Pakistan’s PM shakes up cabinet, vows institutional reforms amid sugar scam

Pakistan’s PM shakes up cabinet, vows institutional reforms amid sugar scam
Pakistani Prime Minister Imran Khan changed the portfolios of key federal ministers in a major cabinet reshuffle. (Reuters)
Short Url
Updated 07 April 2020

Pakistan’s PM shakes up cabinet, vows institutional reforms amid sugar scam

Pakistan’s PM shakes up cabinet, vows institutional reforms amid sugar scam
  • Food security minister and secretary removed from posts after inquiry names those who cashed in on increased government subsidies
  • Rising food prices, particularly of sugar and wheat flour, present one of the toughest challenges for Pakistan’s civilian government

ISLAMABAD: Pakistani Prime Minister Imran Khan on Tuesday vowed to introduce institutional reforms in an effort to avert a sugar crisis in the country.

The announcement comes a day after the PM changed the portfolios of key federal ministers in a major cabinet reshuffle. The minister and federal secretary of the Ministry of National Food Security were removed from their posts.

The shake-up came after Federal Investigation Agency presented two separate reports on its inquiries into the sugar and wheat crises in the country. The full report of the inquiry into a sugar-export subsidy scam is due to be published on April 25.

Investigators named a number of people they said benefited from government subsidies on sugar exports and profited from rising prices on the local market, including Khan’s close aide Jahangir Tareen, allied party leader Moonis Elahi and Federal Minister for National Food Security Khusro Bakhtiar.

“The inquiry report has pointed out flaws in the sugar policy and the prime minister has promised to fix them through institutional reforms,” said Firdous Ashiq Awan, a special assistant to the prime minister on information, after a cabinet meeting. “The government will initiate action against those found guilty [of involvement in a sugar scam] after April 25.”

On Monday, two days after the FIA submitted its 32-page sugar crisis inquiry report, Khan removed Bakhtiar from his post as national food security minister and appointed him the federal minister for economic affairs. He was replaced by Syed Fakhar Imam. The secretary of the ministry, Hashim Popalzai, was also removed from office and replaced by Omar Hameed, the prime minister’s office said.

In its report, the FIA said that the decision by the Pakistan Tehreek-e-Insaf government to increase subsidies for sugar exports had caused the price of the commodity to increase by 30 percent in the local market. Pakistan had an export subsidy in 2015-16 that was set at Rs 13,000 ($170) a ton for exports of up to 650,000 tons of sugar. In 2018, the PTI government increased the amount of sugar eligible for export subsidies to 2 million tons to reduce a surplus in the domestic supply.

Rising food prices, particularly of sugar and wheat flour, present one of the toughest challenges for Pakistan’s civilian government, which took office 19 months ago. Experts increasingly blame influential businessmen and politicians for the price hikes, fueling public anger.

Sugar cane is a popular crop in Pakistan because the government sets procurement prices, and the industry is protected by a 40 percent import tariff that has contributed to high domestic prices.

According to the FIA report, two main organizations benefited from the sugar-price crisis. The first is sugar company JDW Group, which is owned by Tareen. It received sugar-export subsidies of Rs 3.058 billion between 2015 and 2018, representing 12.28 percent of the total subsidies.

The other is the RYK group. Its portfolio includes four sugar mills owned by Bakhtiar’s brother, Makhdoom Omar Shehryar, Chaudhry Munir of the opposition Pakistan Muslim League-Nawaz party, and Monis Elahi of the PML-Q party, which is part of the ruling coalition. Together they received 15.83 percent of the government’s total sugar-export subsidies between 2015 and 2018, amounting to Rs 3.944 billion.

“The sugar-inquiry commission has been actively engaging with about 10 mills, including three of mine. We are sharing all records asked for,” Tareen said in a message posted on Twitter on Monday

“We have given free access [to investigators] even to our server. Nothing has been seized as we are fulfilling all requests. We have nothing to hide.”

Legal experts said the government will face a long court battle if it pursues legal action in light of the commission’s report.

“The actual conviction of those accused in the sugar scam might take years as the government will have to prove the findings of the inquiry in court,” said barrister Omer Malik.

Related