Bitter-sweet revelations: Pakistan sugar millers deny corruption findings as accusations fly

By Pearly Neo contact

- Last updated on GMT

The Pakistan Sugar Mills Association (PSMA) has categorically denied all findings levelled against them by a government-led inquiry into the state of the nation’s sugar industry, which claimed they cheated both consumers and producers out of billions. ©Getty Images
The Pakistan Sugar Mills Association (PSMA) has categorically denied all findings levelled against them by a government-led inquiry into the state of the nation’s sugar industry, which claimed they cheated both consumers and producers out of billions. ©Getty Images

Related tags: Pakistan, Sugar

The Pakistan Sugar Mills Association (PSMA) has categorically denied all findings levelled against them by a government-led inquiry into the state of the nation’s sugar industry, which claimed they cheated both consumers and producers out of billions.

According to the report, which the government made public last month, a ‘sugar cartel’ comprising of 88 sugar millers were responsible for the skyrocketing prices of sugar in the country.

“[The] sugar mill owners and their associates took benefit of PKR100bn (US$614.9m) to PKR150bn (US$922.4m) every year,”​ said Special Assistant to the Prime Minister (SAPM) on Accountability Shahzad Akbar in a statement to media.

“If PKR1 (US$0.0061) is increased in the price of sugar, it gives PKR5.2bn (US$68.8m)to the sugar mill owners and, according to the report, PKR15 (US$0.092) per kg production cost was increased by the mill owners and another additional PKR15 (US$0.092) per kg additional amount is being charged to consumers by market forces, which means that consumer is paying additional PKR30 (US$0.18) per kg.”

In addition to this, the sugar millers were also accused of pocketing billions of rupees (millions of dollars) worth of subsidies, tax evasion, not declaring production and sales, falsifying reports, deceptive marketing, and various other violations of the law.

At present, sugar prices in Pakistan stand at PKR85 (US$0.52) per kg, even higher than numbers in January this year (PKR74/US$0.48 per kg) and way higher than in 2017-2018 (PKR53.75/US$0.35 per kg).

PSMA has directly rejected everything outlined in the report, claiming that the ‘facts were distorted’​, that market forces had been ‘ignored’​, that the inquiry committee was ‘lacking in expertise to judge the sugar crisis and relevant accounting’​ and that it was ‘ignorant of the sugar sector’s ground realities’​, amongst others.

“The recommendations made by PSMA were ignored by the committee when conducting the inquiry [and] no business can operate as per the [pricing] model they presented,”​ said PSMA.

Several of the mills involved were owned by prominent local politicians such as opposition party Pakistan Muslim League (PML) leader Shehbaz Sharif and current ruling party Pakistan Tehreek-e-Insaf (PTI) leader Jahangir Khan Tareen, as well as various other mills within the PSMA.

Calls for PM resignation

Perhaps the most controversial character amidst this sugar drama is Pakistani Prime Minister Imran Khan, who called for the inquiry into the sugar prices in the first place, but is now seeing multiple parties calling for his resignation after the results were made public – despite not officially being found to be complicit in any of the illegal activity.

Leading these calls is the opposition PML party, which claims that the inquiry is more of a ‘staged circus’​ and that Khan should be nominated as the ‘chief criminal’​ in the scandal.

“Why did Imran order the export of sugar amid a domestic shortage? Why did Imran decide to give subsidy despite a 40% devaluation of the Pakistani Rupee? Why did Imran not take any action against the hike of sugar prices [earlier]? Why was Imran not summoned by the Sugar Scandal Inquiry Commission?”​ said PML-Nawaz Information Secretary Marriyum Aurangzeb after the results were released.

“These are the real questions to which the people of Pakistan demand an answer, [but have not received].”

It is unclear how much of these accusations have political forces at its root, but complicit or not, research analysts have also expressed doubts of Khan’s ability to handle the situation and trouble brewing ahead.

“[Imran Khan] once promised to rid the country of the rampant corruption that has existed since partition, [and] removed several ministers related to the scandal, but whether further action will be taken is uncertain,”​ said Global Food and Water Crises Research Programme research analyst Phoebe Sleet in analysis for strategic research institution Future Directions.

“Pakistan’s wealthy sugar barons have links to a number of powerful political families and have influence over the country’s rural voters, an important demographic during election time. If Khan fails to act, however, he risks losing the urban, middle-class demographic that makes up his power base.

“[The country’s powerful military [is also] reportedly irritated with Khan’s style of government, [and showed it during] the coronavirus pandemic [where] the military sidelined the civilian government completely [to impose a lockdown], right after Khan opposed implementing lockdown measures.”

Another opposition party, the Pakistan Awami Tehreek (PAT) party, has also called for action against regulators and recovery of the funds that had been lost to the millers – but given the circumstances, it looks unlikely that any solid penalties will be dealt out in the near future.

“Making public the sugar scandal report is a welcome move but not a sufficient step,” ​said PAT central information secretary Noorullah Siddiqui.

“The government must recover the plundered amount from the guilty and penalise all those responsible for the scam to take the case to its logical end.”

That said, Siddiqui also seemed to express doubt that Khan would be able to dole out the punishments, publicly calling him ‘helpless before mafias in the prevailing corrupt governance system’​.

Wheat drama also brewing

As if this were not enough trouble for Khan, another set of problems is in the works – this time involving wheat, yet another key staple commodity for the country.

According to AryNews​, the country’s National Accountability Bureau had uncovered a PKR5.35 billion (US$50m) discrepancy in accounts within another scandal in the wheat sector last month, where four corruption accusations were filed against the Sindh Food Department and flour mill owners.

Given that large jumps in flour prices and flour shortages have also plagued the country​ this year, Khan is likely to have his hands full seeking to resolve all these very prominent issues within the country’s food industry, and do it soon – or risk being outed if not.

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