Pakistan's six major millers, including a former confidante of Prime Minister Imran Khan, owing over 50 per cent of sugar production were acting like a "cartel" and under-reported sugar sales for years, according to a government report released on Thursday.
The report is based on the probe of the Sugar Forensic Commission (SFC) constituted in April to find out those behind the sugar shortage and its price hike that hit the country earlier this year.
"The findings show that the six major millers owing over 50 per cent of sugar production were acting like a cartel," the Prime Minister's aide on accountability, Shehzad Akbar, said at press conference he addressed along with Information Minister Shibli Faraz.
Akbar said that the finding showed that the millers underreported their stocks to evade taxes. They also colluded to create artificial shortages and sell sugar at high prices. He said they sold sugar to unnamed buyers and also indulged in "double booking, under-reporting and over-invoicing".
The report noted that under-invoiced sales from bagasse and molasses by one miller resulted in 25 per cent cost inflation.
"The report also showed that mill owners are maintaining two account books. There is an under-reporting on sugar procurement of 25-30 per cent, which is an absolute,” he said.
Some of the owners also committed corporate fraud whereby money was transferred from their public limited company to their private company, Akbar said.
He said that the sugar industry was given subsidies worth Rs 29 billion over the last five years whereas the tax income from all 88 sugar mills across the country was just Rs 10 billion after tax refunds.
He said that the probe found stark failure of the government institutions to hold them accountable, as their malpractice went on unchecked for years.
Among the prominent mill owners mentioned in the report include Jehangir Khan Tareen, once considered as the most powerful in the ruling Pakistan Tehreek-i-Insaf (PTI) after Prime Minister Khan.
Tareen, one of the richest men in the country, was dubbed as “ATM” of Khan by opposition parties after he was frequently seen using his private jet to haul lawmakers from far flung areas to Islamabad in order to win their support to form the government after elections in 2018 as Khan''s party lacked numerical strength to form the government on its own.
"I do not maintain two sets of books. I pay all my taxes diligently," Tareen said and vowed to answer every allegation and be vindicated.
Pakistan Muslim League Quaid (PML-Q) leader Moonis Elahi is also one of the mill owners named in the report. His party is an ally of Khan at centre and in Punjab province. His father Pervaiz Elahi is Speaker of the Punjab Assembly.
Hamza Shehbaz and his father Shehbaz Sharif of opposition Pakistan Muslims League-Nawaz have been also named in the report.
The scandal was a test case for Khan who came to power in 2018 riding on the slogan to expose the corrupt mafia and put them in jails.
"The Prime Minister had kept his promise and it is our commitment that we will not tolerate any kind of corruption,” said information minister Faraz.
Akbar said that now action would be taken against those named in the report, including registration of cases and prosecution on charges of for corruption, cheating the public, evading taxes, fraud and other crimes.