Some interesting facts have come to light. They raise disquieting questions of probity in government and parliament.
We are informed that the Ittefaq Group has taken a couple of public sector banks to court, demanding Rs 500 crores (Rs 5 billion) in damages for losses suffered by the Group during Benazir Bhutto’s regime. The argument advanced by the Ittefaq Group relies on the same concept of “engineered default” which the PML(N) advocated so successfully before the caretaker government when it tried to outlaw “bank loan defaulters” from contesting the elections.
The outcome of this case is a foregone conclusion. The public sector banks cannot resist pressure from a business house owned by the PM’s family. Eventually, there will be a “settlement” whereby the Ittefaq Group is richer, and the public sector poorer, by at least Rs 2 billion or so. More significantly, a potentially far-reaching precedent will have been set for other “defaulting” stalwarts of the PML(N) to follow in order to transform their public debts into personal assets overnight.
A newsreport lends credence to this view. The Lahore High Court has allowed Habib Bank Ltd to withdraw its petition for recovery of an outstanding loan against Hamza Board Mills, belonging to the Ittefaq Group, because both the parties have reached a “compromise” out of court. The bank has been persuaded to compromise now, despite having earlier received a favourable decree from the Banking Council and the High Court ordering Hamza Board Mills to pay Rs 19.7 million in “stuck-up” arrears. This amount will now be “rescheduled”. How many other such defaulting loans will be “rescheduled” in such amiable circumstances and what precedents will be set remains to be seen.
We now learn that Kashmir Sugar Mills, a company owned by members of the Ittefaq family, has placed an order for a sugar plant on Hudabiya Engineering Company (HEC), which belongs to the same family. HEC, which has never manufactured a sugar plant, has “managed” a credit facility in excess of Rs 100 crores for this project so that Ittefaq Foundry, a member of the same family, can manufacture one for it. This, despite the fact that (a) a sugar mill costs only half as much as the new loan for the project (b) the State Bank of Pakistan has ordered that no credits may be advanced for setting up a new sugar mill because there is a large excess capacity in the country already. To compound matters, Bashir Sugar Mills, another member of the Ittefaq Group, is rumoured to be asking the banks for a hefty loan to buy another sugar plant from Ittefaq Foundry.
It is, of course, perfectly understandable why the legal cases against the banks and the new sugar projects make eminent business sense to the Ittefaq family. But a question of public morality or probity is involved here. Didn’t Mr Nawaz Sharif say not so long ago that if he became prime minister again, he would not allow any member of his family to exploit his position in government to extract business favours, loans or concessions? Hasn’t Mr Sharif committed himself to “conflict of interest” legislation? If Mr Sharif and his family members do not set standards of probity, how can they expect lesser mortals (taxpayers) to do the same?
We are also intrigued by the unexpected and totally unwarranted hostility of some PML(N) members of Parliament towards Mian Mohammad Mansha, the new chief executive of Muslim Commercial Bank. The MCB, as everyone knows, is in the throes of a massive pruning, restructuring and reorganisation effort launched by Mr Mansha, who owns a substantial chunk of the bank. He suffered a long exile because he refused to accommodate Mr Asif Zardari and his cronies. When he returned, Mr Mansha found that MCB was up to its neck in “bad loans” advanced during the last three years, forcing him to write off about Rs 150 crores in bank defaults. Like a good business executive, he is now refusing to advance fresh loans to “bad parties” irrespective of their political clout. He has also rightly decided to defang the blackmailing unions who have undermined the bank’s efficiency. If all this is as it should be, why is the ruling party, which proclaims the virtues of privatisation and professionalism far and wide, out to defame him? Why should some MNAs lend their voices to those vested interests who object to Mr Mansha’s presidentship of the bank when the autonomous State Bank of Pakistan has authorised him to remain in this position for a year? By so doing, what message is Mr Sharif’s government hoping to convey to all those foreign and domestic businessmen who head his various Task Forces or who want to help him restructure, deregulate and privatise the economy and get it moving again?
We have been told more than once that Mr Sharif means business this time. Good. But if the definition of business is to be construed in terms of the original sin, Mr Sharif’s avowed intentions and flaunted sincerity will amount to nought. There is, if truth be told, much that remains rotten in the state of Pakistan.