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REFERENCE / COMPLAINT NO. V
Reference dated 29-1-2001 – Proposed Sale of Stakes in PTCL
January 29, 2001
Lieutenant General Khalid Maqbool
Chairman
National Accountability Bureau
Chief Executive’s Office
Islamabad
Subject: Selling of Stakes in State Owned Telecom Co.
Dear General Khalid,
Enclosed please see press release dated January 26, 2001 with regard to
proposed sale of PTCL. It is requested that NAB look into this matter.
Yours Sincerely,
(Jahangir Bader)
Secretary General
The Reference / Complaint is based on the source incorporated as under :
Press Release
PPP challenges Selling of Stakes in State Owned Telecom Co
ISLAMABAD, 26 January 2001: A Pakistan Peoples Party taking note of the
decision by the Finance Ministry to sell Stakes in State Owned Telecom calls
upon General Khalid Maqbool of the Accountability Bureau to stop the sale
and begin investigations into whether corrupt practices have taken place.
"Pakistan Telecommunications is one of Pakistan's Crown Jewels. The NAB must
investigate reports of a back hand deal before the PTCL is allowed to be
sold" the spokesperson said.
"There are reports that two companies owned by Rafiq Harriri, Prime Minister
of Lebanon, have already settled with Finance Minister Shaukat Aziz the
purchase. One of those companies is Saudi Oggeh and another a Lebanese
company. Given the importance of the position held by Prime Minister Hariri
and the possibility of a corruption case subsequently arising, it is
important that Pakistan preserve its relations with Lebanon by doing an
inquiry before the sale" the spokesperson said.
Privatization Ministry yesterday announced that the privatization process
for state-owned Pakistan Telecommunication Limited Company (PTCL) will begin
by the end of February with the invitation of expressions of interest.
However, a PPP spokesperson said that it had received reports "that this is
a predetermined deal between Finance Minister Shaukat Aziz and Prime
Minister Harriri's son who now looks after his Father's business".
Noting that President Estrada had been forced to relinquish over corruption
charges, the spokesperson said, "Any shady deal could have serious
ramifications for the country and Pak Lebanese relations and therefore NAB
should get involved to allay public concerns before it is too late."
The spokesperson said that in the PPP government, forty per cent of shares
had to be sold before management could be transferred. This was reduced to
thirty per cent under Nawaz Sharif.
"Shockingly, according to reports, the law is to be changed in an abuse of
office and public trust by handing over PTCL to a Harriri interest Saudi or
Lebanese company for between sixteen to twenty per cent".
Giving the background, the spokesperson said, "PTCL future earnings of five
years can be mortgaged to procure cost of sixteen to twenty percent shares
from any leading international bank as PTCL is a profit making company. Thus
selling at this rate is selling for free and this is corruption".
Deriding reports that the privatization of shares would bring in much needed
foreign exchange, the spokesperson said, "Pakistan can obtain the same
amount of foreign exchange by mortgaging PTCL future earning for five
years". He said that a minimum threshold of thirty percent was needed to
"bring in genuine money rather than give the shares for free." He said "what
else can be concluded other than the shares are being given for free when
the threshold of shares is lowered to an amount for which banks are willing
to loan money on future earnings."
The Spokesperson noted that PTCL has a monopoly on basic telephony in the
country until December, 2002. "The PTCL financial record is sufficient for
anyone, be it Pakistan government, or a private individual, to get a loan by
mortgaging sixteen percent to twenty percent shares with a leading
international bank".
He said that PTCL belongs to the country but "if a private company is able
to mortgage the future earnings and buy the smaller amount of shares
(between sixteen to twenty percent) it means the private company is getting
PTCL for free".
"Calling it a scandal, the spokesperson lamented, "It is deplorable that the
offspring of Prime Ministers and other influential leaders are being
involved in the deal. Such involvement can mar relations of Pakistan with
other countries."
The Spokesperson said that the PPP "Valued its relations with Lebanon and
held Prime Minister Hariri in esteem. " He doubted that the Lebanese Prime
Minister was aware that Pakistan sold shares at thirty percent for
management control and that an abuse of office was taking place in reducing
the amount for the purpose of the sale."
Finance Ministry officials have declared that "soft marketing" has invited
investors from Saudi Arabia, Lebanon and other countries. But PPP has
alleged that reports indicate that the deal has already been settled between
Finance Minister Shaukat and Prime Minister Hariri's son.
Although government is claiming that it is expecting to earn close to US$4
billion from the privatization of PTCL, PPP Spokesperson said "this is a
smoke screen. An amount of one billion dollars will be borrowed from Banks
against future earnings of PTCL as down payment. Why should a foreign
private company get control of PTCL for borrowed money when Pakistan can
borrow the same on the same terms and retain control of PTCL."
The Spokesperson hoped that NAB would examine the matter.
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