The Armed Forces and the Corporate Sector
By Farhatullah Babar - April 30, 2007

If the prime minister’s finance adviser thought that by living in denial he could allay the widespread concerns about the army’s growing involvement in the corporate sector he was gravely mistaken. In saying this, I am referring to a report in your newspaper titled ‘Salman denies army role in corporate sector’, and published on April 28.

If he did not know it, here is a partial list of the military’s corporate enterprises as recently placed before the Parliament in reply to a question besides the several dozen similar enterprises run by Shaheen Foundation and Bahria Foundation of the Air Force and the Navy respectively.


Fauji Foundation : Fauji Sugar Mills, (more than one), Fauji Cereal, Fauji Corn Complex, FONGAS (Natural gas supply company), Fauji Poly Propylene Products, Fauji Fertilizer Company (FFC), Fauji Jordan Company, Fauji Cement, Fauji Oil Terminal Company Project (FOTCO), Fauji Kabirwala Power Company Limited.

Army Welfare Trust: Askari Stud Farms, Askari Farms, Askari Welfare Rice Mill, Askari Welfare Sugar Mill, Askari Fish Farm, Askari Cement (more than one plant), Askari Welfare Pharmaceutical Project, Magnesite Refineries Limited, Army Welfare Shoe Project, Army Welfare Woollen Mill, Army Welfare Hosiery Unit, Travel Agencies, AWT Commercial Plazas, Army Welfare Shops, Army Welfare Commercial Project, Askari Commercial Bank, Askari Leasing Limited, Askari General Insurance Company, Askari Welfare Saving Scheme, Askari Associate Limited, Askari Information Service, Askari Guards Limited, Askari Power Limited, Askari Commercial Enterprises, Askari Aviation, Askari Housing Schemes (at several locations)

The adviser claimed that retired military officers were involved in private businesses and that too for welfare purposes but is the Fauji Foundation really a private concern like any other.

Under its Scheme of Administration the Fauji Foundation is allowed “to receive from government or other bodies or person any contribution to the Foundation”. Which other private enterprise gets contributions from the government also?

The Fauji Foundation is administered by a committee whose chairman is the defense secretary and its members include four principal staff officers of the GHQ and two senior officers of the Pakistan Navy and the Air Force, all paid out of the public funds. A three star serving general was appointed in 2002 as its chief. What a fine example of a private enterprise run by serving military officers and defense secretary.

During question hour in the Senate last year it transpired that the finance ministry accepted loan liabilities of 9 billion rupees of the Foundation. Which other private concern had been provided such a preferential treatment?

Worse still, after being declared ‘private’ they are declared as unaccountable too. In reply to a question in the National Assembly in 2005 it transpired that the Khoski Sugar Mills belonging to the Foundation had been sold at 300 million to an entity that had not even participated in the bidding process. The highest bid of 387 million was ignored. When the Senate Defence Committee asked the head of the Fauji Foundation, himself a former chairman of NAB, to appear before it he refused and chose to refute the allegations through newspaper ads. We were told to shut up.

If the FF and AWT are claimed to be private entities what are other entities like the Frontier Works Organization (FWO) and the NLC doing in the private commercial sector in a playing field that too is tilted in their favour? According to information placed before the Senate on December 30, 2005 the National Highway Authority (NHA) alone awarded twelve contracts costing over 18 billion to the FWO without bids between 2001 and 2005.

Further, not only the contract of collecting toll tax on toll plazas have been given to FWO and NLC without bids but contracts already given to private parties were cancelled and given to it according to information placed before the Senate.

The military’s growing interests in corporate businesses and land has now begun to attract national and international attention and criticism but we are living in self-denial.
That was why the former British High Commissioner in Pakistan Mark Lyall Grant publicly stated about two years ago in Islamabad that the military’s corporate business interests had increased manifold. He also said that it was hampering poverty reduction efforts and effectiveness of the bureaucracy and judiciary in the country. An un-named senior official of the Foreign Office promptly announced that a demarche had been served on the high commissioner for his critical remarks as ‘unwarranted and inaccurate besides being an infringement of diplomatic norms’. But that did not change the reality.
Are the defence housing authorities also really private bodies competing with other private entities in a level playing filed? Is there any other private housing society that is headed by a serving corps commander and whose executive functionaries such as the Administrator are serving senior army officers drawing salary from public exchequer? Is there any other private housing authority that can get land at a price as the DHA Karachi got sometime back and against which the provincial government even moved the court?

During question hour in Parliament it has transpired that military officers get one after 15 years of service, a second one after 25, a third one after 28 years and a fourth one after 33 years of service each worth more than 15 million rupees in the open market. To call it a welfare activity is stretching the meaning of the word a bit too far.

The un-level playing field to the military’s industrial and commercial enterprises, the dispossession of tenants from farmlands in Okara belonging to the Punjab government, the acquisition of additional 870 acres of prime land in sector E-10 at dirt cheap price of Rs 200 per acre for the new GHQ (in addition to the 1470 acres already earmarked), the setting up of strings of defense housing authorities, first in Karachi and Lahore and lately in Islamabad, and converting state lands meant specifically for defense purposes into golf courses and housing colonies as disclosed in the Parliament are clear manifestations of military’s growing corporate and real estate business. The issue will not disappear merely be denying it.

Come on Mr Adviser! Instead of living in a state of denial let us address the issue and do something about it.

The writer is a former PPP senator and a member of the Senate’s human rights committee. Email: drkhshan@isb.comsats.net.pk