REFERENCE / COMPLAINT NO. 13/2006

Reference dated October 15, 2006 – Pakistan Steel Mills

The Chairman
National Accountability Bureau
Islamabad

Pakistan Peoples Party ------------------------------------------------------COMPLAINANT

VS

1. Mr.Shaukat Aziz, Prime Minister of the Islamic Republic of Pakistan.

2. Mr. Hamayun Akhtar Khan, Federal Minister for Commerce, Islamabad.

3. Mr. Jahangir Tareen, Federal Minister for Industries, Production and Special Initiatives, Islamabad.

4. Mr. Awais Khan Laghari, Federal Minister for I.T.& Telecommunication, Islamabad.

5. Mr. Ghulam Sarwar Khan, Federal Minister for Labour, Manpower and Overseas Pakistanis, Islamabad.

6. Mr. Aman-Ullah Jadoon, Federal Minister for Petroleum and National Resources, Islamabad.

7. Mr. Babar Khan Ghauri, Federal Minister for Ports and Shipping, Islamabad.

8. Mr. Zahid Hamid, Federal Minister for Privatization and Investment, Islamabad.

9. Mr. Mushtaq Ali Cheema, Federal Minister for Textile Industries, Islamabad.

10. Mr. Liaqat Ali Jatoi, Federal Minister for Water and Power, Islamabad.

11. Mr. Salman Shah, Advisor to Prime Minister for Finance, Islamabad.

12. Dr. Akram Sheikh, Deputy Chairman, Planning Commission of Pakistan, Islamabad.

13. Mrs. Shamshad Akhtar, Governor, State Bank of Pakistan, Karachi     --------------RESPONDENTS

Subject : COMPLAINT UNDER SECTION 5 AND 18 (B) SUB SECTION OF THE NATIONAL ACCOUNTABILITY BUREAU (NAB) ORDINANCE 1999, AGAINST THE HOLDERS OF PUBLIC OFFICE FOR PUNISHMENT UNDER SECTION 10 OF NAB ORDINANCE 1999 FOR CAUSING HUGE FINANCIAL LOSS TO THE NATIONAL EXCHEQUER BY CORRUPTION AND CORRUPT PRACTICE

FACTS AND GROUNDS :

1. That the Pakistan Steel Mills Corporation (PSMC) is a Private Limited Company and its 100% equity is owned by the Government of Pakistan. PSMC is the largest industrial unit of the public sector, which was placed in the privatization list by the Federal government without obtaining any authorization from Council of Common Interest (CCI) which is a mandatory requirement as per the provisions of the Constitution of Islamic Republic of Pakistan, 1973.

2. That serious irregularities and illegalities were committed by the Board of Privatization Commission (PC) and members of the Cabinet Committee on Privatization (CCOP) in the process of putting the unit for bidding. In the first instance the settled principles for inviting intention of interest from the private parties through public proclamation in Press were not invited. Hence serious illegalities were committed in this process. After having issued request for statement of qualifications, the names of nine prospective bidders were approved by the Privatization Commission. The due date for constitution of Consortium, as given in the request for settlement of qualification, was 29th October, 2005. On the other hand, the Consortium, which ultimately participated in the bidding process, on 31-03-2006 consisted of the following:

i).M/s Arif Habib Group of Companies
ii)M/s Al-Tuwarqi Group of Companies
iii)M/s Magnitogorsk Iron and Steel Works, Russia

The said consortium had not applied within the aforementioned due date and their qualification had not undergone the test of scrutiny. It must be kept in mind that the conditions for qualification required that any change can be brought about in the Consortium not later than 30 days prior to the proposed date of bidding.

3. That the PC issued elaborate set of conditions of eligibility in October, 2005, containing conditions of disqualifications for prequalification titled as “Request for Statement of Qualifications, PSMCL October, 2005”. The relevant sub paras are incorporated below:

a. the acquisition of the equity stake by the potential bidder (as where the potential bidder is consortium any part of the Equity Stake by any member of the Consortium) should not be in violation of the laws of Pakistan.

b. has a back record of corporate behavior evidencing any willful default on any of the obligations to any bank or financial institution in or outside Pakistan or is currently in default of its payment / obligation to any bank or financial institution.

c. is involved in any litigation, arbitration or any other dispute or events, which may have a material adverse effect on its ability to acquire the equity stake or to manage PSMC after completion of the acquisition of the equity stake.

M/s Arif Habib Group of Companies, member of the Consortium had admittedly a record which reflects that three legal suits for recovery against the Group were pending in the Sindh High Court. An FIR No. 55/2003 was pending in Lahore against the Group, representation dated 05-04-2005, filed before SECP, Presentation to President and Prime Minister of Pakistan against Arif Habib, arbitration proceedings initiated by Chief Minister Punjab and Proceedings of the Inquiry Committee reporting on the affix of KSE and LSE, dated 31-08-20000 and 14-06-2002. It is worth mentioning that at the time of making intention of interest M/s Arif Habib did mention about the aforementioned proceedings pending against the Group but amazingly the PC nor the CCOP raised any objection to it.

4. That in the whole process of the bidding of PSMC, indecent haste was shown by PC as well as CCOP. On 30th of March 2006, the final Report of Financial Advisor was received. The officials of PC processed the Report on the same day. Meeting of the Board of PC was held and the summary prepared on the same day. The very next day, i.e. on 31-03-2006, the CCOP meets, considers the summary, fixes a reference price, less than the price as approved by PC and authorizes the PC to approve the highest bid.

5. Apart from the above, so many other violations of the Privatization Rules were committed by the respondents, being members of board of PC and CCOP, including therein that the price of land of PSMC was not included in the valuation, which comes to total land of 19086 acres, worth billions of rupees. The respondents had thus given benefit to the successful bidder worth billion of rupees and loss to the government exchequer in the same manner.

6. That the matter was taken up by different parties before the Honorable Supreme Court of Pakistan for declaring the bidding of PSMC as illegal. The Honorable Supreme Court of Pakistan, after hearing the parties at length, passed a short order, dated 23-06-2006, declaring the whole process of privatization of PSMC as illegal and void. On 8th of August 2006, the Honorable Supreme Court of Pakistan issued a detailed judgment in the matter which was published by the daily "Dawn" Islamabad dated August 09, 2006, which is being enclosed for reference. The same may be treated and read as an integral part of this complaint. In the said judgment, serious infirmities, incongruities, irregularities and illegalities have been pointed out by the apex Court of the country, consequent upon which the respondents being member of board of PC and CCOP are held responsible for benefiting successful bidder Mr. Arif Habib, loss to the Government Exchequer amounting to billions of rupees and receiving millions of rupees as bribe, all respondents for violating and ignoring all constitutional and legal necessities for privatization. If the Honourale Supreme Court had not taken up the matter immediately and passed a judgment canceling the whole process of privatization of the Pakistan Steel Mills with offer letter, the Nation would had lost the golden sparrow as expressed by former Chairman Pakistan Steel Mill, Lt. Gen. ( Retd) Abdul Qayyum.

The above facts and Judgment of Honourable Supreme Court of Pakistan have been published in daily "Dawn" on 9-8-2006 (Press clipping attached for ready reference).

CONCLUSION:
Based on the above facts, grounds and in the light of the judgment passed by the Honorable Supreme Court of Pakistan, the respondents in this complaint do fall within the ambit of National Accountability Bureau (NAB) Ordinance 1999 for the purpose of investigation, trial and punishment. These respondents are reportedly guilty of misuse of power, corruption and corrupt practices as defined in Section 9 of the Ordinance and as such are subject to punishment under Section 10 of the NAB Ordinance 1999 based upon the above facts and grounds.

As such the Chairman of the National Accountability Bureau is called upon to initiate investigation in connection to matters set out herein above and further proceed to file a Reference against the respondents for violating the provisions of section 9 of the NAB Ordinance, punishable under section 10 of the NAB Ordinance 1999 in competent court of law in the light of the judgment passed by the Honorable Supreme Court of Pakistan.

Complainant:
Pakistan Peoples Party

Through:
Shah Khawar
Advocate High Court
Dated: 15th October 2006