Although it is a slightly stale news item, given the season of elections and that all parties in Pakistan are vying for power and presenting themselves as the champion of the poor, it may be the right time to analyze this gigantic write-off allowed (Pak Rupee 54 billion – http://www.thenews.com.pk/top_story_detail.asp?Id=10768 ) and sanctioned by the State Bank of Pakistan (SBP) under a banking circular to all national banks struggling with these outstanding loans. (http://www.sbp.org.pk/bpd/2002/C29.htm)
And an interesting fact is……….. there is no… repeat no penalty / black listing / and even naming and shaming of the defaulters.
What makes Pakistan perhaps unique is that there is no bankruptcy law and the authority to write-off a loan rests with the financial institutions who exercise it by simply assuring themselves that the loan is not recoverable. The beneficiaries are often quite thriving and the write-off only adds to their net worth..
I came across a paper submitted by Dr Shamshad Akhtar, Governor SBP at Bank of International Settlements, titled Pakistan – changing economic and social paradigm ( http://www.bis.org/review/r070115e.pdf )which states that by writing off a billion dollar worth of loans, the banking industry was restructured and asset quality improved – excellent.. what a way to do it…what a big joke!!! She comes from what .. Asian or World Bank and this is her output… what a shame!!!
The banking industry buoyant on operating at one of the world’s highest margins 9% to 12% (doing no duty to the majority of their depositors) could definitely absorb it but writing off loans of politicians and businessmen several times in the history of this country .. and I mean of the same person / same family …. is definitely no service to the banking industry and no service to the nation.
A total of around 50,000 persons including politicians, civil and military business concerns and business tycoons of Karachi, Lahore and other areas were the direct beneficiaries of this massive favour.
Those who benefited from the write-off include the Admajee Group, Ghazi Construction and politicians like Balochistan Chief Minister Jam Yousaf and Senate Deputy Chairman Mir Jan Muhammad Jamali. In certain cases, some individuals had taken loans in the name of two or three companies and then had them written-off.
Unfortunately, the government and the SBP both have decided not to disclose the full list of individuals who received the write-offs with details of how many times these individuals and business groups have received write-offs over the last 60 years. There is no Freedom of Information Act… (On second thought, I think there is.. but when fundamental rights are suspended.. what can we make of this piece of paper which really is a non-issue and when judges who can enforce the law are kept under virtual house arrest, it is just another moot point)
Here are some interesting facts/figures:
An interesting link on google groups kind of rounds up the corruption picture. ( http://groups.google.com/group/reportpress/browse_thread/thread/fd6b1574d1d31a1f)
So now I will end up this post, with the list of 22 families that own Pakistan…. this has been one of the recurring stories over so many generation and I am afraid this list is a bit stale but most of the names and groups are the real beneficiaries of these loan write-offs over the history of this country …. Shame ! Shame ! Shame !
|Name||Manufacturing Assets||Fianancial Assets (Rs. million)|
|9||Gul Ahmad/ Al-Karam||5,220||915|
This list does not include the Zardaris, Bhuttos, Jatois, Jamalis, Legharis, Bugtis, Mazaris, Zehris and other big feudal families in whose estate even today they say you can walk for days and still be on their estate…….. fascinating but it does make you sad.
India did its land reforms immediately after partition .. and behold their progress!!!! And Pakistan didn’t … what a Shame!!!