Business mafias lure caretakers and Fakhru Bhai in latest 11 billion bailout
Saeed Minhas
Islamabad: A nexus of caretakers, election commissioner and powerful consortium led by Arif Habib Group learnt to have managed fifth bailout package of Rs 11 billion for an allegedly overstaffed, inefficient and 65 billion under debt Pakistan Steel Mills, learnt The Spokesman on good authority.
Chief Election Commissioner Fakharuddin G Ibrahim has remained the official counsel of PSM in the past. He was the one who presented forensic report of the PSM to Supreme Court revealing mega scam of Rs 26.5 billion owing to corruption, mismanagement and inefficiencies. Sources privy to these developments revealed that Peoples Party government alone doled out two packages to the sick unit with the promise of lifting its capacity from mere 15 per cent of its 1.1 metric ton capacity to over 75 per cent. Last of these packages were handed out by none other than the known propagator of prioritization of PSM, Hafeez Sheikh as finance minister during PPP-led government. He announced a bailout package of Rs 8.6 billion and another two billion to pay the interest of over 10 billion loans. Arif Habib along with a Saudi and a Russian company had managed to sneak past all the political hurdles in 2006 to clinch PSM’s 75 per cent share and complete administrative control for just US $ 350 million. The move however, was stuck down by supreme court even when the workers union’s plea had already been rejected by the Sindh High Court.
Other actors involved in this latest bail out package for PSM include Shahzada Ahsan Ashraf Shaikh, Minister for Production, Dr. Shahid Amjid Chaudhry, Advisor to PM on Finance. Both of these gentleman have remained quite instrumental in keeping the politically appointed board of directors intact. They did not even considered the fact that previous government have been turning down the bailout packages for PSM for the past one year with the hope of giving it to Saudi consortium, informed the inside sources at PM House.
High stake PSM is currently staffing over 21000 employees and has been earning net losses to the tune of Rs 26.5 billion (2009), Rs 11.5 billion (2010), Rs. 11.4 billion (2011) and Rs 15 billion (2012). There has never been a profit except for years 2001-2007 when the PSM announced a dividend of one billion rupees as well but not because of any improvements but due to international price hike in steel products.
increased value thing Inside financial gurus revealed that accumulated losses of the company have crossed the mark of Rs 65 billion (31 Dec 2012), negative equity of Rs 27 billion, outstanding liabilities increased to Rs 72 billion (31 Dec 2012), deficit in gratuity funds plan assets of Rs 6.5 billion and outstanding contribution of Rs 3.2 billion to employees provident fund trust and additional adverse impact of Rs 1.5 billion per annum on account of regularization of over 5000 employees in FY 2010.
Despite, all this what ostensibly should have been left to the next elected government, Prime Minister Justice (R) Mir Hazar Khan Khoso has announced a hefty package to keep the steel mills floating. With Fakhru Bhai getting his legal fees in the tune of millions from the same mills, the decision is likely to benefit many others.
PM Khoso and his advisers met in PM House and decided that since the federal kitty does not have much to offer to the ailing PSM, therefore, federal government would also provide guarantees to scheduled banks for raising Rs.11 billion for Pakistan Steel Mills to meet its working capital requirement. The meeting was told that with this injection, PSM will be able to attain its production capacity of 50% to 60% within six months and full capacity in due course, which will help reduce its losses. It was also decided that Rs. 11 billion will be deposited in a separate escrow account which will be opened for this purpose. Also that all revenues generated from the sales would be deposited in the same escrow account The meeting also decided that Standard Operation Procedures (SOP) will be introduced for operation of the account to ensure that salaries, pensions of employees of PSM are nor affected. The purpose pf opening the escrow account is to ensure that finances being provided to PSM are used for the intended purpose of rehabilitating the project.
Interestingly, the meeting did not even care to look at the forensic audit report which revealed corruption done by big wigs of the mills.Neither any attention was given to the fact that over a dozen cases are pending with the FIA, NAB and various courts including Supreme Court of Pakistan against various retired and serving officials including members of board of directors.
This will be buried like Mehran Gate, Gilani's son and Iftikhar Chaudry's son
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