around Dawood Corporation, Habib around Habib Sons incorporated in 1922, Nishat around Nishat Corporation, Tawakkal around Tawakkal Enterprise, Schon around Schon Export House, Hashwani around Hassan Ali and Company, United around Sadiqsons, all these companies being trade houses.
Inter group marriages have also helped in the multiplication of wealth owned by the 22 families. Naz, daughter of Yusuf Saigol is married to Mian Mohammad Mansh while Ambar, daughter of Mahmood Haroon is married to Azam Saigol of the Saigol group.
One of three sisters of Mian Mohammad Mansha is married to Jehangir Elahi of Elahi group while one of his cousins is married to S M Saleem of United group.
A daughter fo Mughis A Sheikh is married to Saleem of Crescent Sugar while another of the Colony ladies is married to Shahzad A Monnoo and it is said that the plot on which Monnoo House stands today in Lahore came in dowry from the Colony.
Zahra, daughter of Aziz and Laila Sarfraz of Premier group who died on April 20, 1996 in New York was married to Asif Saigol and is said to have brought a textile mill in dowry.
Bawany, Adamjee and
Al-Noor are related in both business and family while Mehrunissa, daughter
of Abdul Ghani Dadbhoy, founder of Dadabhoy group is married in the Jaffer
family. A grandson of Ahmad Dawood was married in August 1994 to a daughter
of the Dewan group.
Role of Banks and DFI
Table of Contents
Nawaz Sharif and Chiniotis
Barons of Pakistan