Here are four fairy tales from a land called Pari-istan. We call them fairy tales since they don’t happen – at least, are not supposed to happen – in real life. The four tales relate to the privatization of an airline, an automobile company, a bank and a telephone company.
First, the bank. The sale was the result of a backroom deal. Initially of course, the government proceeded with a fair degree of transparency. A foreign professional firm was hired to place a value on the asset. Thereafter, the buyer and the government arrived at a staggered payment arrangement.
The buyer paid the government the equivalent of the value of the furniture of the head office and all the branches in the country. The balance was deferred to a later agreed date. The buyer took control of the bank, obtained a loan of the equivalent amount from his own (now privatized) bank and paid the government the balance amount. Bottom line. The bank was purchased for the value of its furniture.
Next, the automobile company. Among the assets of the company were an assembly plant plus other properties, including a high value office building on Elite Street – the equivalent of Wall Street of New York. The government proceeded with a fair degree of transparency. A foreign professional firm was hired to place a value on the asset. It was provided a list of all the company’s assets – supposedly all. A buyer was found, who paid the government the full amount as determined by the foreign professional firm and took ownership of all the company’s assets.
It transpired – at the time of the transfer – that one property at the time the list of the company’s assets was forwarded to the foreign professional firm was inadvertently left out and was not included in the total value of the company’s assets. Bottom line: the buyers received the high value office building on Elite Street for free.
And next, the telephone company. The government placed an international advertisement for the sale of the telephone company. Several bids were received. It turned out that the amount quoted by the highest bidder was significantly higher than that of the second bidder. Inexplicably, the bid amounts were leaked. The first bidder balked and withdrew his bid. The second bidder claimed the right to proceed with the process of obtaining the company.
The government was, however, fixated on transferring the company to the first bidder. A legal anomaly, but politics took centre stage. The government offered the first bidder to revise his bid down close to the value offered by the second bidder. An agreement was reached, which included a provision for part of the payment to be made subsequently. Bottom line: the transfer was made; the deferred remained deferred.
And now the airline. The privatization process is underway. The government had been soliciting some prestigious international airlines to acquire the national airline. That did not transpire. Instead, some of the country’s financial and property wizards put together a consortium to acquire the airline. The government extended the last date for bids, more than once, to facilitate the local consortium.
Reports are circulating that the consortium has asked for an arrangement where a down payment is made, the airline acquired, and the balance paid subsequently – a la telephone company arrangement. Mercifully, the country’s central bank has put brakes on the proposal.
The fairy tale continues.
The writer represented Sindh on the 7th NFC and now represents Balochistan. He tweets/posts kaiserbengali