Pakistan Steel Mills located 40km south east of Karachi came under some serious controversies after reports continued to appear in the media in early 2009 of some serious financial problems that may have effectively left this organization in some serious debt which may actually extend to well beyond a substantial few billions, reportedly upto the tune of Rs 22 billion, if not more. The first set of reports emerged during middle half of February 2009 following which the Competition Commission of Pakistan undertook a detailed investigation and came up with some very alarming discoveries which place the Abbas Steel Group, owned by Riaz Lalji, also a close associate of Asif Ali Zardari, being interincisly involved in some serious corruption issue in the previous PPP tenures and has been labelled as “fugitives from law” in turn was a close associate of Asif Ali Zardari being solely responsible for recent recent Steel Mill debacle.
The initial set of accusations generally started off with accusing the, then Chairman of Pakistan Steel having a strong bias towards the Abbas Steel Group [ASG] accusing them of allocating all the billets being produced by Pakistan Steel Mill to be exclusively sold to the Abbas Steel Group at well below the market price while other competing vendors, who had actually made full advance payments at official market price, were left stranded and starved literally running their own factories into debt and ultimate closure.
It must be recalled that in May 2008, Moeen Aftab Sheikh was appointed as the Chairman of Pakistan Steel by the PPP to “achieve optimum level of production and making Pakistan Steel cost-effective”. Ever since the appointment of Moeen Aftab Sheikh, as the Chairman of Pakistan Steel, a strong favoritism was extended to Abbas Steel Group giving them exclusive rights to all the production coming out from the factory at well reduced and discounted prices
THE DISPUTED PRODUCT – LOW CARBON STEEL
It may help us to understand which product is under question. Pakistan Steel being the largest and the only large scale blast furnace in Pakistan has generally a monopoly on the raw materials coming out for the steel industry. It produces a wide ranging of products depending on the market requirements. The product that is being disputed in this case is a specific type of steel product known as low carbon steel billets. These billets are generally produced in blast furnaces that have the ability to produce low carbon steel from iron ore and air. This product has a carbon content of 0.1 percent or lower, which gives the steel malleability and ductility enabling it to be shaped into wire rods which are then used to make end products such as screws, nails, buckles, fan covers and welding rods. The international classification for this item is SAE 1008 and SAE 1010
Other comparable products are high carbon steel billets with a content of more than 0.1 percent carbon naturally labelled as high carbon steel is brittle and is considered an extremely inferior quality.
STRONG BIAS TOWARDS SELLING ALL GOODS TO ABBAS STEEL
The Pakistan Steel Mills shares all its market data, production and selling data, also known as Product Allocation (NOR) [Notice of Readiness] data publicly on its website. The data stream showed some alarming irregularities in 2008. The Low-carbon steel SAE 1008 and the SAE 1010 billets, in the first half of 2008, were allocated at a higher level then the usual norm to the Abbas Group, but since June 2008 [after the new Chairman assumed office] there was a considerable spike in the allocation to ASG and the increase topped the charts in October and November 2008 where 100% of the steel being produced in Pakistan Steel Mill was given to ASG. It was observed that to help cater to the much sought after low-carbon steel and also fulfilling the requirements of Abbas Steel Group production to other higher end carbon stel categories was stopped and all the mills resources were allocated to the low carbon steel
A chart is reproduced from the Competition Commission investigative report shows the alarming trend seen in 2008, it compares the low-carbon steel supply to two other randomly selected steel vendors as compared to Abbas Steel Group
If you notice in there is no data publicly available on Pakistan Steel Mills website for December 2008 and the trend continued into January 2009, even Transparency International is on record to have complained for this irregularity. The NOR data started reappearing in February 2009 and even then the same identical pattern was noted where again Abbas Steel Group was on the recieveing end of almost 100% of all the billets emerging from the Pakistan Steel production line which had now become exclusively for low carbon steel
PAKISTAN STEEL RE-ROLLING MILLS RESPOND
Having noticed this strong bias and favoritism towards Abbas Steel Group the Pakistan Steel Re-rolling Mills Association wrote to the Chairman objecting of many irregularities, the pleas were generally left unheard until the Re-Rolling mills association to approach the Ministry of Industries and Production who summoned a high-level meeting in December 2008 chaired by in the documented minuted they “drastic reduction in prices of billets (from Rs 63,000 per ton to Rs 41,000) cleared the inventory of PSM in a week to 10 days but the major share of the billets was sold to a few parties.”
Following the meeting in December where the Ministry asked for comprehensive answers from the Steel Mill, the requests were left ignored, in turn, Pakistan Steel on the night of 9-10th February actually sold off the remaining stock of 4,500 tons, at again a below the cost price to “favorites.” resulting in a loss of over Rs 34,000 per ton. While the traders then re-sold these billets to the market at a premium of between Rs 7,000 and Rs 8, 000 per ton resulting in a mammoth potential loss of Rs 153M to Pakistan Steel while these favorite middlemen pocketed a handsome commission of over Rs 35M.
The scarcity of low-carbon steel in the market being hoarded by a select group of traders had the on-demand price fluctuating anywhere from Rs 5,000 ‘on’ to even a reported premium of around Rs 100,000 over and above the market price. An advantage which Abbas Steel expertly exploited to make millions, despite having purchased the steel at a significant below the market price discount from Pakistan Steel.
TRANSPARENCY INTERNATIONAL
Even Transparency International Pakistan (TIP) had expressed concern over the fact that Pakistan Steel Mill was “not selling its products in a transparent way and is unnecessarily delaying rise in the prices of billets” According to the news item, TIP “Some Pakistan Steel Mill officials are favouring a company by supplying and allocating extraordinary quantity of billets. As a result, other dealers and re-rolling mills are deprived of getting billets.”
In addition there were numerous confirmed reports where Abbas Steel Group was given extra ordinary procedural advantages, an example quoted in the investigative period is of November 2008, a tender contract was awarded to Abbas Steel Group for 4,000 M/Tons of Billets valuing at over Rs 194 million, which included an extra ordinary interest-free credit facility of Rs 76M for 90 days on November 25, 2008 even before the company [ASG] completed any proper registration procedures or did the Steel Mill await the proper clearance of the security deposits submitted by ASG on Nov 27th [checks were cleared on 3rd Dec 2008]. but the steel was shipped out of the factory floor on the 26th of November. Complicating this uncharacteristic “interest-free” policy was the fact that the prices of steel products was also reduced by over 35% of the market price on November 26, 2008 and 100% of the Pakistan Steel production was handed over to Abbas Steel Group, surely such favoritism helped the group make millions over night
There is so much evidence to suggest that there was a seriously issue of favoritism and corruption, it seems that towards Riaz Lalji who is a close aide of Mr. Asif Ali Zardari. The exact implications of this entire scam has already run into well over Rs 22 Billion but if we factor in the 180M population of Pakistan it is as if Mr. Asif Ali Zardari in cohoots with Riaz Lalji swindled approximately Rs 150 from each Pakistani in a short span of one year. How long are we going to keep silent while the menace runs this entire country to the ground. It must be noted that all facts reported in this article were presented as a summary from the investigative report by the Competition Commission of Pakistan and are authentic to my best understanding. The question that remains to be answered who is willing to take these corrupt to the bleachers.
Comments
27 responses to “Abbas Steel Group solely responsible for Pakistan Steel Mill debacle”
It saddens me when I hear of debacles one after the other in the state run organizations and institutions, specially Pakistan Steel. The mess in Pakistan Steel was cleaned up in the previous military regime and was made a profitable organization. Now we are back to square one. How much more is to be looted from this dear country of ours for the satisfaction of a few??
Most of Rs100bn loans written off in Musharraf era Wednesday, December 02, 2009 Industrialists, military men, politicians benefited since 1985;some cases were genuine, some bogus By Rauf Klasra – ISLAMABAD: Industrialists, military men and politicians have got loans of over Rs100 billion written off from banks since 1985, the National Assembly Secretariat record has revealed .http://www.thenews.com.pk/top_story_detail.asp?Id=25860
ISLAMABAD: More than Rs18.5 billion loans obtained from government banks, financial institutions and agricultural bank were written off during the first four years of the military rule of Gen. (Retd.) Pervez Musharraf. According to the National Assembly’s documented records obtained by Geo News, the National Assembly on a query of Aftab Jiliani in June 2003 presented 869-page details regarding the loans written off during the first four years of Musharraf regime.
The document says loans worth Rs11.9337 billion obtained from government banks and financial institutions during 1999 to June 2003 were waived. The principle amount of the debt was Rs5.6385 billion while Rs6.2953 represented the mark up.
The agricultural bank written off Rs5.4 billion loans extended as agricultural loan during 1999 to 2003 and Rs1.746 billion as agro-industrial loans. Loans over Rs18.5 bn written off in Musharraf regime Updated at: 1749 PST, Wednesday, December 02, 2009 http://www.geo.tv/12-2-2009/53971.htm
Speaking of scams related to Asif Zardari (and Mush), let's not forget the KESC ones….
KESC Swindles: Past, Present, and Future
@Aamir Mughal
Regarding those agricultural bank loans, let's not forget most of the beneficiaries were INDUSTRIALISTS and not farmers:
BTW: <a href="http://www.dawn.com/wps/wcm/connect/dawn-content-library/dawn/news/pakistan/12-pms+wife+paid+rs455m+against+rs570m+liabilities–bi-07" rel="nofollow">PM Gilani's wife is a recent beneficiary of ZBTL, getting away with stealing over Rs 500 Million
very sad .Pakistan Steel Mills is the largest and major Industry.It can be the back bone of Pakistan economy.
It is a shame when smaller states of former Russia or Soviet union are progressing because of Steel mills we are making ours bankrupt.
A project of this huge scale and level in itself is a matter of pride .Half of Karachi is employed by Steel Mills.
Corruption is like a termite it has eaten the basis of our economy what is left is facade,chairmans and governments,their shiny cars,branded shoes ,expensive watches and bank balances and properties……..abroad.
What is our future???Do people of Pakistan really know the worth of Pakistan Steel mills?
How many people know what a big Industry it is?
It can turn around our future and fortune?
Extremely disillusioned and disappointed.
How many of its units are operative ?Its capacity is huge?
Steel is in demand in the world.
if smaller industries of steel can provide the back bone for economic fortune of other countries why is our so decadent.
what are the import,export and contribution of pakistan steel mills in the gdp of pakistan..
During my service I cam across a case [after 12 Oct 1999 Military Mutiny against the Elected Government of Pakistan] and that too after Formation of National Accountability Bureau i.e. ALLEGEDLY ACROSS THE BOARD ACCOUNTABILITY BRAND", that Musharraf appointed Colonel [R] Afzal, Chairman Pak Steel Mill [despite being a Murder Case was registered him for killing a labourer] – So much for the accountability and NAB Files.
Board of Directors
Lt. Gen. (R) Sabeeh Qamar-uz-Zaman
http://www.thecitizensfoundation.org/profile/peop…
Dear Awaba Sahab,
The above mentioned General is still absconder on FIA Record for Corruption Cases in Pakistan Steel Mill registered in 1996.
February 2001 NAB was interrogating 358 bureaucrats
The National Accountability Bureau is interrogating 358 bureaucrats including Pakistan’s sitting ambassador to the United States, and dozens of senior serving and retired officers , for their alleged involvement in corrupt practices or misuse of power. Maliha Lodhi, Pakistan’s Ambassador to United States, Mohammad Zafarullah Khan, ex secretary Water and Power; A.R.Najmi, Registrar Federal Shariat Court; Ms Surosh Sultan; an influential DMG officer and wife of politician Nasruallah Drashek; Salik Nazir, ex-Chief Secretary Sindh; Arshad Sami Khan, former federal secretary Culture; and Shahid Rafi are the most prominent among them. According to a latest report of National Accountability Bureau submitted in the Supreme Court on February 7 by Syed Sharifuddin Pirzada, 190 cases of corruption are being investigated by NAB offices in Punjab; 82 by NAB Sindh; 35 by NAB NWFP; and 40 by NAB Balochistan. In comparison to the civilian bureaucrats, NAB is interrogating 15 retired army officials for their alleged corruption. They are Maj Gen (R) Sabeeh Qamar Uzzaman; Maj Gen (R) Sikandar Hayat; Major General Shujjat Bukhari; Major (R) Tariq Javed Afridi, MD Choolistan Department Authority; Brig Imtiaz, former DG IB; AVM (R) Umar Farooq, Admiral Mansoorul Haq; Vice Admiral Akbar H Khan; Maj(R) Muhammad Nawaz, PASSCO; ; Major (R) Mushtaq Ahmad, OSD Establishment Division; Air Marshal (R) Waqar Azeem; Brig (R) Tahir Khaili; and Air Cdr (R) Shahzada Babar Shah.
The Citizen Foundation
Board of Directors
Lt. Gen. (R) Sabeeh Qamar-uz-Zaman
In 1992 Prime Minister Nawaz Sharif appointed a General, Sabeeh Qamar-uz-zaman, as chairman of Pakistan Steel. He was given the task of improving the situation and “normalizing” the working conditions. He imposed an undeclared ban on the trade unions at Pakistan Steel. Terror and the harassment of the unions were enforced in the name of discipline. An internal security intelligence unit, the FIU [headed by Colonel Afzal involved in a murder of a labour Laiq Chandio and later appointed as Chairman Pak Steel by Musharraf because he was Musharraf batchmate], was also established and was headed by an army colonel. This notorious intelligence unit “discovered” that 1500 workers were a “security risk”. These workers were punished and removed from their jobs.
niether surprised nor shocked…..
what one could expect in country like pakistan.
we need a bloody revolution which could send this current elite into the concentration capms where they could face a extremely painful and agonzing deaths.
no other way out…
This notorious intelligence unit “discovered” that 1500 workers were a “security risk”. These workers were punished and removed from their jobs.
—–
Sometimes I read things which send chills to my spine.Institutional,cool,contemplated and planned torture,abuse and murder.
i do not know why people do not follow procedure it is very easy to get rid of people through proper channels like warning letters and dismissal letters ….
why these people wait until the things come to such a worst point that they have to resolve it with torture,murder and abuse????
@dr Jawwad Khan
Welcome back !!lagta hai hajji sahab hou gai hain aap.
Mubarrak hou!!!
hahahaaaa. Aadmi haji ho ya na ho,kam az kam paji na ho….
i was on eid vaccation and out of city.
eid mubarak
Thank you Dr.Sahab
Yes Belated Eid Mubarak 🙂
http://www.ahmedquraishi.com/article_detail.php?i…
above is the link of letter of Ameer jamaat Al Dawwah Pakistan to Geo TV.
Whatever Happens in USA or India
Why Pakistanis have to pay the price ?Our goverment fails us.
Politicians, Generals, Businessmen, Bureaucracy
SAB CHOR . . .
es pe ker zara gor . . .
One cannot be surprised any more. It is not a matter of whether they did it or not. It is only a matter of how much they looted. I don't believe we know the exact figures. I believe it is only the top of the iceberg.
We cannot eradicate corruption to a zero-level, which means that every party will have their own cases in a normal society, but tell me is there any clean politicians from PML-N, PPP, JUI-F or ANP?
How "rich" Pakistan must be. The military, the bureaucrats, the businessmen, the politicians etc. are all busy looting Pakistan and the vast majority of Pakistanis are still silent. Are Pakistanis morally dead people?
Observer,
You can say it about politicians but not Pakistan Army. Thats a breed of angels (guardian ones) free from corruption and the owners of LOYALTY TO PAKISTAN as Zaid Hamid Kezzab and Ahmed Qureshi would claim it.
@Abbas
Do you live in a cheese dome?
The root cause of much evil in Pakistan is the military! Even the corrupt politician are a product of evil designs by the generals!
Who allowed the Guard of Honour???
Guess who walked away with nation’s 100 bn rupees? Friday, December 04, 2009 Chaudhrys, Saifullahs, Jatois, Legharis, Tawakals, Saigols,Jams, generals; some cases were genuine
By Rauf Klasra http://thenews.jang.com.pk/top_story_detail.asp?I…
The first loan of Rs70 million was outstanding against the Punjab Sugar Mills and was written off by the National Bank of Pakistan along with the actual loan amount. The mill was owned by Chaudhry Shujaat Husssain, Chaudhry Mansoor Elahi, Chaudhry Pervez Elahi, Chaudhry Gulzar Mohammad, Chaudhry Wajahat Hussain, Chaudhry Sabhat Elahi, Mrs Qisara Elahi (wife of Chaudhry Pervez Elahi), Mrs Kasur Hussain (wife of Chaudhry Shujaat Hussain), Mrs Khalida Begum (wife of Gulzar Muhammad).
The second loan of Rs15 million was written off by the UBL outstanding against Punjab Sugar Mills. The beneficiaries were once again Ch Manzoor Elahi, Ch Shujaat Hussain, Pervez Elahi, Wajahat Hussain, Shafaat Hussain, Gulzar Ahmed and Mrs Qaisra Elahi, Khalida Begum, and Kauser Hussain. The UBL once again wrote off another loan of Rs34.1 million outstanding against the Spaco Private Limited. The beneficiaries were the same — Ch Pervez Elahi, Shujaat Hussain, Manzoor Elahi, Wajahat Hussain, Sabahat Elahi, Mrs Kauser Hussain, Qaisra Elahi.
No ID no worry, get loans and get them written off also
Saturday, December 05, 2009 By Rauf Klasra http://thenews.jang.com.pk/top_story_detail.asp?I…
ISLAMABAD: As if the generous writing off of loans worth Rs59.94billion during the General Pervez Musharraf reign wasn’t bad enough, now official documents show that hundreds of these borrowers were even given these loans with such casualness and deliberate neglect that not even the national identity cards of the borrowers were demanded by the banks, what to talk of other collateral and sureties.
The official record of these written off loans submitted to the National Assembly and available with The News revealed that in an unbelievable large number of cases the lending institutions, a bank and another (now defunct) financial entity, had issued huge loans to the individuals without even getting their National Identity Cards (NICs) as per prudential requirements.
@Amir
No wonder, when politicians (children of the army) openly say that corruption is their right.
http://www.youtube.com/watch?v=zjIfV8mTiTs
Is there nobody to catch this b****** Jatoi, and hang him upside down and give him a round of chitrool?
These bastards!!!
Poor people are selling their kids or committing suicides and yet these motherf@ckers are raping this country turn by turn.
Pervez Musharraf (one big Chuttoo from Chuttoo Army), was giving these blessings just to strengthen his illegal rule.
Now we have a democratically elected Chutto, who belongs to the same group of thugs, who are taking their turns to amass all the wealth they can and when their turn is over they cry of being victimized because of their ethnicity. FUCK THEM ALL, but who will? They are arms in arms with all the goons who rule and plunder this country, day and night.
Five generals also got their loans written off Sunday, December 06, 2009 By Rauf Klasra http://thenews.jang.com.pk/top_story_detail.asp?I…
ISLAMABAD: If you thought that only civilian and politicians got billions of rupees worth of loans written off from state-owned banks, you thought wrong. Records now show that many top military officers got their loans written off. This lucky lot included five lieutenant generals, two major generals and a battalion of other senior uniformed beneficiaries, with some Army (mis)managed institutions to boot.
The Army controlled institutions also got their share from the national plunder with the Army Welfare Trust (AWT) got a massive loan written off worth Rs 14.49 million from a state-owned financial entity, which is now defunct (hardly a surprising fate). Talking to The News from Peshawar, General (retd) Ali Kuli Khan said that he “did not remember” getting any loan written off by him during his military service. General Kuli said, “There might be some rescheduling of the loans by the banks outstanding against the mills.” He said only the politicians get loans written off by using their clout. Of course, general can dare anyone argue with that logic.
Lt General (retd) K M Azhar, who later became active in politics, of Rex Breen Batteries got Rs16 million written off by the Agriculture Development Bank. His business partners were Misbah Azhar, Sward Azhar, Ahmed Jamal Siddiqui, Syed Ijaz Ahmed Hashmi, Mauro Dr Bashir Ahmed.
Lt General (retd) SA Burkey and Lt General (retd) Safdar Butt also figure amongst the happy generals benefiting from the state institutions generosity.
Another prominent name on the list is that of Air Marshal (retd) A Rahim Khan. Air Marshal (retd) Viqar Azeem also got Rs15 million written off from Pakistani Kuwait Investment Co. Lt General (retd) SA Burkey, Major General Zahid Ali Akbar, Brig MM Mahmood, Begum Omar Mahmood, Saeed Ahmed also got loans written off.Gohar Ayub Khan, brother of General Kuli Khan—Raza Kuli Khan also got a loan of Rs7.2 million written off against Rehana Woolen Mills. Tariq Ayub Khan, Zahid Ahsan, Ahsan Khan were the directors of the mills whose loan was written off by the financial institution SAPICO.
I humbly appeal to the President of Pakistan to aid in all possible means to put behind bars all persons present and previous of Pakistan Steel Mill who have caused this national treasure to ruins. Shaheed Zulfiqar Ali Bhutto's legacy of strong and stable Pakistan must be realized in the remaining years of your office. Pakistan's Political Process will continue without interruption from a mid term polls INshallah.
salam
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