Nov 15 , 2015
News
Closure on MCB privatisation
It doesn’t matter what the outcome, in a way. That the past has been dug up - vindictive, regressive, and contrived, the nail in the coffin may already be very firmly in place. The message has been sent out: no matter how transparent, how successful, and however long ago, there is nothing in Pakistan that cannot be pulled down, regardless of the competence with which it was raised. All that is required is the appetite for vengeance to burn brightly enough, and the ensuing flames could tarnish the reputations of the most well run institution, and the people who run it.
The MCB Bank privatisation in 1991 should be one taught in business and economic schools and universities across Pakistan; whoever said this country was incapable of handling a mature, accomplished transition of ownership from the state to private management? A bank that showed promise but was beginning to stagnate under government control, once handed over to the private sector, achieved its full potential in a way even the greatest optimist of the time perhaps wouldn’t have envisioned, going from a profit of Rs. 159 million in 1991 to a stratospheric Rs.36.7 billion in 2014. It has paid over Rs. 100 billion in income tax since privatisation, nearly a hundred times more than it was able to contribute under national ownership. Assets and deposits have grown by 20 times, helping it become the country’s second largest bank in terms of market capitalisation. International accolades have followed, with Asia money declaring MCB Bank the best in the country a whopping nine times, culminating in a 2008 award for being the Best Bank in Asia.
High fives all around, surely? In a country where red tape stymies, and often cripples, progress in all walks of life, MCB could be looked at as the model along which other national institutions the government is keen to offload could be sold to the private sector. Maybe the plummeting stock of institutions like PIA and Pakistan Steel could also rise under private ownership, and they may cease to be the burden they are on taxpayers at present, owing to their perpetual need for subsidisation and bail out packages. The total accumulated losses for those two organisations alone has risen to Rs.426 billion as of 2014, all, of course, money coming from the pockets of people who would surely rather their taxes served a more fruitful purpose. Now that really would be something to get riled up about.
Well, think again. It is MCB, the technicalities of its takeover, more precisely, that is under severe scrutiny, with all the venom of a 24-year old grudge rearing its ugly head. Never mind that in September 2000, a law was passed to deal specifically with matters relating to privatisation such as this one, decreeing that any controversies arising from such transactions must be resolved within one year. An administrative procedure, deemed to have been conducted transparently a generation ago, is being probed with the sort of malice that would make tabloid newspapers looking for skeletons in musty cupboards proud. A bank that has attracted foreign investment to the tune of $880 million is being dragged ignominiously through the mud, a campaign that, whichever side the ultimate decision comes down on, is likely to stunt foreign confidence regarding investment in Pakistan. In that sense, the tawdry ambitions of those with aging chips on their shoulders have already been fulfilled; the bank has been smeared with allegations of wrongdoing. True or not, those stains don’t wash out easily.
An excellent case can be made for the integrity of the process with which the bank was privatised, but it is perhaps more significant to focus on how harmful the saga will be for the country in general. Mian Muhammad Mansha is Pakistan’s richest man, with nearly all his business interests concentrated in Pakistan. Tens of thousands of Pakistanis are employed by one of his many businesses, be it banking, insurance, textiles, or any of Nishat Group’s myriad other ventures. He is the face of the argument that Pakistani businessmen can smash glass ceilings and be private sector tycoons without needing to cross the geographical boundaries of their country. If, even after a quarter of a century of managing one of Pakistan’s most profitable (and naturally, tax-contributing) banks, he can be held to account on nebulous fine points of obsolete legislation, when can an investor think about moving on and looking forward?
It is harmful enough that the past can be manipulated and used to the whims of seemingly anyone who thinks now might be a good time to claim their pound of flesh. It is certain to reduce foreign direct investment by hundreds of millions of dollars into Pakistan; investors have long memories, particularly when they serve to teach them such painful lessons. Just at a time when the economy needs a shot in the arm, the NAB’s decision to give any credence to such a frivolous case has likely shot it in the foot.
Courtesy www.dailytimes.com.pk