LAHORE: PTI senior leader Jahangir Khan Tareen in his reply has submitted to the Federal Investigation Agency (FIA) probing the sugar scam has claimed that not even a single aggrieved party was shown to have been "wronged" by any act or omission by the JDW Group.
Earlier this week, Tareen had informed the FIA that he was in the United Kingdom and undergoing medical treatment, pledging that once he got well he would return to the country to appear before the FIA in person. He said he needed more time to file a reply to the FIA's questions related to his and son's businesses, assets and sugar mills.
In his 11 volumes (1400-page) reply submitted to the FIA Lahore through his counsel on Thursday, Tareen said the joint investigation team (JIT) comprising officers of the Intelligence Bureau, Federal Investigating Agency (FIA), Federal Board of Revenue, Securities and Exchange Commission of Pakistan (SECP), Punjab Anti-Corruption Establishment, Inter-Services Intelligence (ISI) and the State Bank of Pakistan (SBP) had only targeted 10 sugar mills out of the total 84 mills in the country.
"Of them, three mills are owned by the JDW group. Despite the fact that the high-powered JIT having already conducted its inquiry, the JIT is now bringing forward the very same concerns and repetitively asking the same questions, though JDW has already comprehensively responded to every query before the JIT," the PTI leader contended.
According to the document, a copy of which is available with Business Recorder, the PTI senior leader said the JDW whilst purchasing assets and liabilities of JK Farming Systems Limited (JKFS), a sugar cane farming company, it is emphasized that any question of financial irregularity in JDW's acquisition of the assets of JKFS simply does not arise.
He added it was decided by the JDW's Board of Directors (BOD) that purchasing sugarcane business operations of JKFS was a financially pragmatic step, since it enabled JDW to secure 15-18% of its sugar cane supply for all times to come.
The valuation and survey of the assets of JKFS was carried out by an independent surveyor, namely Unicorn International Surveyors, which is a member of the Pakistan Engineering Council and is on the panel of approved valuators of Pakistan Banking Association, he pointed out.
According to Tareen, the acquisition transaction was also reviewed by one of the world's premier chartered accountancy firms, AF Ferguson & Co. Chartered Accountants. The reports furnished by these firms have previously been supplied to the Sugar Inquiry Commission.
Regarding Faruki Pulp Mills Limited ("FPML"), the reply says that there is a misconception that JDW whimsically injected a lump-sum of Rs 3.15 billion in FPML. In fact, the investment was carried out over a period of eight years and during that time period technical and financial experts were repeatedly consulted regarding the project. "When JDW made its initial decision to invest in FPML in 2009, there was no company other than FPML across Pakistan in the field of wood pulp manufacturing, which is the raw material for finished paper industry. In fact, the pulp had to be imported to Pakistan and JDW saw the opportunity to manufacture wood pulp locally for the first time with immense benefits for the local paper industry. The idea was to completely substitute the imported pulp, this would have resulted in a good source of foreign exchange for Pakistan."
Moreover, the entire production was sold out in the US dollars on advance payment terms to local and foreign buyers. However, due to technical problems, including power and steam-related issues, it was provisionally not viable to proceed with FPML's operations and, consequently, the plant was closed. To fix the technical problems an additional investment of approximately Rs. 2.2 billion was required for which mandate was given to MCB to find any equity investor on best efforts basis. However, JDW eventually decided not to invest any further capital in FPML.
In 2017, certain information and explanations regarding FPML was sought by the SECP which was replied comprehensively by JDW; however, eventually no proceedings were initiated. This establishes that the SECP was satisfied with the explanations provided, and that there was no need to bring any sort of action. Moreover, the FIA itself has already visited the FPML site, inspected its machinery, and verified that the project was legitimate. Even otherwise, the SECP has never raised any objection regarding any acquisition or investment transaction conducted by JDW, and doing so at this belated stage is highly prejudicial to JDW.
In connection with the cash payments, the document says it has been implied in the query raised that the cash payments were a lump-sum amount of Rs. 2.2 billion. However, it must be clarified that these payments were made over a period of 3 years.
This is very normal for an organization of JDW's size and is a relatively insignificant amount given that it is below 1% of the overall turnover for the 3-year period, which was approximately Rs 200 billion.
Moreover, the concern that cash payments from the JDW's accounts were made into private accounts for personal utilization is vehemently and categorically denied. It is clarified that no such payment was ever made and not an iota of evidence of any transaction exists to prove any wrong doing or money laundering.
"The cash payments were used for statutory payments, utility payments, import clearance costs, salaries and wages, overtimes to support staff, entertainment, fuel, minor repair maintenance and various other day to day expenses, and some portion of these amounts was used to repay excess payments of sugar dealers, which they deposited in the companies' bank accounts in normal course of sugar trade."
These withdrawals were made from proper company accounts and no amounts were ever deposited in any personal account. Has there been any irregularity or malfeasance in the transactions, the relevant banks would have raised a Suspicious Transaction Report or Currency Transaction Report, but no such report was ever generated, the reply states.
In response to the query regarding the source of cash deposits in the accounts of ATF Mango Farms (Pvt.) Limited and JK Dairies (Pvt.) Limited, Tareen contacted that it is imperative to note that following the corporatization of the aforementioned companies and subsequent handover of his shareholding therein, he ceased to hold any management or executive position in either company, nor do I any longer hold a stake in them.
Regarding the transactions between JDW and Deharki Sugar Mills (Private) Limited (DSML), all transactions are fully documented and, contrary to what has been alleged, there is nothing haphazard about those.
These were arm's length transactions in the form of short-term advances between JDW (Parent Company) and DSML (wholly owned subsidiary of JDW), conducted under Section 208 of the Companies Ordinance, 1984 and Section 199 of the Companies Act, 2017. The advances were made through proper banking channels and, as per the law, the borrowing cost of the lender was duly charged to the borrower. Lastly, with reference to the investment by DSML in FPML, this was again an arm's length transaction under Section 208 of the Companies Ordinance, 1984 and was conducted with shareholder's approval.
Copyright Business Recorder, 2020
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