Crackdown on sugar mafia: Tareen is not alone, there are many more…

ISLAMABAD: It's not just Jehangir Tareen. There are many more…

At least 14 sugar mills have so far been issued a ‘final notice’ by the FIA Lahore alone besides there being a large number of FIRs registered against various different actors of what is now known as the ‘sugar mafia’.

Although Tareen is said to be the major player in the sugar business, Shahbaz Sharif’s family is on top of the FIA's hit-list on which only Tareen until recently prominently featured on.

In its FIR, the FIA has accused Shahbaz Sharif and his sons of having hidden and laundered Rs. 25 billion from 2008 to 2018 mostly from ‘extraneous sources’ through fake accounts opened and operated in the name of low-wage employees (peons & clerks) of his sugar mill.

In the case of Jehangir Tareen’s JDW Mills, which is a public limited listed company, Tareen is accused of allegedly having dishonestly purchased the assets of JK Farms Ltd (whose CEO is his son Ali Tareen) at an exorbitant Rs. 4.35 billion thereby cheating the public shareholders and benefitting his son through a premeditated fraudulent sale deed dated November 20, 2013.

Federal minister Makhdoom Khusro Bukhtiar’s family’s RYK Sugar Mill has also been issued a final notice in connection with the ‘satta-mafia’ (fraudulent speculation mafia) investigations. Like Tareen’s mill, RYK Sugar mills is also accused of ramping up sugar prices fraudulently through a clandestine WhatsApp group network of the ‘satta-mafia’.

Other mills that have been sent similar notices include the Two Star Sugar Mills, Kashmir Sugar Mills, Hussain Sugar Mills, Chanar Sugar Mills, Hamza Sugar Mills, JDW Sugar Mills, Tandalian Wala Sugar Mills, Al-Arabia Sugar Mills, Eithad Sugar Mills, Al-Miz Sugar Mills, Madina Sugar Mills and Ramzan Sugar Mills.

All of these mills have been issued similar notices and the same set of records have been sought from them --whether they belong to Jehangir Tareen, Shahbaz Sharif, Khusro Bakhiar’s family or anyone else.

According to these notices, the managements of all these sugar mills are alleged to have actively been in league with brokers and frontmen and have morphed into a sugar-satta mafia, that is driving up sugar prices dishonestly and fraudulently through a clandestine network of WhatsApp groups.

They have also been accused of allegedly cheating and defrauding the consumers by getting exorbitant and undue prices and subsequently hiding the ‘crime proceeds’ in secret, fake and unrelated third-party accounts and assets.

“Evidence also reveals that bogus/fake books of accounts or parallel books (katcha khathas) are being prepared to disguise these crime proceeds. Evidence reveals that your sugar-mill is no exception and is knitted closely with the satta mafia,” read these notices.

The head of accounts of all these sugar mills have been asked to bring with them the actual records of sugar stock that have been sold since November 1, 2020 to or through the sugar satta players as documented in their company’s original ledgers/vouchers. The actual record of sugar stock which has been sold since November 1, 2020, as declared to FBR, has also been sought.

The list of bank accounts that are or have been operated in the name of any employee or riders of these mills or employee/riders of their sugar brokers are also asked to come before the FIA. A list of corporate accounts of these mills are also sought by the FIA.

These mills have been asked to share with the FIA inward and outward remittance (FTTs) since Nov 1, 2020 made by or on behalf of the mills or their directors, CEOs, brokers, frontmen, whether through banking channels, money exchange companies or ‘hawala’.

Following the inquiry conducted by the Sugar Commission, the FIA Lahore claims to have so far established prima facie a number of financial crimes and money-laundering in the following instances, in which FIRs have also been registered and a formal investigation started:

FIR 39/2020 (14-11-2020) ACC LHR (Ramzan Sugar Mills Ltd/ RSML):

The FIA alleged Shahbaz Sharif and his sons of having disguised and laundered Rs 25 bn (from 2008 to 2018) mostly from ‘extraneous sources’ through fake accounts opened and operated in the name of low-wage employees (peons & clerks) of the RSML.

The FIA claims that 90 percent of the money was withdrawn in cash by two trusted junior employees. It is suspected that most of this money has been shifted abroad to the UAE or UK) via hundi & hawala. During the FIA investigation in Kot-Lakhpat jail, the FIA source claimed that the response of Shahbaz Sharif was evasive while Hamza Shahbaz, the CEO of RSML, shifted the entire burden on Suleman Shahbaz, who has been declared an absconder and is currently in the UK.

FIR 51/2020 (14-11-2020) CCC LHR (JDW-JK Farming Ltd):

According to the FIA, the JDW Mills -- a public limited listed company with Jahangir Tareen as its CEO -- dishonestly purchased the assets of JK Farms Ltd (CEO Ali Tareen) at an exorbitant Rs. 4.35 bn and thereby cheated the public-shareholders and benefitted his son through a pre-meditated and fraudulent sale deed dated Nov 20, 2013.

The FIA alleged that the sale deed was executed without determining fair-value through independent evaluators and without making a truthful disclosure in the AGM or Annual Audited FS. Bogus and post-facto evaluation reports were prepared on January 29, 2014, by Unicorn Surveyors & Asad Aleem Mirza of AF Ferguson & Co. It is said that JKT and his son Ali were summoned six times during the inquiry but failed to appear before it.

FIR 17/2021 (22-3-2021) CCC LHR (JDW-Faruki Pulp Mills):

The FIA has alleged in the FIR that CEO JDW Jehangir Tareen dishonestly and fraudulently invested Rs. 3.14 bn from 2013 to 2016 from JDW Accounts – a public ltd listed company -- in an associated company Faruki Pulp Mills Ltd ( owned by Ali Khan Tareen & Waleed Faruki) in 2011/12, when the company’s operations were closed after multiple failed trials when there was no intent to resume operations

The agency added that this was done to misappropriate and launder JDW funds. Ali Tareen allegedly transferred over US$ 7 million to the UK in 2016 to purchase overseas properties.

The FIA sources said that the accounts of JKT/AKT are referred to the banks for review against KYC/ CDD protocols & freezing under 5-(5) FIA Act, 1974; Rs. 41 million in 36 personal accounts of JKT/AKT have been frozen and they have been summoned to answer five questions each (mentioned in their notices).

FIR 18/2021 (22-3-2021) CCC LHR (JDW-Money Laundering):

According to another FIR, JKT as CEO JDW misappropriated Rs. 2.2 bn from JDW Accounts–a public limited listed company- through his trusted junior employee Amir Waris and transferred the amount into his family accounts.

The FIA claims that JKT/AKT operated a fake account (with Rs. 5.8 bn in it) through Majid Malik, a satta player and front for money-laundering and transferring extraneous money into personal businesses like ATF Mango Farms & JK Dairies in the guise of business payments.

It is added that Rana Nasim, COO JDW, misappropriated and laundered over Rs. 600 million per annum from JDW Accounts in the guise of salary and fringe benefits while JDW was reporting net losses over the last five years (there was a Rs. 2.27 bn net negative contribution to the national exchequer by JDW in the last five years) and had not authorised him any salary over Rs. 1 million per month.

It is said that the accounts of JKT/AKT and Rana Nasim referred to the banks for review against KYC/ CDD Protocols and freezing under 5-(5) FIA Act, 1974.

FIRs 19 to 28/2021 (22-3-2021) CCC LHR (Sugar Satta mafia):

It is said that the FIA Lahore and Punjab Zone conducted a search and seizure operation (on an intelligence report of the IB/Special Branch) on the night between March 22 and 23 and seized 34 smartphones, six laptops and thousands of katcha khata ledgers. An analysis of the digital evidence revealed 40 satta players ( comprising ten sub-groups) collaborating via 16 WhatsApp Groups to ramp up sugar-prices through dishonest & fraudulent speculation in active connivance with all the 40 sugar-mills in Punjab.

According to the FIA sources, a total of 10 FIRs are registered against 40 satta players and the forensic analysis of evidence has been initiated. Additional names of 20 satta players in Karachi have been shared with the FIA Karachi and they are replicating the crackdown undertaken by the FIA Punjab.

The sources said that a total or 464 personal accounts of 40 satta players, that had a Rs. 106 bn turnover showing satta transactions, have been frozen. At least 392 fake, benami third party accounts of the satta players having a Rs 667 bn turnover, including sugar satta-transactions, have been referred to the banks for a review against their KYC/CDD protocols and freezing if required. These accounts include those of 10 ghee mills that were being used to launder the proceeds of this sugar-satta network.

It has been disclosed that an investigation of the assets of satta players and the mills’ management has also been initiated and the record sought from banks, the FBR, development authorities, housing societies and deputy commissioners. The mapping of the money trail through the fake/benami accounts and junior employees of sugar mills is also under way.