IPP’s founder Tareen acquired a business “Faruki Pulp Mills” in 2007 when he was a federal minister for industries under General Musharaf
Tareen had loans totaling Rs109 million written off by the respective bank before subsequently assuming the roles of director and CEO of the company
State Bank of Pakistan reported this loan write off to Election Commission of Pakistan ahead of 2013 general elections
Tareen took the plea before the returning officer by presenting evidence that he became director of the company after the loans were written off
This information was misleading. Although Tareen assumed the role of director on December 29, 2010, he had already become the owner of Faruki Pulp Mills through his JDW Group in 2007
According to Article 63(1)(n) of the Constitution, individuals with a loan of Rs2 million or more written off are permanently ineligible to contest elections
Ahmad Noorani
Jahangir Khan Tareen, the founder of the newly established political party IPP, had loans totaling Rs109 million, obtained in the name of a business he acquired in 2007, written off in 2009/2010. Consequently, he is disqualified from contesting elections under Article 63(1)(n) of the constitution.
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Tareen informed the media that the loans in question were acquired by “Faruki Pulp Mills Ltd” and were written off before he assumed the role of director of this company in December 2010. Tareen’s Istehkam-e-Pakistan Party (IPP) is backed by Pakistan’s powerful military establishment and is an ally of former Prime Minister Nawaz Sharif’s PML-N.
However, investigations into the financial statements of the company (now removed from the websites but still accessible through the Wayback Machine) and records obtained from the banks reveal that JDW Group invested in the acquisition of Faruki Pulp Mills Ltd (FPML) back in 2007, during Jahangir Khan Tareen’s tenure as the federal minister for industries under General Pervez Musharraf. The loan restructuring process for FPML was initiated in 2007 and write-off process was concluded in 2010. Tareen assumed the position of director at FPML on December 29, 2010, although his JDW Group had purchased FPML in 2007.
When the State Bank of Pakistan (SBP) reported the same to the Election Commission of Pakistan (ECP) following the submission of nomination papers ahead of the general elections in 2013, Tareen managed to obtain letters from the relevant banks. He then presented these letters to the returning officer appointed by the ECP. According to the content of these letters, the loans in question were declared written off before Tareen assumed the role of director at FPML. While the wording of these letters was accurate, they conveyed misleading information. Tareen did indeed become a director of the company after the loans were written off, but he had purchased the shares of the company through JDW Group and became owner of the FPML three years prior. Consequently, the responsibility for the loan write-off rests with him and the other buyers.
Article 63(1)(n) reads as follows: “63. Disqualifications for membership of Parliament: (1) A person shall be disqualified from being elected or chosen as, and from being, a member of the Parliament, if:-
(n) he has obtained a loan for an amount of two million rupees or more, from any bank, financial institution, cooperative society or cooperative body in his own name or in the name of his spouse or any of his dependents, which remains unpaid for more than one year from the due date, or has got such loan written off.
Tareen is already disqualified from parliamentary candidacy as the Supreme Court has deemed him ‘dishonest’ under Article 62(1)(f) of the constitution, citing his failure to declare his UK property owned by an offshore company. The existence of this offshore company was initially reported by this journalist on April 30, 2016, for The News, Pakistan. Presently, Chief Justice of Pakistan, Justice Qazi Faez Isa, is spearheading efforts through a committee of judges to reconsider and potentially mitigate the lifelong impact of disqualification under Article 62(1)(f).
The financial statement of Faruki Pulp Mills Limited (FPML) audited by the AF Ferguson shows that after the establishment of the company in 1991 and a failed trial run in 1997, the only infusion of new capital into the company occurred in 2007. This new investor was M/s JDW Sugar Mills Limited (of Jahangir Khan Tareen) which according to the same Ferguson audit reports became the “principal shareholder of FPML”. The bank documents show that the loans continued to be written off till 2010.
The FPML had become a dead unit after the 1999 failed trial run. The audit reports establish that major restructuring of loans of the FPML acquired from different Pakistani banks took place in 2007.
[Audit Reports can be downloaded from following links: 2011 Audit Report – 2012 Audit Report. Readers can themselves download these reports directly from FPML website by copying this weblink (http://farukipulpmills.com/faruki_pulp_mills_003.htm), pasting in wayback machine (https://archive.org) and checking the website for the year 2011.]
The official documents of UBL and MCB show that FPML had loans amounting Rs78,561,000 and Rs9,015,000 written off by United Bank Limited (UBL) and MCB respectively in the year 2010. The SBP report in 2013, however, had shown the loan written by the UBL at Rs19.234 million. This amount in fact was the interest on loan and was also written off.
[These bank documents can be downloaded from these links: UBL – MCB – and any reader can also search them from the official websites of these financial institutions. A simple way to search them on Google using some key words including the bank name and the year.]
Similarly, another loan of Rs21.57 million taken from the Royal Bank of Scotland was also written by the Faysal Bank. FPML was set up in 1991 by Faruki family members, namely Mian Majeed A Faruki, Maj (R) Nasim Faruki, Shahid Akbar Faruki, Kaleem A Faruki, Naeem A Faruki, Waleed Akbar Faruki, Salim A Faruki, Abdul Sami and Parvaiz Aslam Faruki.
When JDW Sugar Mills invested in FPML in 2007, it became principal shareholder but members of Faruki family continued as directors. Shahid Akbar Faruki and Waleed Akbar Faruki also held top management positions in the company according to its website. They initially invested, acquired loans, but became helpless after 1997 failed trial run till the time new investors invested in 2007 to become principal shareholder.
In its report to ECP at the time of 2013 General Elections, State Bank of Pakistan (SBP) presented the same position vide its letter No.CPD/CPU-01/122/NA-154/35202-2698829-5/2013 dated March 28, 2013 and held that FPML got loans written off from three banks.
In 2016, Tareen presented media persons with letters from three banks—UBL, MCB, and Faysal Bank—demonstrating that the loans of Faruki Pulp Mills Limited (FPML) were written off before he assumed the position of director in the company. Additionally, he also shared the 2013 letter from the SBP indicating that Tareen was a government-nominated director of Heavy Mechanical Complex (HMC), emphasizing that the overdue amount mentioned against his name did not render him liable for HMC’s liabilities. Tareen’s assertion regarding the HMC written-off amount was accurate, considering it was a government-owned entity, absolving him of any responsibility for the HMC loan write-off.
As a matter of fact, SBP had only clarified position regarding overdue amount and the banks issued statement on the basis of a certified copy of Form-29 provided to them showing Tareen becoming director of FPML on December 29, 2010 in documents of the company maintained at SECP. Clearly, the banks were misled by Tareen.
Faruki Pulp Mills Limited, Financial Statement for the year ended June 30, 2011 prepared by A.F. Ferguson, Chartered Accountants, Lahore. Auditors’ report was submitted on November 4, 2011. On its page, under the heading, “Legal status and nature of business”, the report reads, “Faruki Pulp Mills Limited (‘The Company’) was incorporated as a public limited Company under the Companies Ordinance, 1984 vide certificate of incorporation dated October 20, 1991. The Company will be engaged in the manufacture of paper pulp. The production facility is situated 20 Km from Gujrat and the registered office is situated in Lahore.
The company had its trial production run in the year 1997 but could not commence commercial production as some of the production processes’ vital for commercial viability were incomplete.’ Further construction was suspended due to insufficient funds.
Pursuant to the injection of further capital by the new investors, restructuring with the lenders in 2007 and obtaining long-term loan from consortium of banks in 2010, completion of production facility and trial production thereof, start of commercial production is expected within 6 months of the reporting date.
The Audit Report for the year ended on June 30, 2012 and submitted on November 16, 2012, on its Page-7, under the headings “Legal status and nature of business” and “Going Concern Assumption”, after reproducing the above paras from the report of the previous year, reads: “…These financial statements have been prepared on a going concern basis as the management is confident, based upon a commitment of continued financial support from its principal shareholder, M/s JDW Sugar Mills Limited.”
The official website of JWD at its web-link http://www.jdw-group.com/About-JDW/ gives introduction of FPML but without disclosing exact detail about date of investment in the company as everyone in Gujrat’s FPML knows as to when JWD invested there. The introduction of FPML on JWD web reads; “Faruki Pulp Mills Limited was incorporated as a public limited company under the Companies Ordinance, 1984 on October 20, 1991. The Company is engaged in the manufacturing of wood pulp from Eucalyptus for consumption in local and foreign paper industry. This project was started in early 1990 but due to various reasons could not be completed on time. This will be first of its kind project in Pakistan based on 100% supply of all raw materials locally. Due to its technical and professional viability, JDW Group has chosen this business for strategic investment with an objective of diversification. This is an agro based industry using local raw materials.” Apparently, to keep this issue confidential, Tareen never tried to get removed the SBP report still available on ECP website giving details of loans write off by FPML.
“A man of many lives” is a July 2020 investigation by Pakistan’s leading investigative journalist Umar Cheema which discloses how FPML was later used as a tool of money laundering.