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Govt warned against injecting funds into PSM

Pakistan News Business: The Senate Standing Committee on Industries and Production has said that Pakistan Steel Mills is like a bottomless pit and whatever goes into it will never come out.

poland steelmill reutersThe committee has presented a report to the Senate Secretariat, highlighting the root causes of financial troubles faced by the Steel Mills and warning the government against investing more money in it.

“Any further cash injection in the Steel Mills will be wasted,” it said.

It revealed how a former chairman of Pakistan Steel Mills, Moeen Aftab Sheikh, gave undue favours to Al Abbas Group of Companies, owned by Riaz Laljee, a friend of President Asif Ali Zardari, by selling huge quantities of steel at low prices.

The report, compiled by the sub-committee of the Senate standing committee, has said that Steel Mills would continue to bleed if the status quo was maintained.

Talking to Dawn, the chairman of the sub-committee, Senator Haroon Akhtar, said the government and policy-makers were responsible for the situation because there was no permanent chairman of the Steel Mills.

“Moeen Aftab and some of his top management were involved in blatant financial bungling and his successor Imtiaz Lodhi remained acting chairman for almost six months prior to his suspension by the PSM board recently,” he said.

Other members of the sub-committee are Senators Gul Muhammad Lot and Adnan Khan, both from PPP.

The report said that in just one year when Moeen Aftab Sheikh was its chairman, the total equity of the Steel Mills declined to Rs4.5 billion in 2008-09 from Rs26.6 billion the previous fiscal year and its liabilities reached Rs28.1 billion in January last year against Rs8.3 billion during the same month of 2009.

“Now the liabilities have crossed Rs40 billion only because of the apathy of the government, particularly the ministry of industries and production,” Haroon Akhtar said.

The report said that Moeen Aftab was appointed through the support of a large and politically influential group involved in the steel business and also supported by a mafia of commission agents, who represented the companies that had supplied raw material to the Steel Mills for several decades and had become multi-billionaires.

“While the PSM made a pre-tax profit of Rs3.6 billion in 2007-08, it faced losses of more than Rs22 billion in 2008-09, ” it said.

The report said that Moeen Aftab together with some of his top managers especially, director (commercial) was involved in blatant financial bungling. They rendered the PSM bankrupt while the ministry of industries made no efforts to persuade the Steel Mills to seek substantial discounts from raw material suppliers and shipping companies, it added.

During the period when the PSM was suffering colossal losses, the general administration expenses were doubled to Rs2.9 billion from Rs1.5 billion in just one year, the report said and added that the Steel Mills had borrowed Rs10.3 billion from the Employees Gratuity Funds with the promise to refund it within a year. “This is unethical, immoral and against the rules.”

The money had yet not been returned and the financials showed it might not be done for a long time, it said.

Haroon Akhtar said that there was a need to conduct a through inquiry into the PSM affairs and start criminal investigations against Moeen Aftab and other top officials, but the government was trying to downplay the issue.

“It is a deliberate attempt not to appoint a CEO of the PSM so that the deeds of Moeen Aftab are never probed,” he added.

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