FIA’s Inquiry Committee completes investigation against sugar cartel

Inquiry Committee points out six influential groups including Tareen and Sharif families behind manipulation of sugar price

KARACHI: The Committee of Federal Investigation Agency (FIA) completed its inquiry against the cartelization of sugar industry involved in sugar price manipulation in the country.  

According to Todaynewz, a Pakistani website, Inquiry Committee has pointed out six political and influential groups including Jahangir Tareen and Sharif family, Zardari group in Sindh and others who were involved in cartelization and enhancing prices of sugar in the market.

The Prime Minister Imran Khan has formed the inquiry committee to probe sugar price manipulation. The Sugar Committee was comprised on Director General FIA, representative of IB not below BS-20/21 grade, Director General Anti-Corruption Punjab, and any other member co-opted by convener.

 Inquiry Committee in its report said that the major Increase in ex-mill prices of sugar occurred between December 2018 to June 2019, when the sugar price was increased by Rs 12 per kg from Rs 51.64 to Rs 63.59 per kg. During this period, there was no increase in sales or other taxes and the price of sugarcane, the major input, was also stable. The only factor that stands out was the export of sugar which coincides with this period, the report said.

To establish the manipulation and cartelization of sugar mills concrete evidence was required which can be possible through a proper forensic audit of the sugar mills. However, as per the data provided by the SECP and PSMA, some facts stand out showing control of very few on the industry.

According to the report, these six groups control about 51 per cent of the sugar production in Pakistan. These groups were included JDW Group, RYK Group, Al-Moiz Group, Tandilanwala Group, Omni Group and Sharif Family Mills.

These groups have the capacity to manipulate the market by joining hands for cartelization and subsequent manipulation. The control of so few, mostly with political background, of the sugar industry shows the wrong influence they can exercise on policy and administration.

The sugar mills have their own association called Pakistan Sugar Mills Association (APSMA). Many policies are conveyed to the sugar mills from the platform of PSMA. The call for the closure of the sugar mills In Punjab, for instance, from December 30 2019 to January 1 2020 was also given from the platform Of PSMA. Later on, PSMA held meeting with the Punjab government and then the strike was called off.

All the mills did not take part in the strike but this platform can be used in acting in union in order to obtain objective by using pressure tactics.

In the strike call four sugar mills of Sharif Group, four of Al-Moiz Group, two of Tandianwala Group, two of RYK Group and one of JDW Group and many other mills participated.

The maximum number of mills participated in strike were 25 on one particular day. Since the strike was called off on the call of PSMA, it can be safely assumed that PSMA initiated the strike as well. This was the sign of cartelization, not all sugar mills are part of it, but there are groups of sugar mills with common interests.

Utility Stores Corporation had also floated tenders on different dates for procurement of sugar with different quantities. But sugar mills had offered the same price except one.

This kind of offer indicates that there are some collusive practices. The cost of production of each and every sugar mill is different and it is impossible to offer the same price with varying cost of production. Though there are signs of cartelization but the concrete evidence can be established by conducting forensic audit.

About The Author