EDITORIAL: The sugar price inquiry of last year has taken its sweet time returning to the headlines, yet the way in which the state is positioning to take action against the so-called mafia that manipulated prices and made life miserable for the common man is enough to show that it has opened quite a can of worms. That a nexus of “industry barons, sugar brokers and satta agents (speculative pricing players), in active connivance with sugar mills, have transformed into a clandestine sugar satta mafia and are operating in a collusive but secret mode” and were able to fleece unsuspecting consumers of a good Rs110 billion just last year, is truly outrageous and a proper crackdown against them was long overdue. But the government needs to be careful about the way it goes about dismantling this cartel because its agencies and departments have a tendency for heavy handedness and making outrageous claims. Often the targets of their investigations are able to get relief through stay orders precisely because the methods employed and the claims made are so extreme that they are difficult to defend.
The sugar business clearly needs to be properly regulated because while Pakistan does have a commodities exchange, and it is the proper platform for futures/forward trading, sugar contracts are not traded on it. All such activity is carried out strictly between sugar mills, a handful of dealers, and their vast networks of agents. Some of these dealers are more flush with cash than mill owners themselves and prefer to enter into deals ahead of time, which is perfectly understandable. The crushing period for sugar is three months, after all, yet it is sold, consumed and stocked throughout the year. That requires locking in large amounts of capital, which means that the dealer makes a judgement call whenever he settles an advance price. All completely legal so far, but the problem arises when they agree to one price and put another on the contract; the remainder to be paid under the table of course. From this point lots of black money fuels speculation, leading to a sharp escalation in the market price of sugar which pretty much nobody can do much about.
There’s nothing wrong with futures/forward trading, but not disclosing it or the income from it is not legal. The investigation that led the Federal Investigation Agency (FIA) to register an FIR against the sugar mafia, including mills owned by Jahangir Tareen and Shahbaz Sharif and his sons, seems to have unearthed the network that exploits this arrangement. No doubt the forensic audit of the 32 mobile phones and laptop computers that FIA confiscated from “major players” leaked a treasure trove of investigation, and details about more big fish will hit the press soon enough. Yet that is also part of the problem. For everybody knows how sugar is a side business of sorts of the high and mighty that dominate Pakistan’s power corridors. It’s that sugary politics of them that is causing harm to the country’s economy. They always remain in power in this country regardless of the administration because there are sugar barons aplenty on all sides of the divide. That of course explains just how and why they have been eating off the fat of the land all for so long.
So far they remain powerful enough to embarrass even the prime minister because nothing came from his repeated promises of using all the might of the state to break all the mafias that have been manipulating prices for years. And considering how things are done in this land, they will surely do what they can to escape justice this time as well, just like every other time, and carry on with their merry ways. The state will therefore have to resist the kind of pressure it is not used to resisting. And for that the political will that is needed will have to come right from the very top. Therefore, the prime minister himself must oversee all the action that is being taken in regard to the sugar investigation and make sure that the long arms of the law not just catch all those who corrupted the price of sugar but also shake all the money they looted out of their deep pockets. But all this must be done very sensibly otherwise the whole exercise will come to naught once again.
Copyright Business Recorder, 2021
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