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January '06: Public or private: that is the question

Individualland spotlight is a monthly monitor on political affairs printed on the 17th of every month by individualland.com. Individualland would welcome reproduction & dissemination of the contents of this report after proper acknowledgment.

Public or private: that is the question
(January 2006)
This January 2006 issue of individu-spotlight attempts to articulate some fundamental questions on behalf of the Pakistani citizens with reference to the status of Fauji Foundation. Through this spotlight, individualland would like to highlight the contradictions regarding the status of Army's corporate interests and seeks clarification on behalf of the public.

Before Kellogg's hit the Pakistani middle class breakfast table, Fauji Cereals gave us our necessary nourishment. Most of us would remember the Fauji Corn Flakes box but very few would be able to answer the question as to whether the Fauji Corn Flakes parent company, the Fauji Foundation is public or private? Even public representatives are not able to answer this question which was revealed during the somewhat hot exchange between the Federal Education Minister Lt. Gen ( r) Javed Ashraf Qazi and Senator Farhatullah Babar during the Senate Session. The government maintains that the Fauji Foundation is a private entity and therefore, when a Parliamentary Committee earlier in 2005 had summoned the Managing Director of the Fauji Foundation, the MD refused saying that he was not accountable to the Committee as Fauji Foundation was a private company. The same stance was taken by the government. The Federal Education Minister also declared on the floor of the House in November that Fauji Foundation was not given any public money. The Honourable Minster declared on November 22nd 2005, `` They (Fauji Foundation) have been given no money. Again this is not correct. If at all, it was only a guarantee given to the Army Welfare Trust and not to Fauji Foundation."

However, on December 28th 2005 while giving a written reply to a question of compensations, the Minister of State for Finance Mr. Omar Ayub Khan declared,`` The Government of Pakistan agreed to compensate for the losses incurred by the Fauji Jordan Fertilizer Company, renamed as Fauji Fertilizer Bin Qasim Ltd in the wake of non implementation of the provisions of Fertilizer Policy 1989. The total amount of Rs 5 billion was agreed to be disbursed to the Company over a period of seven years starting from the year 2002" The payment of this compensation made Fauji Fertilizer the only fertilizer company in the country to be compensated. When the Education Minister was asked as to why he declared that Fauji Foundation had not benefited from any public funds he declared that there was no contradiction between what he had stated in the Senate and what the Finance Minister had said in reply to a question about the compensation paid to the Fauji Jordan Fertilizer Company. General Qazi also said that the Fauji Jordan Fertilizer Company was an independent entity and the Fauji Foundation was only a partner in it.

The question is whether Fauji Foundation is a public or private entity? As stated earlier, the Managing Director of the Foundation himself maintained that FF was a private entity and thus beyond the preview of the Parliamentary Committee. The home page of the Foundation's website (www.fauji.org.pk) also describes the Foundation as a ``self supporting entity in the private sector" It further declares that `` The Fauji Foundation has been generating financial resources to meet its welfare obligations through its own industrial and commercial projects. Today it covers 9 million beneficiaries spending over Rs 16 billion since its inception." The website further goes on to describe the Foundation as `` being the largest welfare and industrial group in the country" One would conclude from this self assertion that firstly Fauji Foundation is private and secondly that it is the ``largest industrial group in the country" and spending Rs 16 billion for welfare.

However, on the very same page, the Foundation also asserts that `` The Fauji Foundation is a charitable trust for the welfare of ex-servicemen and their families. It's corporate operation begun in 1954 when the Post War Services Reconstruction Fund was reactivated under the control of the Pakistan Army" The Foundation is run by the Administration Committee and the Board of Directors. The Chairman of the Central Board of Directors is the Secretary, Ministry of Defence of the Government of Pakistan. The Administration's Committee 's Chairman is also the Defence Ministry Secretary and its members are Chief of the General Staff, Pakistan Army, Adjutant General Pakistan Army, Quartermaster General Pakistan Army, Chief of Logistics Staff Pakistan Army, Deputy Chief of the Naval Staff Pakistan Navy and the Deputy Chief of Air Staff Pakistan Air Force. In other words, the Administrative Committee of this `` self supporting entity in the private sector" has public servants including generals i.e. the Chief of General Staff, the Adjutant General, the Quarter Master General and the Chief of Logistics Staff. The question that individualland would like to ask are public servants allowed to be members of administrative committees of private corporations?

The Fauji Foundation also declared that it ``disburses annual grants to service headquarters for the welfare of destitute and disabled ex-servicemen." Figures for 2005 were not available but in 2004, according to the Foundation's own website Rs 21.390 million each was given to the General Headquarters of the Pakistan Army, the Naval Headquarters and the Air Headquarters. This generous grant raises certain questions such as (a) If Fauji Foundation is a private corporation than why is a private corporation giving Rs 21.390 million each to the three services of Pakistan? (b) If the Foundation is in a position to contribute this amount, than why does it need bailing out as compensation for its fertilizers company from public money?

The Fauji Foundation has seven affiliates namely MariGas Company Limited, Fauji Cement Company Limited, Fauji Fertilizer Company Limited, Fauji Fertilizer Bin Qasim Limited, Foundation Securities, Fauji Kabirwala Powers Company Limited and Fauji Oil Terminal & Distribution Company Limited. The Minister of State for Finance, Mr. Omar Ayub Khan declared that Fauji Fertilizer Bin Qasim limited formerly known as Fauji Jordan Fertilizer Company Limited was given the compensation from public company. However, the Federal Education Minister maintains that this is not correct and that ``only a guarantee was given to the Army Welfare Trust" It is not clear as to why the Education Minister deems it within his obligations to dispute a statement of the Finance Ministry as the latter should know more about the matter than the Education Minster.

However, lets examine the statement of the Education Minister that no money was given to Fauji Foundation but instead a ``guarantee" was given to Army Welfare Trust. The Army Welfare Trust, was founded in 1971 and according to its website ( www.awt.com.pk) ``AWT's mandate is restricted only to generation of funds for welfare and rehabilitation without undertaking welfare activities itself." The home page further goes on to assert that `` The Army Welfare Trust essentially operates as a business house" Thus, if one was to paraphrase what the Education Minister actually said was that no public money was given to Fauji Foundation but a guarantee of Rs 5 billion of public money was given to an entity which ``essentially operates as a business house" Is this legal? It is important to mention that no other business house was given any guarantee or compensation out of public money for the losses it suffered for the non implementation of the provisions of Fertilizer Policy 1989.

Individual-land, on behalf of the tax paying citizens of Pakistan, would therefore like to know firstly ask whether Fauji Foundation is public or private? If it is public then why the MD of the Foundation refuses to appear before the Parliamentary Committee which consists of public representatives? If it is private, than why is it's administrative committee headed by the Defence Ministry Secretary and its members serving generals? If it is private, than why was it the only private company to be compensated for financial loss by public money? How is it that a private company paid Rs 21.390 million to each of the defence services of the country?

These are questions that cannot be brushed under the carpet.



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