Thursday, August 13, 2015
Daily Times Aug 14, 2015
Witch-hunt Strange are the ways of the workings of the Islamic Republic. On the one hand, successive governments since the 1990s, including the PML-N ones in the past and the current one, never tire of talking about the need to privatise state-owned white elephants that are swallowing up public money relentlessly and without let up year after year. Prominent examples of such enterprises are the Pakistan Steel Mills (PSM) and PIA. The former is virtually closed down, but is again seeking a bailout of Rs five billion from the government, with no guarantee this too will not disappear down the sinkhole the PSM has been reduced to because of rank mismanagement and corruption over the years. The latter, once the pride of the country and one of the leading airlines, has been pummelled into the position of a basket case for similar reasons. Finance Minister Ishaq Dar said the other day that both of these state-owned white elephants would be privatised within the next seven months. The same would be the case with LESCO and FESCO. Now contrast this intent with the harassment and vilification being carried out against the Muslim Commercial Bank (MCB), one of the most successful privatisations in the country’s history. A relentless campaign by state institutions such as the National Accountability Bureau (NAB) and sections of the media based on half-truths and innuendo seeks to find fault willy nilly with a bank that is one of the leading banks of the country, having been turned around since privatisation from sliding into bankruptcy to the status of a market leader in the country and with a record of opening the door to foreign investment of considerable proportions. One of the leading banks of Malaysia, Maybank, bought 20 percent of the shares of MCB for $ 850 million, which flowed into the country in the form of foreign exchange. MCB is the only Pakistani bank listed on the London stock Exchange. Since privatisation, it has paid more than $ one billion in taxes into the treasury. It has expanded its countrywide operations and provided employment to thousands. Quite apart from these obvious successes, MCB has emerged since privatisation as one of the leading lights of the Pakistani banking industry, with credibility and market capitalisation that should be the envy of any rival. When such a financial institution is vilified for no good reason through sections of the media that are irresponsible or perhaps motivated by ulterior and hidden motives, and at the same time hauled over the coals by NAB at the hands of officials with little or no knowledge of banking but illogical zeal to find fault even where there is none, the results are predictable. Banks are sensitive financial institutions and such propaganda does no bank any good. The whole business of banking rests on the confidence of its customers and the market. Casting unnecessary doubts or allegations against one of the leading banks makes no sense from any angle. NAB’s efforts to prove some preconceived notion about the bank is not only inexplicable, it is also patently illegal. Starting with the Economic Reforms Act of 1992 and through to the Privatisation Ordinance of 2000, the law clearly states that any state-owned entity privatised will not be taken over by any government for any reason whatsoever. Not only that, the Ordinance provides that any privatisation case can only be questioned/investigated within one year of its privatisation being completed and forbids reopening privatisation cases beyond that. When MCB was privatised 25 years ago, all challenges to the decision were defeated through the courts soon after. How then has NAB taken it upon itself to reopen the privatisation of MCB now, and that too on the watch of a government that was in power when the privatisation took place? It seems the government’s left hand does not know what the right hand is doing and it is unaware or recklessly ignoring the impact of its actions on its privatisation plans for other state-owned enterprises, not to mention the destruction of confidence of both domestic and foreign investors who cannot be guaranteed that a closed transaction will remain closed. Can the country afford such a message being put out? The country’s economy, despite the rosy picture being presented and swallowed hook, line and sinker by the IMF and other international financial institutions, needs investment, domestic and foreign, desperately in a milieu where the problems of terrorism, law and order, energy deficit and cost of doing business has resulted if anything in a flight of capital from the country. The government needs to wake up to the inconsistencies in its approach to the economy, particularly on disturbing successfully privatised enterprises needlessly.