Huzaima Bukhari and Dr Ikramul Haq

Matthew Parker, author of Panama Fever and Monte Cassino: The Hardest Fought Battle of World War II, in his famous book, The Sugar Barons: Family, Corruption, Empire, and War in the West Indies, uses the rise and fall of the sugar dynasties of the West Indies as a framework for the intertwined histories of sugar, slavery, the industrial revolution, and Britain’s American colonies. The story narrated in this book, occasionally horrifying, portrays the worst period of exploitation during the colonial period. Unfortunately, many of its reminiscent still exist at many places like Pakistan in post-colonial era. It is evident from the landmark judgement of Lahore High Court in JDW Sugar Mills Ltd etc. Versus Province of Punjab etc [Writ Petition No.37 of 2016]. The only difference is that now the sugar barons are not colonial masters but known politicians of Pakistan.

Parker begins his story with James Drax’s first experiments in growing sugar cane as an alternative to tobacco on Barbados in the early 1640s. He ends with the decline of the West Indian sugar industry following Britain’s abolition of slavery in 1838. In between he tells the story of how West Indian “white gold” transformed the British economy, not to mention the British diet. Along the way, he introduces the reader to pirates, Dutch financiers, dissolute planters, Quaker reformers and the thousands of African slaves on whose backs the Sugar Revolution was built. Interestingly, the political economy of “white gold” has surfaced in our judicial decisions in recent years.

Most recently, the war over “white gold” surfaced in the order of Supreme Court in Tariq Khan Mazari & 3 Others v Government of Punjab & 3 Others PLD 2016 Supreme Court 778 wherein it was observed: “It appears that there is a tussle between two different sugar mills’ owners regarding the relocation of an existing sugar mill, whereas the matter considered by us is the determination of the legality of the impugned Notification which has imposed a ban on the setting up of new sugar mills and also expanding the installed capacity of existing ones. Therefore, it would not be appropriate for us to express any opinion on this aspect of the matter which has as yet not been decided by the Lahore High Court where the said two writ petitions are pending adjudication”.

Now the Lahore High Court has decided all the writs, including those, mentioned in PLD 2016 Supreme Court 778 in favour of the Petitioners who had challenged that the Respondent sugar mills under the garb of shifting/relocation of a functional sugar mill were in fact establishing new sugar mills despite the ban imposed under the Punjab Industries (Control on Establishment and Enlargement) Ordinance, 1963 read with Notification No. AEA-III- 3-3/03 (VOL-III) dated 6.12.2006. This Notification is upheld by Supreme Court in PLD 2016 Supreme Court 778.

The basic defence of the Respondent sugar mills was that they were not establishing “new sugar mills” nor were they “enlarging the sugar production capacity of their existing sugar mills”. They were simply “relocating” their sugar mills from one area to another which was not “prohibited under the Ordinance or Notification dated 6.12.2006.

Para 6 of the judgement in writ petition No.37 of 2016 reads as follows:

“One of the main arguments raised by the petitioners was that respondent sugar mills are owned by the Chief Minister, Punjab and the Prime Minister of Pakistan along with close family relatives. Hence the impugned notification has been issued to benefit their business interest. Further that the impugned notification has been issued simply to facilitate and legalize the establishment of new sugar mills owned by the families of the Chief Minister, Punjab as well as the Prime Minister given the ban on establishing sugar mills in the province. In this regard, it is specifically alleged that Ittefaq Sugar Mills Limited and Chaudhary Sugar Mills Limited are owned by Mian Muhammad Nawaz Sharif, Hassan Nawaz Sharif, Hussain Nawaz Sharif, Mrs. Marriyam Nawaz, Mrs. Kalsoom Nawaz and Hamza Shahbaz along with other family members. Haseeb Waqas Sugar Mills Limited is owned by Haseeb Ilyas, Zakia Ilyas, Mrs. Shahzadi Ilyas and other family members. Abdullah Sugar Mills Limited is owned by Mian Mohammad Ejaz Miraj, Yasmin Riaz and other family members”.

The Lahore High Court held in Para 34 as under:

Clearly the Government of Punjab has taken an inconsistent and contradictory position before both the Courts. In the august Supreme Court while defending the ban on the establishment of sugar mills the Government of Punjab took the position that setting up new sugar mills in areas such as Rahim Yar Khan Multan, Rajanpur, Bhakkar is detrimental to the cotton crop and that cultivation of sugarcane crop poses a threat to cotton growing areas. It was also stated before the august Supreme Court that sugarcane is a water intensive crop and since ground water sources have depleted, increase in the sugarcane crop will worsen the situation. The position of the Government before the august Supreme Court of Pakistan was that the establishment of new sugar mills was not in the national interest. However, before this Court, the Government of Punjab, while relying on the recommendations of the Cabinet Committee has argued that while historically the growth of sugarcane in some areas posed a threat to cotton and wheat, today the climate and the environment conditions have changed and as such the cultivation of sugarcane in areas like Rahim Yar Khan Multan, Rajanpur, Bhakkar would not be detrimental to cotton crop. They have also stated that the establishment of sugar mills in the aforementioned areas would not compromise or prejudice national interest. In fact they have urged that the cropping pattern should change as per market dynamics. When confronted with the contradictory position of the Government, the learned AAG appearing before this Court defended the position by relying on the fictional notion that relocation does not amount to establishment of a new sugar mill because it does not increase the total production capacity of sugar mill. In this regard, it is noted that the overall production capacity of sugar is not the driving force behind relocation or the location policy. The Respondent sugar mills have relocated to promote their commercial interest and business prospects. The new location is considered more suitable to business due to its environmental and geographical factors. The Respondent sugar mills want to relocate for better business prospects. Hence the relocation is motivated by personal interest and ignores the national interest in totality.

There is a clear indictment in the judgement [Para 40] against the ruling family in the following words:

In this case, the relocation policy has not benefitted or protected the national interest but is aimed to facilitate certain sugar mills, which happen to be owned by the families of the Chief Minister, Punjab and the Prime Minister of Pakistan.

In Para 42, there is a stricture for violation of law and rules:

The matter does not end here. The Government not only designed a policy to cater to a few sugar mills but it also failed to take action against the Respondent sugar mills for establishing new sugar mills without any permission whatsoever required under the law. The Respondent sugar mills have failed to comply with the requirements of the environmental laws of the Province and have admittedly not taken the required permissions.

In the end in Para 45, the Lahore High Court has directed that the Government to take “necessary legal action against the Respondent sugar mills pursuant to the show cause notices issued to the Respondent sugar mills on account of their establishing new sugar mills without seeking the prior permission from the competent authority required under the law”. One really wonders whether Shahbaz Sharif will take action against himself, his family and elder brother and his family. Let us see what happens in future when this judgement is challenged in Supreme Court. If it is confirmed by Apex Court, its implementation under Article 201 will become mandatory for the Punjab Government.

Owners of sugar mills have been pocketing unprecedented profits both through domestic and international markets. In March 2016, they managed to convince the government to extend the deadline for exporting 500,000 tons sugar by getting subsidy on per kilogram basis beyond March 31 deadline.

The Economic Coordination Committee (ECC) on March 29, 2016 granted permission to export 0.5 million tons sugar till March 31, 2016, for getting subsidy at the cost of taxpayers’ money to the tune of Rs. 13 per kg. When some journalists asked for justification of Rs. 13 per kg subsidy on export of sugar at a time when the prices were escalating in the international market, the representative of Pakistan Sugar Mills Association (PSMA) said that “the subsidy amount should be reduced proportionately in accordance with increased prices of sweetener in international market”. However, the sources said that the sugar industry obtained orders to export around 250,000 tons or 50 percent of the allowed limit, so they started lobbying to convince the government for extending the deadline enabling them to avail this subsidy on exporting sugar, at a time, when the prices in international market went up by $50 per metric ton in recent weeks.

When the ECC allowed exporting of sugar its price in international market stood at around $ 414 per metric ton which went up by $ 50 per metric ton whereas the existing price was at over $ 460 per metric ton. Thus sugar industry was making money with both hands. In this context, the battle for shifting/relocating existing sugar mills and abusing the government machinery for self-aggrandisement by the rulers of the day is quite understandable.

On June 24, 2016, the Lahore High Court ordered Cane Commissioner to seal Brother Sugar Mills for defaulting on payment to farmers against supply of sugarcane. Cane Commissioner Punjab, Waqas Ahmad, told the court that the sugar mills did not pay Rs. 670 million in 2015 and Rs. 170 million in 2016 to the farmers.

In July 2015, BR Research interviewed Chairman of PSMA and Director of Premier Sugar Mills (the first sugar mill set up in Pakistan in 1947). He explained that at one million hectares, Pakistan was the fourth country in the world by sugarcane area, but by production and yield “we are number 14”. This is a story of an inefficient industry that thrives on exploitation of farmers and workers. It makes billions through favouritism. He claimed in his interview that there was no sugar mafia in Pakistan. One hopes that after reading the detailed order of Lahore High Court in JDW Sugar Mills Ltd etc. Versus Province of Punjab etc [Writ Petition No.37 of 2016] he may revise his opinion. (The writers, lawyers and partners in Huzaima, Ikram & Ijaz, are Adjunct Faculty at Lahore University of Management Sciences (LUMS).