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Influential sugar mills linked to ruling parties default on Rs 23 billion loans taken from public sector banks
More than half of the defaulted amount is being attributed to mills owned by the Omni Group which is allegedly close to President Zardari. Ramzan Sugar Mills is also a major defaulter.
By
Ahmad Ahmadani
ISLAMABAD: At least 25 sugar mills owned by influential individuals with ties to the country’s political elite have defaulted on loans worth over Rs 23 billion taken from state owned banks.
The revelations came to light as part of an audit of Pakistan’s largest state owned bank and revealed a number of major defaulters. Many of these defaulters have strong and often direct ties to government politicians. The sugar industry in Pakistan is one of the most powerful in the country. Almost all of the 91 sugar mills in the country are owned by household name politicians and their families, all of whom belong to different political parties. Profit has covered the nexus between sugar barons and politicians in the past.
Read more: For six years, Pakistan’s sugar barons were at war. Did they just call a truce?
Sources familiar with the matter that have shown Profit the relevant documents said that a significant portion of this debt—approximately Rs 12 billion—is attributed to eight sugar mills operated by Anwar Majid’s Omni Group. Mr Majid and his Omni Group came to national prominence some years ago due to their alleged involvement with President Asif Ali Zardari. The group was also the subject of a Supreme Court case that also involved the President.
And they aren’t the only ones accused of defaulting. The Sharif family’s Ramadan Sugar Mill is another notable defaulter, with an outstanding loan of Rs 2.59 billion. Meanwhile, Ramzan Sugar Mill has failed to repay a loan of Rs 62 crores, further compounding the institution’s financial woes.
According to available documents, the bank has admitted its failure to collect these debts, acknowledging the losses incurred due to its inability to secure repayment. The Auditor General has criticised the bank for its negligence in not securitizing these loans as per policy, pointing to weak financial management and a lack of accountability within the institution.
During the audit for the year 2022, it was observed that the management granted advances/loans of Rs 15.28 billion to various sugar mills. However, the management failed to recover the amount of loans from the said sugar mills and the amount was shown as a loss. This indicated that the loans/advances were not properly secured as per prevailing policies of State Bank of Pakistan (SBP) which resulted in non-repayment of loans of Rs 23.35 billion (a principal of Rs 15.28 billion and interest of Rs 8.07 billion), said the available document.
Sources also said that this failure in debt collection is poised to lead to significant financial losses for the bank, with the possibility of waiving both the loan amounts and the accrued interest now under consideration.
As per sources, the potential waiver of these loans has sparked outrage, as it would set a precedent for influential individuals and entities to escape financial accountability, further eroding public trust in the banking system. This is not the first time that sugar mills owned by powerful figures have had their debts waived, raising questions about the fairness and transparency of the financial system, they added.
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