Supreme Court calls for audit reports of Pak Steel

[Naveed Yaseen]

ISLAMABAD (October 08 2009): Expressing dismay over the loss of Rs 22 billion incurred by Pakistan Steel Mills (PSM), the Supreme Court on Wednesday called for its internal and external audit reports for 2008-09 to ascertain who had been responsible for the loss to the national exchequer.

Chief Justice Iftikhar Muhammad Chaudhry disapproved a report/comments submitted before the court on behalf of MM Usmani, PSM chairman, over the issue and directed him along with former Chairman Moin Aftab Shaikh and Secretary Ministry of Industries and Production to furnish detailed comments.

In addition, Federal Investigation Agency (FIA), which is probing the matter, has also been asked to submit its inquiry report before the next hearing, which is scheduled for October 16. A bench comprising Chief Justice Iftikhar Muhammad Chaudhry, Justice Ghulam Rabbani and Justice Jawwad S. Khawaja issued these directions while hearing a suo motu case regarding Rs 22 billion loss incurred by PSM during 2008-09.

Chief Justice Iftikhar Muhammad Chaudhry had taken notice of publication of an article which hinted at corruption at PSM and removal of its chairman without an inquiry. On August 18, Prime Minister Yousuf Raza Gilani had sacked PSM Chairman Moeen Aftab Sheikh for alleged corruption before an inquiry was instituted or submission of any report detailing any wrongdoing on his behalf.

Meanwhile, the Ministry of Industries had constituted a three-member committee to conduct an inquiry but on the day of presentation of its finding before the Senate standing committee, it indicated that the inquiry report was incomplete, and its three-member inquiry committee would submit it in a subsequent meeting, which is yet to be scheduled.

According to provisional accounts, accumulated losses of the country's largest steel manufacturer mounted to about Rs 26 billion during last 15 months with the addition of Rs 4 billion losses during the first quarter of the current fiscal year mainly due to slow production.

On Wednesday, Qamar Mehmood Sandhu, Deputy General Manager (Legal) appeared before the court and attributed the loss of Rs 22 billion to global economic recession.

He said that steel prices fell by 68 percent due to which PSM reduced its prices by 35 percent. In addition, he enumerated various factors responsible for the loss that included decrease of sales by 26 percent, depreciation of rupee against dollar, issues related to electricity and gas (increase in tariff /load shedding), and closure of re-rolling units in the country due to load shedding.

In addition, he said, the PSM had entered into a long-term contract five years ago regarding procurement of raw material. Therefore, it was bound to import raw material at high prices. He said that the PSM management was stuck with an inventory of Rs 9 billion which it tried to dispose of by lowering prices. On court's query about PSM dealers, he said that Metropolitan, Amreli Steel, Abbas Engineering, Al Abbas Steel and Abbas Steel were among the major registered dealers through which PSM sells its products.

The article on which court took suo motu notice of the issue had said that lowering of prices was meant to benefit one of President Zardari's close friends, Riaz Lalji.

When asked whether any inquiry or show-cause notice was undertaken prior to sacking former Chairman of PSM for his alleged involvement in corruption, the PSM official said: "No such exercise was conducted, and the chairman was removed on the instructions of the Prime Minister". The court will again hear the case on October 16.

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