Prime Minster of Pakistan has appointed investment banker Ali Jahangir Siddiqui as ambassador to the United States of America. He is son of financial tycoon Jahangir Siddiqui who in the past four decades has emerged from a stock broker to become Pakistan’s leading businessman. The new envoy is expected to take up his office next month. Ali is a close confidant of Prime Minister Khaqan Abbasi having served in Air Blue and also as special assistant to the PM on economy and business. In addition there are political reasons to businesses.
The JS group shot to prominence in 2006 when it acquired local operations of American Express. The group owns Jahangir Siddiqui & Co. Ltd. (JS&Co), JS Global Capital Limited (JSGCL), JS Bank Limited (JSBL), JS Investments Limited, EFU Insurance Group and Bank Islami. The group is also involved in Al Abbas Industries dealing in Steel, Chemicals and Fibre Board, Al Abbas Sugar Mills, Azgard 9 Limited (ANL), Pakistan International Container Terminals (PICT), Pak American Fertilizer Limited (PAFL), real estate and transportation. In 2012, JS Bank was sure to buy out HSBC Bank‘s Pakistan branches and assets. The agreement fell through for reasons not public. Though I repeatedly pointed out, the aggressive methodology of JS Group and political allies, the mainstream media of Pakistan chose to ignore the scandal and joined the scintillating bandwagon.
Despite being amongst the biggest business group in Pakistan, it has concentrated on consumer sectors within Pakistan where the rate of return is very high. Its presence in manufacturing sectors is zero. Over the past decades, the group has used its financial spread at acquisitions and forayed into political businesses. As a political economist, this makes me suspicious of the group of promoting consumerism rather than sustainable economic indices in Pakistan.
Bad and unethical business practices, external connections, shady backdoor deals, opaque acquisitions, companies especially established for insider trading and arm twisting are common characteristics of such economic hitmen.
It is for this reason that JS group has intermittently been under the sharp eye of National Accountability Bureau, Security and Exchange Commission of Pakistan and State Bank of Pakistan.
In April 2013, the Securities and Exchange Commission of Pakistan filed a criminal complaint against six companies and seventeen individuals involved in manipulation of ANL share price and volume through means which constitute acts, practices or omissions that operated as a fraud and deceit. The list of accused includes JS Global Capital Ltd (JSGCL), Jahangir Siddiqui & Co. Ltd (JSCL), Jahangir Siddiqui & Sons Ltd, Jahangir Siddiqui Securities Services Ltd and JS Investments Ltd. To understand the charges, it is important to know how JS Group operated.
Startlingly, KSE trading data from April 2007 to July 2007 showed unusual hike from 3.5 million to 10.8 million in trading volume and price of the ANL shares increasing its share prices by 132%. Blatantly while the investigation was still underway, in 96 trading sessions from December 2007 to April 2008, the trading volume jumped to 16.8 million shares with a value increase of 168%. The culprits were JS Global Capital Limited and Aziz Fida Hussain & Company Limited. Market data disclosed that at the beginning of first review period, JS Global Capital Ltd. was not only the main brokerage house used by a majority of JS Global clients involved in the said activity, it was also the major financier facilitating some of them to carry out substantial trading in the ANL share, and thereby participating in artificial activity. It was this activity that stood in way of JS bank to acquire HSBC.
In an article (Nation: Deformed Legislations February 24, 2018) I had suggested a case study to assess the role played by PMLN and Chief Justice Iftiikhar Chaudary (Retired) in removal of Chairman SECP Muhammad Ali, Governor State Bank Yasin Anwar and Chairman NAB Admiral Fasih Bokhari (Retired). All three stood in the way of the purchase of HSBC to JS Bank. The PPPP government in power did nothing to protect its nominees because it felt they had crossed a Rubicon that would ultimately haunt them.
It is only after the appointment of the new Chairman that National Accountability Bureau has issued a notice to the Pakistan Stock Exchange) that it has authorised an inquiry against owners and directors of Azgard Nine Limited (ANL) and Agritech Limited (AGL) on corruption charges. These charges were overdue since 2013 but JS Group in cooperation with Mir Shakil Ur Rehman, a very powerful media group, tacit backing of Asif Ali Zardari and Mian Nawaz Sharif and activism of Chief Justice Iftikhar Chaudary managed to get rid of three main government officials responsible for not only taking on JS group but also making corrupt politicians embedded in every political party uncomfortable.
In addition Admiral Fasih Bokhari had reopened Hudaibya Paper Mills case. Mr. Shahid Hamid met Admiral Bokhari to drop the idea of reopening Hudaibya. Once the Admiral refused, Justice Chaudary was requisitioned to fire the shots. Jang Group acted as the devil’s advocate.
Ali Jahangir Siddiqui was Chairman of JS Bank, which he founded through the acquisition of American Express Bank Limited’s Pakistan operations in 2006. In addition he built a number of successful businesses in partnership including Airblue, Arabian Gulf Steel in the United Arab Emirates, Jura Energy and RAK Ghani Glass (the largest pharmaceutical glass producer in the Middle East). Why value addition industries were established in Middle East and not Pakistan is what all economic hitmen do.
Ali’s appointment is a case of defiance by the PMLN government. He has a long experience of wheeling dealing with American Express and HSBC. Despite blatant frauds and trickery, it needed some connections to be declared Pakistan’s entrepreneur of the year and be backed by NASDAQ and The Wall Street Journal. Even its ratings by State Bank of Pakistan were manipulated.
I am not sure if the appointee has been cleared by intelligence agencies or not. Perhaps they too would not have the true measure of the extent of wheeling dealing, backdoor deals and fraud that has made JS group such a juggernaut. Pakistan’s entire system is deeply infested by individuals who serve outside masters, whose self-interests override national interests and whose only interest is money.
Pakistan’s political will is inversely proportional to its power potential. Most business houses and politicians make a crucial link with outside powers to get and stay in power. If Pakistan melts is not their concern. I dread to think that an Economic Hit man will soon ride the dangerous currents of Pakistan-US relations and to what purpose?
n The writer is a political economist
and a television anchor person.