Cabinet decides to make inquiry report on sugar public exposing big fraud by mill owners

• He said in the past, only lip service was paid regarding sugar and flour crises and no practical steps were taken to address the problem and find out the culprits.
• It was Prime Minister Imran Khan who ordered the inquiry as the common man was the main victim of the loot and plunder on account of the sugar and flour shortages.
• Shahzad Akbar said a subsidy of Rs. 29 billion was given to the sugar industry in the last five years.

ISLAMABAD: The Federal Cabinet on Thursday decided to make the inquiry report of the Sugar Inquiry Commission public, which revealed that the major sugar mills groups had under-reported sales and committed fraud using different tactics.

Briefing newsmen after the special cabinet meeting chaired by Prime Minister Imran Khan here, Minister for Information and Broadcasting Shibli Faraz flanked by Special Assistant to the PM on Accountability Shahzad Akbar and SAPM Shahbaz Gill, said the present government was firmly committed to accountability and transparency in governance.

He said in the past, only lip service was paid regarding sugar and flour crises and no practical steps were taken to address the problem and find out the culprits.

It was Prime Minister Imran Khan who ordered the inquiry as the common man was the main victim of the loot and plunder on account of the sugar and flour shortages.

The prime minister had also issued directives to the Cabinet Secretary to gather the details of the assets of unelected advisers and special assistants and made them public.

SAPM Shahzad Akbar said today was a very important day in the history of Pakistan as no government had ever made the reports of such inquiry commissions public in the past.

He said the Sugar Inquiry Commission was established to ascertain the reasons of increase in the sugar prices in the last couple of years, and its detailed report was presented in the special cabinet meeting held today.

The commission's report, he said, proved what PM Imran Khan had always maintained that "whenever a businessman comes into politics, he will always do business even at the expense of the poor."

The would be available online following the prime minister's orders, he added.

Shahzad Akbar said the report explicitly stated that the sugar mill owners not only purchased the produce from the sugarcane growers at the price less than the support price announced by the government but also cut the weight of sugarcane by 15 to 30 percent.

He said the commission also found irregularities in the form of giving advance payments to farmers in the form of cash or commodity, which was akin to unregulated banking and they earned upto 35 per cent profit on the loaned amount.

Shahzad Akbar said a subsidy of Rs. 29 billion was given to the sugar industry in the last five years.

He said it was found that the net total income tax paid by around 88 sugar mills of the country was mere Rs. 10 billion after getting refunds. Six big industrial groups of Pakistan, which had a 51 percent share of the sugar industry and were acting as a 'cartel', and the forensic audit of their mills was conducted by the commission.

He said the audit of Alliance Sugar Mill from Rahim Yar Khan partially owned by Pakistan Muslim League- Quaid (PML-Q) senior leader Moonis Elahi, showed that between 2014, to 2018, it made a systematic cut of 11 to 14 percent of the amount it owed to the farmers, which translated to Rs. 970 million.

It was was a huge blow for the farmers.

The said mill under-reported sugar its sales for several years and sold sugar to unnamed buyers, he said, adding the inquiry report mentioned violations of the Pakistan Penal Code committed by the mills.

Mentioning the JDW Sugar Mills in which Jahangir Tareen owned 21 percent shares, he said according to the report, the mill management was involved in double booking, under-reporting and over-invoicing.

It under-invoiced sales from bagasse and molasses, which resulted in 25 percent cost inflation.

The mill was involved in forward sales, satta and benami sales.

He said the Al-Arabiya Sugar Mills owned by Salman Shehbaz Sharif was also audited, which found to be involved in a fraud of Rs. 400 million through informal receipts and market manipulation.

Shahzad Akbar said the report revealed that certain sugar mills used informal receipts and it was ultimately the farmer, who was crushed because there was no official record.

The mill owners showed the price of production to be more than the support price which meant that farmers earned less than the support price.

He said it was the first time that an "independent inquiry" had been conducted into the cost of production.

He said in 2017-18, sugar mills determined the cost of production at Rs. 51 per kilograms whereas as per the calculations of the commission it was estimated at Rs. 38 instead.

Similarly in 2018-19, the sugar mills gave the cost price of one kg at Rs. 52.60 while according to the report the estimated cost was Rs. 40, he added.

The SAPM said the report also pointed out that the sucrose content as shown by the Pakistani mills owners (9.5pc to 10.5pc) was less than the international standard.

He said on the one hand, the inflated cost of production and market manipulation were being done and on the other, accounting fraud was also being committed by the sugar mill owners.

Shahzad Akbar said the report of the commission had also shown that the mill owners were maintaining two account books - one for the government and the other for themselves.

There was an under-reporting on sugar procurement up to 25-30 percent, which was a scandal as no tax was evaded because of that factor.

He said the report revealed that the Omni Group in Sindh had specifically benefited from the subsidies given by Sindh Chief Minister Murad Ali Shah.

The Omni Group was already getting subsidies from the Federal Government, but the Sindh Government gave it additional subsidy.