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ISLAMABAD: The Finance Ministry has directed concerned ministries/State Owned Entities (SOEs) to deposit balance amount of “constitutional” Benazir Employees Stock Option Scheme (BESOS) in Federal Consolidated Fund (FCF) immediately, well-informed sources told Business Recorder.

“The Supreme Court has passed a detailed order on October 22, 2020, declaring BESOS executed in breach of Article of 154 of the Constitution. Therefore, any amount deposited/set aside by the SOEs under this may immediately be deposited in the Federal Consolidated Fund,” said the Finance Ministry in a letter to Privatisation Commission and other concerned Ministries/Entities.

The Finance Ministry maintains that during a number of meetings held in Finance Division, attended by the key Ministries and SOEs, it was agreed by the SOEs that BESOS amount will be settled through cash deposit or non-cash adjustment. However, the action by the concerned is still awaited.

According to sources, the Finance Division has maintained that it is under significant fiscal pressure to meet the budgetary shortfall during CFY, urging Ministries that concerned SOEs may be directed to deposit the BESOS balance in Federal Consolidated Fund immediately.

On April 22, 2022, Secretary PC, Hassan Nasir Jamy in a letter to Secretary Finance, cited the reference of his earlier letter of February 14, 2022 wherein the short order of October 22, 2020 passed by the Supreme Court of Pakistan in the appeals titled C.A.421/2018, 422/2018 & 423/2018 in which the Benazir Employees Stock Option Scheme was declared unconstitutional, was highlighted.

He said, in various meetings held in the Finance Division with the concerned Ministries/Entities such as OGDCL and PPL, etc, the entities argued that the amounts cannot be transferred in the Consolidated Fund of the federal government in the absence of the detailed order to be passed by the Supreme Court. The Supreme Court has now passed the detailed order declaring BESOS as a scheme executed in breach of Article 154 of the constitution.

The operative para of the detailed order is as follows: “in view of our discussion above, where the very scheme has been found to be against Article 154 of the Constitution, we set aside the judgment of November 24, 2016 passed by the Islamabad High Court in ICA| No. 292 to 294 of 2016 and uphold the judgment of January 3, 2018 passed by the High Court of Sindh in Constitution petition No. 1837 of 2014.”

Ministry stops PSEs from depositing funds in private banks

“Privatisation Commission through its legal wing had vigorously pursued the case in the Supreme Court of Pakistan leading to the final decision in favour of Government of Pakistan that may result in an addition of over Rs.30 billion in the Consolidated Fund,” said Secretary PC.

According to Jamy, the Central Revolving Fund maintained by Privatisation Commission has been closed since, 2020 and all concerned Ministries have already been requested through PC’s OM of December 30, 2020 to deposit amount retained on account of Employees Empower Trust (EET) in the Federal Consolidated Fund.

Secretary PC has requested Finance Division to issue following necessary directions to the concerned Ministries/Entities: (i) transfer of amounts in EET directly in the Federal Consolidated Fund maintained by the Finance Division pursuant to the decision of Federal Cabinet on March 29, 2019; and (ii) winding up or revocation of EET’s as may be advised by the Law and Justice Division in the light of the order passed by the Supreme Court in this regard.

On April 9, 2019, the Federal Cabinet made the following decision regarding BESOS: (i) whereas the deciding of case by courts may take some time, an amount of Rs 28.004 billion is lying stuck in EET’s including Rs 117.601 million with the Privatisation Commission, may be returned to the Federal Consolidated Fund # 1 being federal government’s share of dividends; (ii) no amount may be transferred to any bank account henceforth on account of BESOS; and (iii) Privatisation Commission may initiate the case for winding up of BESOS.

According to the Finance Division, the Federal Cabinet, on the directives of the then President, in its meeting held on August 5, 2009 approved BESOS, offering 12 per cent of GoP share to the employees of 80 State Owned Entities as an arrangement to empower the employees. The scheme envisaged that 12 per cent of GoP share of amount received from dividends was to be divided into two options - 50 per cent to be credited to Central Revolving Fund (CRF) maintained by the Privatisation Commission which was to be used for payments of buyback claims on the pre-defined criteria; and 50 per cent was kept by the EETs for distribution amongst the employees of respective entities.

To implement the scheme, EETs were created amongst 236,306 employees in 59 SOEs, however, in spirit, the scheme could become effective for over 23 SOEs only.

Copyright Business Recorder, 2022


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