Who Owns Pakistan - Yimg

companies, management was to be transferred to a strategic investor,
preferrably a foreign multinational after it acquired 26% of stakes.
The formula for handing over the management to private owners, acquiring 26%
stakes was criticized by both the national and international press. It was argued
that the method of handing over the control of an undertaking to an individual or
group, upon their acquiring 26% of equity is extremely suspect, since the normal
corporate practice was to pass on the control, at the purchase of 51% of shares.
" It could be that it has been made easy to facilitate the purchase of
what one might the whole of Pakistan" an article by I A Hussan, in
daily The News of Islamabad of June 2,1991 observed.
The formula also provided that Employees Buyout will have 10% preference over
other bidders and that the workers of the privatized units will have a right to
Golden Handshake whose cost would be equally shared by the Privatization
Commission and the new owner. It was this corrupt formula which facilitated
bogus employees buyout and the sale of the family silver at throwaway prices to
the favourites.
It was hammered by Finance Minister Sartaj Aziz in his speeches and press
conferences that in respect of industrial units, banks and utilities, even after
privatization government would retain between 49 to 74% shares and would thus,
benefit from dividends in profits of these companies resulting from the efficiency
of the private sector. The hollowness of this argument and craftiness of the
privatization formula is evident from the fact that the first unit privatized in 91 i.e
Muslim Commercial Bank has built hefty reserves but not announced a single
dividend during last seven years, thus depriving the government which still owns
49% equity, of its shares in profit. Some of the most profitable units like National
Fibres, Zeal Pak Cement, Pak-China Fertilizer and five of the six privatized
engineering units stand closed because they were bought politically influential
and unscrupulous element to strip these units of their assets and not to improve
their operational efficiency.
How Privatized Units are Evaluated, Priced?
We have stated above that valuation is the most important step in the whole
process of privatization because it helps the Privatization Commission in putting
a price tab on the units marked for privatization, by determining the reference
price below which the unit would not be sold. This fact is also vouched by a
booklet, Privatization in Pakistan, published by the Privatization Commission in
1998. While talking about the process of valuation of the assets and setting up a
reference price for units to be privatized, it observed that " This (valuation) is
perhaps one of the most important steps in the process of privatization."
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